Although you might not know it from looking at the market of new cars hitting showrooms, but the world is in the midst of a battery arms race. And one Chinese firm is reportedly poised to become the global leader in just three years.
- Chinese battery maker CATL reportedly will expand annual production to nearly 137 million gWh by 2022.
- Currently global battery demand is 120 gWh, on track to reach 150 gWh with Panasonic controlling 26% of the market.
- At that rate, CATL would be far and away the world’s largest lithium-ion battery maker.
Chinese battery maker Contemporary Amperex Technology, or CATL, is reportedly preparing to ramp up its annual lithium-ion battery production to 136.6 million gigawatt hours. To put that into perspective, according to Inside EVs, the global market for plug-in vehicle batteries is somewhere around 120 gigawatt hours and on its way to 150 gigawatt hours.
If CATL remains on this path, as predicted by Digitimes, it could nearly meet the world’s entire lithium-ion needs.
CATL has been on a slow market-share climb, having garnered 13% of the global battery market in 2018. However, it was easily overshadowed by current leader Panasonic, which dominates 26% of the lithium-ion business. However, this incredible ramp up could all but destroy CATL’s competitors.
This could be good news for EV customers, who will benefit from an oversaturated battery supply. With so much supply, prices are bound to drop, as battery brands fight to remain competitive with one another. Carmakers would benefit, too, at least in the short run. Audi, for example, had to reportedly cut back its planned production numbers of its all-new pure-electric e-tron quattro SUV because it couldn’t afford the batteries from LG, which raised prices mid-stream.
At the same time, CATL’s rapid expansion could be disastrous for European and American car makers who are keen to remain on the cutting edge of battery tech and supply. In fact, the European Union and Germany are so worried by China’s potential dominance in battery tech that the two are working together to incentivize battery development in the region through subsidies.
The EU and Germany know that much of the area’s jobs hinge on the auto business, which has long been based on internal combustion engine technology. If that propulsion tech evaporates and they can’t fill the void, jobs will be lost and their economies will take big hits. Plus, European carmakers don’t want to be beholden to Chinese battery suppliers, who could give preferential treatment (and pricing) to fellow Chinese brands.
There is a bit of a catch 22 in the battery development business. Rare earth metals need to be mined from the earth and their processing and refining into usable battery cells is a messy and energy-intensive process. Does Europe really want to bring the toxic byproducts of lithium-ion battery production to their region? I am not sure. What’s more, do they have the energy resources — without turning to coal — to power such facilities? I’m equally unsure.
No matter how fast the Germans can ramp up within the stringent regulatory environment, even with subsidies, it may be for naught. CATL may be too far ahead to be caught up.