There is no doubt that China is making significant strides in the field of electric car batteries, as the country focuses on the rapidly growing sector driven by the global shift towards electric vehicles.
The battery stands as the most costly component in an electric car, a domain where China globally dominates. Additionally, the battery serves as the pulsating heart of the entire electric vehicle supply chain, encompassing everything from raw material production to battery manufacturing and recycling.
The cost of batteries in China reaches $127 per kilowatt-hour on an average weighted basis, according to Bloomberg agency data. This means that utilizing domestically manufactured batteries can significantly reduce the overall cost of a new energy vehicle.
Statistics from market research firm Jato Dynamics show that the average cost of an electric car in China is around €32,000 compared to an average of €56,000 in Europe.
According to data from market research firm Counterpoint, China became the world’s largest electric car market as of the third quarter of 2023, with a 58% market share, followed by the United States and Germany.
Chinese companies offer cheap and advanced batteries and control a large part of the global supply chain for electric car batteries, from rare metal extraction and refining to cell production.
According to a report by the International Energy Agency in July 2022, China dominates the electric car battery supply chain post-mining. It also controls the processing stage of basic materials such as graphite, lithium, nickel, and cobalt.
The country has spent years building its expertise, processing over half of the world’s lithium, two-thirds of cobalt, over 70% of graphite, and about a third of nickel. China showcases its prowess in cell components, the four main parts essential for battery operation, owning approximately 70% of global cathode production capacity, over 80% of anodes, and more than half of electrolyte production.
The cathode is the most critical element, serving as the positive terminal of the battery. Among all battery materials, it is considered the most challenging and energy-consuming. Chinese companies manufacture most other battery components, also dominating anode production, the battery’s negative terminal. China also sells most separators, the layer that separates the cathode and anode to prevent short circuits.
Additionally, there is a need for electrolytes, primarily consisting of lithium salts and solvents for conductivity. The Chinese are the top four producers of electrolytes globally.
These parts come together to form lithium-ion batteries, with China alone manufacturing about 80% of the world’s electric car battery production, mostly by just two companies, CATL and BYD. The two companies together accounted for around 53% of global electric car battery usage for the first ten months of 2023, according to data from market research company SNE Research.
This extensive manufacturing infrastructure, alongside subsidies and other forms of government support, has made China the home to the largest electric car market on the planet.
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