Global Li-ion battery market sees strong APAC overseas expansion

Interact Analysis’s latest Li-ion battery and Manufacturing Equipment Market Tracker collects and collates trends from major battery suppliers and equipment manufacturers around the world. Based on more than 500 news items, we have summarized four major topics.

Overseas expansion: Players from China, Japan and South Korea are actively targeting European and United States markets

In 2022, Li-ion battery production capacity in the APAC region accounted for 81.1% of the world’s output, with China, Japan and South Korea as the engines of production. As European and American countries are scrambling to deliver the right policies and incentives, APAC power battery enterprises have been regularly winning large long-term orders from overseas automobile enterprises, and are gradually expanding the scale of overseas production and R&D facilities.

In recent years, the European Union has launched a series of industrial policies to encourage the development of new energy vehicles, and this has greatly boosted overall market demand for batteries. As a result, Chinese battery companies are increasing their footprint in Europe:

• The planned battery capacity of Chinese battery manufacturer CATL in Europe is about 200GWh, with production located in Germany and Hungary. This is far more than that of Japanese and Korean enterprises, which penetrated the European market earlier, and is also greater than that of local battery manufacturers in Europe.
• Chinese battery cell manufacturer and Volkswagen partner Gotion High-Tech has announced plans to build battery facilities on a site in Germany in two phases, with annual production targets of 6 and 12 GWh respectively.
• Battery technology company Envision AESC is also planning a battery cell factory in Spain, which will be built in the Spanish city of Navalmoral de la Mata and will be operational in 2025 with a capacity of up to 50 GWh. Meanwhile, Envision AESC has commenced building work for its battery factory in Sunderland, UK, with an annual capacity of 12 GWh.
• Chinese battery enterprises EVE Energy, SVOLT and CALB have also announced plans for European operations.

China’s power battery enterprises are less enthusiastic about building factories in the United States than they are in Europe, which is a result of the uncertainty brought about by the American version of the “Whitelist of Power Batteries”(details can be found in our earlier insight: How will the US Inflation Reduction Act affect China’s Li-ion battery and EV industry).

• Nonetheless, CATL has chosen a different way to enter the United States market and is cooperating with Ford on a new plant. The new plant is a wholly owned subsidiary of Ford, with CATL providing the battery technology know-how.

While Japanese and Korean manufacturers rapidly expand their capacity in North America through joint ventures, Chinese manufacturers are largely focused on Europe.

• In 2022, LG Energy Solution announced plans to build another 3 battery plants in the USA; one in Arizona State with a capacity of 11 GWh, while the other two are joint ventures with Honda and Hyundai respectively.
• In addition to three plants announced through a joint venture with Ford, SK On revealed plans in 2022 to build a battery plant in Georgia with Hyundai.
• Also in 2022, Samsung SDI flagged up its plans to build 2 battery plants in the US.

EV OEMs Push Further with Self-Built Plants, Opening Up New Opportunities

With the rapidly increasing penetration rate of electric vehicles, major automobile enterprises have released detailed and aggressive roadmaps for electrification, showing their determination to comprehensively transform the industry. This will ensure long-term demand for high-quality and stable power battery capacity. To secure their battery supply chain and effectively control costs, more car manufacturers are hoping to enter the battery production process, either establishing their own battery factories, or partnering with an established battery maker.

Self-Built Plants

• In 2021, Volkswagen announced that they will build six gigafactories in partnership models, with a total production capacity of 240 GWh secure battery supply.
• In 2022, GAC launched battery subsidiary ‘Lvqing’ and broke ground on a 36 GWh-capacity battery plant in China.

Joint Venture

• In 2021, BlueOvalSK, the joint venture between Ford and SKI, announced plans to establish a total of three battery plants – two in Kentucky and one in Tennessee – with a combined capacity of 129 GWh per year.
• Ultium Cells, the battery cell joint venture between General Motors and LG Energy Solution unveiled its plans in 2021 to build three battery plants with a total capacity of 160 GWh in the US.
• In 2022, domestic OEMs were also assisted by power battery manufacturers. Joint venture factories between CATL and Geely, between REPT and SAIC, between Farasis and Geely, between Sunwoda and Geely, and between BYD and FAW have now all started building work.

Major Battery Manufacturers Speed Up IPOs

Throughout 2022, another key word for the battery industry was “listing”.
At present, whether it is to build a factory, develop technology, or lay out the upstream and downstream industrial chains, substantial funds are needed. In order to accelerate the development process of enterprises and cope with the pressures of tight finances, power battery manufacturers have turned their attention to the secondary market.

• In June 2022, Northvolt confirmed plans for an IPO in next two years.
• In October 2022, CALB was listed on the main board of the Hong Kong Stock Exchange, becoming the first power battery company in the Hong Kong stock market.
• In November 2022, SVOLT submitted a prospectus for listing on the Science and Technology Innovation Board.
• Subsequently, Ganfeng Lithium Group also announced its decision for the company’s split listing on the Shenzhen Stock Exchange.
• In December 2022, REPT submitted a listing application to the Hong Kong Stock Exchange and proposed to be listed on the main board.
• Gotion High-tech and Sunwoda have not only listed A-shares and on the Hong Kong Stock Exchange, but, since 2022, they have also successively issued global depositary receipts (GDR) and listed on the Swiss Stock Exchange, in order to increase their financing options.

Battery Manufacturers Invest in Raw Materials Procurement and Recycling

The operational ambitions of battery manufacturers not only include the production of cells, modules and packs, they also want to control the sourcing of raw materials to ensure the security of production. The overall industrial chain will look at the entire ecosystem, including cascade utilization and even recycling.

• Due to the dramatic price of raw materials, power battery companies, including OEMs, have begun lithium mining.
  In 2022, CATL secured the mining rights for a lithium mine in Yichun in Jiangxi province for 865 million yuan (123 million euros). BYD has acquired 6 lithium mines in Africa in order to make EV batteries. LG Chem and CALB have invested in Tianqi Lithium, and Gotion High-tech, Sunwoda and SVOLT have all obtained mining rights.
  OEMs BMW, VOLKSWAGEN AG, Renault, GM, Ford, Tesla, TOYOTA and GAC have also invested in lithium mining.
• The downstream of the power battery recycling industry is mainly divided into two fields; the field of cascade utilization, and the field of dismantling and recycling materials.

1. CATL entered the battery recycling business by acquiring Brunp Recycling, and in Jan 2023 announced investment of up to 23.8 billion yuan (about 3.25 billion euros) in the construction of a large industrial park for the recycling of battery raw materials and further processing for new batteries.
2. BYD was one of the first companies to invest in the cascade utilization field and currently has about 40 power battery recycling outlets in China.
3. In 2022, SK Innovation and LG Chem both became involved in battery recycling.

For more information on the Li-ion Battery and Manufacturing Equipment Market Quarterly Update please contact Maya Xiao at Interact Analysis.