This is the overview of global development of NEVs’ power battery in 2022. The article indicates how power battery is connected with NEVs and its progress in global market.
Two domains matter for the development of New Energy Vehicles (NEV): electrification and intelligent features. As the rival of the traditional oil industry and the core technology for electrification innovation, the power battery has ridden on the crest of the wave of the NEV industry. Under the strong trend of NEVs globally, it is expected to become the engine of industrial innovation through continuous updating.
The power battery is closely bound up with the development of NEVs’ industrial upgrading. The function of a given battery system will make a difference not only to brand image but the customer’s experience directly. As the NEV power battery industry chain is pretty sophisticated, the supply and demand relationship and competition among upstream, middle and downstream companies are complicated and intense. Driven by demand for improving energy supplements and usage from owners of NEVs, all kinds of power battery firms are playing active roles in this technology innovation. Meanwhile, owners of NEVs are expecting an earlier deployment of more advanced power batteries.
In fact, as a major component of NEV, the power battery has been closely connected to each aspect of NEV profitability and design. The battery actually decides many key parameters of car performance. On the whole, efficiency and safety are of vital importance for the improvement of power battery tech, and along with the steady updates of technologies from different subareas, the power battery for NEV is poised to cater for all kinds of demand in future like longer mileage, shorter charging times and safer driving. Moreover, mass commercialization of the 4680 large cylindrical battery, solid state battery, sodium ion battery and non-spontaneous combustion battery is expected to considerably relieve pressing demands from owners of NEVs.
Global sales of NEV skyrocketed to 6.5 million units, motivating the installed capacity of power battery doubled
Against the background of the NEV industry speeding up around the world, global sales of NEV skyrocketed to 6.5 million units, while 3.52 million units were sold in China, accounting for 54%. According to EqualOcean’s forecasting, in 2025, global sales of NEVs will reach 25.8 million units, and the sales in China will reach 13.59 million, taking 53% of global market share. The market will grow at a Compound Annual Growth Rate (CAGR) of 42% from 2020 to 2025.
Motivated by the rapid development of the NEV industry, the global lithium battery industry, especially lithium power battery, also shot up: in 2021, the global installed capacity of power battery was 297GWh, and the average installed capacity of single vehicles was 45.7KWh. EqualOcean predicts that the global power battery installed capacity will be 1485GWh in 2025, and the average installed capacity of single vehicles will be 57.6KWh. The market will grow at a CAGR of 42% from 2020 to 2025.
Battery companies are concentrated, with the top three accounting for more than 65%. Lithium iron phosphate power battery of lower cost is the most popular in the market
The global structure of power battery companies has formed basically. In 2021, CATL，LG Energy Solution and Panasonic ranked the top three, and BYD ranked fourth. And the Matthew effect in market competition is significant. The top three companies accounted for 65.1% of the market share, while top 10 for 91.2%. Many more companies were left behind and proved less competitive – so, as a whole, the competition has become heated and entered the stage of elimination.
Since Q2 of 2021, the prices of raw materials such as lithium (represented by lithium carbonate), nickel, and cobalt have skyrocketed, resulting in higher cost of power batteries. Then the price pressure was transmitted to downstream firms from February to March in 2022, so car companies increased their prices accordingly to CNY170/KWh (USD25.36/KWh). On the other hand, since Q2 of 2021, the market share of Lithium iron phosphate power batteries in China has surpassed the ternary lithium with a lower relative cost in total. According to EqualOcean, Lithium iron phosphate power battery is more popular in market for its low increase in price and better cost performance.
Lithium ore is mainly distributed in South America and Australia, and cost of the core part of a battery lies in the positive pole for 40%
The key raw material of lithium-ion power batteries is Lithium ore (lithium salt). Lithium resources in the world are mainly divided into brine lithium, hard salt lithium and sedimentary lithium, which account for 59.4%, 34.2% and 6.4% respectively. Currently, lithium brine is mainly produced in South America, the United States and China, while hard salt lithium is mainly produced in Australia and China, and the countries with abundant deposits of sedimentary lithium are Serbia and the United States. Lithium resources are unevenly distributed worldwide.
Cathode materials account for about 40% of the overall cost of a power battery. And raw materials are the main cost of the positive and negative poles, accounting for 89% and 86% respectively. In addition to raw materials, the ratios of processing costs and manufacturing costs of electrolyte and diaphragm are high components of the overall cost, taking up 51% and 37% respectively. Therefore, the price of raw materials (lithium salt) is the key factor that determines the cost of cathode materials and even the power battery industry chain.
CATL is the hexagonal warrior among power battery companies
EqualOcean selected global power battery companies with the top installed capacity between 2021 to Q1 of 2022, and used the SPC model to analyze the competitiveness of the existing power battery companies. S, P and C are short for Strategy&shared value, Product&tech-driven and Customer&operating respectively. Besides, zone A is the core area which stands for leaders pioneering in SPC all three aspects in the domain of power battery. Zone B is the secondary core zone, which is called challengers: B1 represents the strongest on S (also not bad on the other two)；B2 represents the strongest on P, and B3 on C. Zone C is the edge region, which is called followers: C1 stands for performing not bad in P and C; C2 stands for performing not bad in S and C; C3 stands for not bad in S and P.
So far, only one company, CATL, lies in the core area, while three firms, BYD, Panasonic and LG Energy Solution lies in the secondary core area, performing well in S, P and C respectively. The four core companies in zone A and B have become vital facilitators leading the reform of the global power battery industry, while other chasers are catching up in their advantageous aspects correspondingly.
Core area: CATL is the model one of all the power battery companies globally with excellent strategic layout. Its products balance two routes of ternary lithium and lithium iron phosphate stably, while its group of customers covered plenty of domestic car companies. By now, the only shortcoming of CATL is that it has not proved itself in the global market.
Secondary area: BYD's investment in the field of power batteries over a long time indicates its company value, and its product level blade battery has entered the market. The cylindrical battery from Panasonic has become a symbol of its technical and innovative strengths, and its partnership with Tesla has enhanced its brand reputation. LG Energy Solution has won the cooperation of many auto firms with its excellent management ability and aggressive global layout.
Edge area: Gotion High-tech (Chinese:国轩高科) and CALB (Chinese:中创新航) are in zone C2 stabilize in S and C, but are still insufficient about P compared with companies in the core area. Firms in C3 are also trying to march into the core area with a strategic vision and technology-driven ability. Moreover, the reason zone C1 is blank is that no power battery companies can rank among the top competitors only by technology and business ability. In fact, strategic layout and financing strength are the major conditions for the development of power battery companies.
The NEV power battery market is riding on the crest of the wave. As the power battery technology continues to develop and progress, the power battery product with more usage convenience, higher energy density and better safety is expected to be successively carried on NEVs, and even to become part of the smart electric energy network. Currently, as the global auto chain has been through great changes due to the rapid development of power battery, China’s battery has grown at a solid pace and six of the top 10 battery makers are from China, with a combined market share of 55.7%, and the combination of ‘battery + motor’ is replacing the traditional combination of ‘internal combustion engine + gearbox’. In conclusion, the new global supply chain system has taken shape, and new technologies will continue to bring new dynamism and progress to the industry in the future. Meanwhile, the trend of globalization in power battery industry chain will be further strengthened, and the upstream and downstream companies are poised to pay more attention to the scope and content of investment and cooperation.
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