Why Is China Largest Automotive Lithium-Ion Battery Producer and User?

In 2019, 2.1 million electric cars were sold around the world, which increased the total number of those operational to 7.2 million, according to the International Energy Agency (IEA). This was because of the increasing emission of toxic gases from vehicles, which is playing a key role in disrupting normal weather patterns. Though the overall emissions have decreased significantly in recent years, those from the transport sector haven’t decreased fast enough. According to the Environmental Protection Agency (EPA), the share of the sector in the total GHG emissions in the U.S. increased from 14% in 2010 to 29% in 2019.

This is a major reason P&S Intelligence expects the automotive lithium-ion battery market size to rise to $74.3 billion by 2024 from $24.2 billion in 2018, at a healthy 15.9% CAGR between 2019 and 2024. Even though, initially, all electric vehicles (EVs) had sealed lead–acid (SLA) batteries, the demand for lithium-ion (Li-ion) variants is rising fast. This is because these batteries have a higher energy density, which means that they can store more charge per unit volume, which makes the battery smaller and the vehicle lighter.

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They also offer a longer driving range, which is one of the key requirements of people. Since the number of EV charging stations is grossly low compared to the number of EVs in operation, the vehicle range has become important. Most charging stations are installed at people’s homes, which, additionally, are slow variants that take up to 8 hours to complete the battery charging process. Hence, the longer driving range that Li-ion batteries offer to EVs is a key reason behind their increasing adoption.

Another factor raising the demand for Li-ion batteries is their falling prices, which is, in turn, encouraging people to buy EVs. As per the Massachusetts Institute of Technology (MIT), Li-ion battery prices have fallen by more than 98% in the last thirty years. Since the battery is responsible for around 40% of the purchase cost of an EV, a reduction in its prices is necessary to encourage mass adoption of battery electric vehicles (BEV), plug-in hybrid electric vehicles (PHEV), and hybrid electric vehicles (HEV).

Among these, Li-ion batteries are majorly procured for integration into BEVs. This is because as BEVs do not have an internal combustion engine (ICE) at all, they are not operationally polluting. This is why the subsidies and other benefits offered around the world are the highest for the purchase of BEVs. For instance, the Indian government is offering a purchase incentive of INR 8,596 crore on EVs under phase II of its FAME India scheme. Under the scheme, an incentive of INR 50,000 is being offered for each BEV, while only INR 13,000 is available for an HEV.

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Because of government initiatives such as this, the automotive lithium-ion battery market is dominated by Asia-Pacific (APAC). India, China, Japan, and South Korea are already the world’s largest automotive producers and buyers, which is why emission concerns are really strong here. Additionally, China is the largest automotive battery producer in the world, with many companies from India and South Korea entering the fray now. Further, India has banned the sale of conventional three- and two-wheelers from 2023 and 2025 onward, respectively, which will propel the demand for such batteries.

Therefore, the automotive Li-ion battery demand will grow with the strengthening focus on EVs.

Contact:

Prajneesh Kumar
P&S Intelligence
Contact: +1-347-960-6455
Email: enquiry@psmarketresearch.com
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This release was published on openPR.