China dominates the lithium-ion battery supply chain now and over the next five years due to its large domestic demand and control of refining and manufacturing capacity.
BloombergNEF’s first lithium-ion battery supply chain ranking for 2020 points to China having control of 80% of the world’s raw material refining, 77% of the world’s cell capacity and 60% of the world’s component manufacturing. The country’s domestic battery demand is 72GWh.
In 2020, Japan and Korea – leaders for the majority of the past decade – rank number two and three respectively. While both countries are leaders in battery and components manufacturing, they do not have the same influence in raw materials refining and mining as China. However, they have higher environmental and regulatory, innovation and infrastructure scores compared to China.
“China’s dominance of the industry is to be expected given its huge investments and the policies the country has implemented over the past decade,” said James Frith, BNEF’s head of energy storage, in a statement. “Chinese manufacturers, like CATL, have come from nothing to being world-leading in less than 10 years.”
The next decade will be particularly interesting as Europe and the US try to grow their capacity to challenge Asian incumbents who are already present in both regions, Frith notes.
As EV demand grows there is an increasing need for cell manufacturing facilities close to automotive production. This has led to a boom in European cell plants, and the rest of the supply chain is also slowly making its way to the region, according to BNEF. The growing industry within the region and Europe’s strong environmental credentials helped five European countries – Germany, UK, Finland, France and Sweden – place in the top ten ranking for 2020.
The 2025 rankings are based on countries’ current trajectories. These have China and Japan as the top two and the US, currently in sixth position, displacing South Korea in third place. However, if policy and regulation enactments are made these rankings could change. For example, the US could overtake Japan and China to be number one in 2025 if it were to increase investments in raw materials and promote EV adoption.
Conversely, the UK could see its position in the rankings fall in 2025 if it becomes unable to access the large demand in continental Europe. At 152GWh, this will be around five times the size of its domestic market.
Other potential changes are Sweden rising to fourth place in 2025 from tenth in 2020, and South Korea dropping to eighth.