BNEF: China dominates the Li-ion battery supply chain, but Europe is on the rise
17 September 2020
China dominates BloombergNEF’s (BNEF) lithium-ion battery supply chain ranking in 2020, having quickly surpassed Japan and Korea that were leaders for the majority of the previous decade.
China’s success results from its large domestic battery demand—72GWh—and 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, according to data from BNEF.
In 2020, Japan and Korea 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. What they lack in the control of the raw materials supply chain, they make-up for in higher environmental and RII (regulations, innovation & 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. 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 create their own battery champions to challenge Asian incumbents who are already building capacity in both places. While Europe is launching initiatives to capture more of the raw material value chain, the US is slower to react on this.—James Frith, BNEF’s head of energy storage
BNEF’s lithium-ion battery supply chain ranking provides a snapshot of a country’s position in 2020 and where it will place in 2025, based on its current development trajectory. The work ranks countries across five key themes related to the supply chain: raw materials, cell & component manufacturing, environment, RII and end demand (across electric vehicles and stationary storage). The five key themes were given equal weightings in the overall ranking.
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 Europe. The growing industry within the region and Europe’s strong environmental credentials helped five European countries place in the top ten ranking for 2020.
BNEF’s 2025 rankings are based on a country’s current trajectory, but if a country enacts targeted policy and regulations there is ample time to improve its position. The US is in sixth place in 2020. If the US were to increase its investment in raw materials and promote EV adoption, it could overtake Japan and China to be number one in 2025, BNEF claimed. In contrast, the UK could see its position in the rankings fall in 2025 if it becomes unable to access the large demand in continental Europe, which, at 152GWh, will be around five times the size of its domestic market.
A key concern of many raw materials producing countries is how to leverage resource wealth into more value-add, and attract further downstream investments, like battery manufacturing. Key distinguishing factors are the environmental footprint of industry, the availability of cheap but clean electricity, a technically skilled labor force, and incentives driving battery demand. These factors may be more important than a monopoly on one specific critical metal.—Sophie Lu, head of metals and mining at BloombergNEF
Sustainability and carbon emissions associated with the supply chain are of growing importance. Making sure that the electricity used in material processing and cell manufacturing is low-carbon is critical to meeting lifecycle goals. France performed best in the environmental category, helped by its electricity grids low carbon emissions factor, at 28gCO2/kWh in 2019.
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Posted by: travel52 | 17 September 2020 at 11:49 PM
Lithium battery production is capital intensive, lots of automation.
With interest rates low they can make the investments.
Posted by: SJC | 18 September 2020 at 10:18 AM
So the Chinese read "The Trouble with Lithium", rubbed their eyes and pinched themselves that such highly valuable market intelligence was put out for free and ran with it - massively subsidising CATL and buying up as much primary Li production as they could to go from nowhere to practically total market domination and control in less than 10 years while the West as usual sat there doing nothing important.
The only reason that report was put out for free was because the author could not sell it because the UK and western Stasi have blocked and hijacked his communications for 20 years, child's play with our all digital comms systems, destroyed his business and reduced him to penury for "knowing too much". So the Chinese laugh, take the information which was put out to try and put the world on the right EV track - not lithium - and dominate the west in yet another arena, impoverishing the west further and creating further fertile ground for Stasi recruitment of the unemployed and underclass - reduced to those conditions by allowing China to industrially destroy the west in the first place.
Posted by: Emphyrio | 19 September 2020 at 12:23 PM