The rapid growth in the EV battery production sector in China will soon see EV batteries tripling in capacity, surpassing the need for the same from the EV makers in the region. This will force China to seek international markets in order to sustain its rapidly expanding EV battery industry. Chinese companies are responsible for the production of NCM and LFP batteries, the two types of batteries frequently used in electric vehicles.
According to the Economic Daily Report, the projections revealed by the top EV battery companies indicate that mainland EV battery producers would boost their output from the 500 GWh that is anticipated to be generated this year to 3000 GWh by the year 2025.
China is at the forefront of battery technology. Therefore, it’s worth noting that the need for producers of batteries to explore markets outside those available locally may arise in order to meet consumer demands.
From UBS projection, mainland China is set to purchase 6 million battery-powered vehicles in 2022, an increase more than twice the 2.99 million purchased in 2018. On the other hand, the Fitch ratings showed that the passenger electric vehicle sector is expected to develop steadily at a rate of 30% every year over the following five years.
From the predictions, however, the optimistic outlook does not speak well for all the battery suppliers in the largest EV market in the world. In 2017, there were 200 or more battery suppliers operating, according to CAAM data, but there are only 48 active suppliers today.
It has taken 10 years of hard work to advance innovation and production techniques for a few Chinese EV battery manufacturers to be able to penetrate the international market. The majority of EV batteries supplied globally come from Contemporary Amperex Technology Limited (CATL), the world’s biggest EV battery producer in east China.
Other Chinese companies, including CALB, Svolt, Gotian and Sunwoda, are among the top 10 producers of EV batteries worldwide. CATL intends to begin construction on a multibillion-dollar factory in Debrecen, Hungary, in September 2023, with a target completion date of 2027. It is the second factory outside of the mainland, which aids CATL in its internationalization strategies. Meanwhile, CALB plans to make Portugal its production center.
According to David Zhang, EV batteries made by China companies abroad will compete to surpass EV assemblies on the mainland as major players on the world stage. In order to do so, they will need to obtain a large number of international orders from auto manufacturers such as Rivian Automotive Inc. (NASDAQ: RIVN) because the local market will not sustain heavy use of their establishments.
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