In the dynamic landscape of the global electric vehicle (EV) battery supply market, a notable trend is the increasing dominance of Asian companies, as highlighted in a recent report by CleanTechnica on the top 10 battery producers worldwide. The provisional report for 2023 reveals a remarkable 40% growth in demand for lithium-ion batteries within the light vehicle automotive sector, surpassing the 35% growth in actual EV sales 

CATL continues to lead the charge, and it has increased its share from 32% to 34% due to a slightly over-average growth rate. That’s thanks to the continued success of the Made-in-China Tesla Model Y, SAIC’s MG4/Mulan, Li Auto’s success, as well as a long list of clients. With the recently introduced Qilin battery and promising new Shenxing batteries, expect the battery maker to consolidate its share and remain in the lead through 2024, and even for years after that.

Fast growing BYD (+59% YoY) is the new silver medalist, with the Chinese  battery maker jumping from 14% in 2022 to 16% in the same period of 2023 thanks to the rise and rise of the namesake brand. But the growth is also due to the new 3rd party supply deals it now has. It supplies the Made-in-Germany Tesla Model Y, Toyota bZ3, Changan UNI-V, Venucia V-Online, as well several Haval and FAW models. And with other brands lining up to get their batteries in 2024 (Kia, KG Mobility, etc.), expect the Shenzhen make to continue increasing its share throughout the year.

 This was done at the cost of LG, which lost share in 2023, going from 17% in 2022 to 15% by the end of 2023. This was due to the lack of new orders, GM’s troubled ramp-up of its new EVs, the end of life of some important volume models (Renault Zoe…), and also the fact that volume from some clients, like Mercedes or Ford, is being diverted to the competition.

Still, the top three battery makers are responsible for two thirds (66%) of the total battery deployment, which highlights the importance of scale in this business, in order to have the most competitive product on the market.

Panasonic, once upon a time a leader in the automotive EV business, has continued its slow slide down the table. It’s now in 4th, with 8% share, down from 9% last year. With its main client, Tesla, now effectively a multi-supplier OEM when it comes to batteries, and without another large client coming to fill in the gap, the Japanese battery maker is losing in this race. This is also in no small part due to the small EV investments that its compatriot automotive companies are pursuing.

#6 Samsung SDI followed the market, helped by increasing volumes at Jeep and the production ramp-up of Rivian, while slow growing CALB was in 7th.

#8 Farasis Energy (+123%!) is the biggest highlight, having seen its share grow from 1% in 2022 to its current 2%. The Chinese company is now looking to displace CALB from the 7th spot during 2024. That’s thanks to the success of GAC, the addition of Mercedes as a large client, and the ramp-up of the nascent Turkish startup Togg.

#9 Envision AESC (+77%) and #10 Sunwoda (+55%) are also growing above average. They’ve seen significant growth rates. For AESC, the ongoing relationship with Nissan is the bread and butter of the company, but the big reinforcement this year is the addition of the US operations of Mercedes. While it is not significant in the total number of EVs sold, when we remember that each EQS SUV has a 108 kWh battery 

Finally, Sunwoda is greatly benefitting from the growth of the startup Leap Motor, which it is the main battery supplier for.

With the EV market continuing to grow fast, and average battery size increasing, expect the battery market to continue growing even faster, with +/-50% growth rates likely in the next couple of years.

Thoughts

The trajectory of Asian dominance in the global electric vehicle (EV) battery supply market could be influenced by various factors, including recent legislation in Europe and the United States aimed at fostering competitiveness in the Western battery industry. Legislative initiatives, such as increased investments in research and development, tax incentives, and strategic partnerships, may contribute to the growth of Western battery manufacturers. For example, policies promoting the development and production of electric vehicles and their components could incentivize Western companies to invest in battery technology. Additionally, regulations focused on environmental sustainability and reduced carbon emissions may drive the demand for locally produced batteries.

However, the existing market dynamics, the scale of established Asian manufacturers, and the intricate supply chain networks might pose challenges to Western competitors in catching up rapidly. Asian companies, particularly Chinese ones like CATL and BYD, have demonstrated strong capabilities, innovation, and partnerships with major automakers, providing them with a substantial head start.

The future balance between Asian dominance and Western competitiveness in the EV battery market will depend on how effectively Western countries implement and execute their legislative initiatives, the pace of technological advancements, and the ability of Western companies to scale up production and establish strategic collaborations.

The industry’s evolution will likely be dynamic, with both regions contributing to the global growth of electric vehicles and their associated battery technologies