Rapidly growing demand for electric vehicles in China is triggering an explosion of investment in the lithium-ion battery industry, with China’s production of power lithium-ion batteries set to jump 400% by 2017, according to market research firm CCM.
A total of 78,499 EVs were manufactured in China in 2014 (according to the China Association of Automobile Manufacturers), an increase of almost 250% on 2013, and CCM forecasts that this figure will more than triple again in 2015 to reach 250,000.
This growth is sparking a similar rise in demand for power lithium-ion batteries (EV batteries that use 10,000 times more electrolyte and much more sophisticated technology than a typical mobile phone battery) – Chinese EV brand BYD has already encountered difficulties meeting orders due to a shortage of batteries.
Battery manufacturers are already scrambling to meet this demand. Samsung, LG, and Foxconn all invested more than US$325m in China’s lithium-ion battery market in 2014, and CCM expects to see similar levels of investment in 2015.
Most domestic Chinese battery manufacturers currently lag behind their competitors –principally Japan, South Korea and the US – in terms of the ability to manufacture high-performing EV batteries. This quality gap is, however, gradually narrowing, creating opportunities for international players to gain market share in China’s power lithium-ion battery market in the coming years.
Overall, China’s power lithium-ion battery market is expected to grow five-fold by 2017 – from four billion Ah a year to 20 billion – to meet growing demand from the EV market.