Lithium-ion Battery Market – Shadowing the Growth of EVs
The lithium-ion battery market will grow over 2x between 2017 and 2027 – where will this spurt in growth come from? Unsurprisingly, consumer electronics will be at the forefront; however, it will witness massive uptake by the automobile industry that will catalyze revenue streams. As EV penetration grows rapidly, and the automotive industry looks to reduce its dependence on fossils, lithium-ion battery manufacturers will unlock access to opportunities that were unthinkable of a decade ago.
Growth will also be complemented by the growing focus on renewables. As government and private initiatives on harnessing solar and wind energy gain traction, the lithium-ion industry will play a central role. However, amidst the euphoria in the industry, the traditional challenges associated with supply/demand are also likely to crop up. Also, while a majority of the lithium-ion batteries manufactured currently satisfy the ‘cycle stability’ parameter, creating next-gen batteries that do not falter in terms of ‘overall age’ remains a challenge. Overall, these are exciting times to be in the lithium-ion battery landscape, as the highly-touted EV revolution grows stronger by the day.
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Disposal of Lithium-ion Batteries: Challenge or Opportunity?
The lithium-ion battery market does encounter a deadlock when it comes to environmental sustainability. With the exponentially rising need to integrate lithium-ion batteries in EVs, serious disposal concerns and their detrimental effects on the environment have inspired automakers to give a second thought to adopting them.
With polymer separators and plastic cases being used to manufacture lithium-ion batteries, the shift to electric energy from fossil-based energy for EVs makes no difference. This challenged manufacturers to rethink their product. However, innovation in the technological range engendered the recycling of lithium-ion batteries, which is likely to become a trend of the industry. With automation meeting recycling processes, the separation of different components have been easier, and, in that perspective, manufacturers can capitalize on the reduced overhead costs with low raw material requirements.
Since the reserves of lithium are highly concentrated in Chile, China, Argentina, and Australia, dependence on mining will reduce as industries optimize recycled materials and attribute a second-life to the batteries.
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Changing Industry Dynamics Indicate a Rising Tide of Lithium-ion Battery Market
Currently, lithium-ion batteries hold sway over the dual quest for portability and long operational life in consumer electronics. In the immediate future, the encapsulation of a large amount of energy into relatively small space and weight of a wearable’s tiny pocket will rely on a lithium-ion battery. And, in the pursuit of innovative gadgets, consumer electronics is anticipated to hold a strong uptake of lithium-ion batteries, like it did in the last decade. In the next decade, the sales of lithium-ion batteries for consumer electronic devices are likely to maintain a ratio of half the global sales. However, desired traction to the market will be received from the automotive industry.
Lithium-ion batteries feature high energy density, high discharge power, and low impact of time, which facilitates a remarkable advance in the growing application to EVs. Besides, increasing government spending plays a crucial role in fueling the adoption of electric vehicles. Leading regions in electric mobility leverage varied measures such as fuel economy standards and incentives for zero or low emission vehicles, which serve as economic instruments for the adoption of electric vehicles.
With the remodeling of EVs and customizable battery size, manufacturers look at the reduced cost of lithium-ion batteries, which further lays the foundation for the integration of lithium-ion batteries in autonomous vehicles (AVs). Collectively, the demand for lithium-ion batteries ascending from the automotive industry is likely to uptake at a compound annual growth rate of ~ 11% during the period 2019-2027.
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Favorable Response from Private Sector to Escalate Momentum for Lithium-ion Battery Applications
Though the growth of the lithium-ion battery market is significantly stimulated by the governments of numerous countries, the private sector will follow the lead and push the bars of the industry. Volkswagen, a German automaker, announced its vision to electrify all its car models by the year 2030. Chinese automakers – Yutong and BYD – are actively involved in deploying electric bus in Latin America and Europe. For example, in June 2019, BYD Co. Ltd announced the deployment of 183 units of Pure Electric Buses to Chile.
With electric vehicles becoming the benchmark for the automotive industry, automakers following the traditional suit of fossil-based vehicles are seen entering into partnerships with lithium-ion battery manufacturers. For instance, in June 2019, LG Chem Ltd. formed a joint venture with Geely Automobile Holdings Ltd. for manufacturing lithium-ion batteries for EVs in China. Production of lithium-ion batteries is expected to begin in 2021, with 10 GWH of annual capacity.
Since the conceptualization of electric cars, the performance of Chinese EV automakers and favorable regulatory norms reflected a strong position of China in the global electric vehicle market. However, this lead has gone beyond the entire product, and moved towards the lithium-ion battery landscape as well. Currently, China accounts for ~ 60% of the total Asia Pacific lithium-ion battery market. The effect of EVs peeping into the automotive industry has also influenced the mature German lithium-ion battery market.
In November 2018, the German government announced support worth US$ 1.12 billion for bringing in innovation into lithium-ion manufacturing firms. With an innovative-driven approach and established automotive players, Germany is likely to remain an attractive region as far as investment is concerned.
What Does it Mean for Market Players?
- Chemical Companies
Chemical companies tend to look at the consumer electronics sector as a lucrative segment, given the supply of raw materials to cell manufacturers aimed at developing batteries for gadgets and devices. An entirely new market opportunity requires a commercial strategy as to how much investment is safe to make in EVs. In addition, frequent amendments in the specifications of EVs also put the confidence of chemical companies at test. However, partnering with lithium-ion battery manufacturers will make it easier for chemical companies to supply raw materials on a demand basis.
- Battery Manufacturers
As applications of lithium-ion batteries move into a new dimension, battery manufacturers have both, pressure and opportunity on the horizon. With drastic improvements in the demand for lithium-ion batteries ascending from the automotive sector, manufacturers need to prioritize their investments and production facilities as per the RoI potential of the region that they are operating in. Since leading battery manufacturers take a cost competitive and innovation-driven approach, product diversification can be a good bet.
The automotive industry has been undergoing a seismic shift, with electricity being the new default fuel. This has inspired automakers to redefine their business models based on current and future sustainability implications. With a high pick in the number of EV manufacturers, stiff competition can be tackled only by standing out in the market, which will shift focus towards the ‘comfort’ and ‘aesthetics’ of electric cars. To achieve this, automakers will seek customized auto parts, which can be achieved through backward integration, acquisition of a battery manufacturer, or a joint collaboration.
Global Lithium-ion Battery Market: Trends and Opportunities
- Rise in the demand for electric vehicles, including electric bikes and energy storage applications, is increasing the demand for lithium-ion batteries.
- The market share of lithium-ion batteries in the overall lithium market increased from 25% in 2007 to 35.0% in 2015.
- Governments across the world are promoting the use of electric vehicles. For example, in China, the government has mandated that automotive players having a production capacity of more than 50,000 units per year must ensure that electric vehicle sales account for 8.0% of their overall sales in 2018.
- Across the world, rise in the demand for smartphone is increasing the demand for lithium-ion batteries.
- It is expected that, the demand for lithium-ion batteries in consumer electronics products such as smartphones, laptops, and other digital devices will rise from 26 GWh in 2015 to 37 GWH in 2020, and to 54 GWh in 2025.
- In FY2018, according to Japan-based global lithium-ion battery manufacturer Murata Manufacturing Co., Ltd., the number of smartphones, desktops, notebooks, and tablets having installed lithium-ion batteries was 1,360 million, 100 million, 160 million, and 150 million, respectively. Thus, increase in the sales of consumer electronics products is increasing the demand for lithium-ion batteries.
- A trend observed in the global lithium-ion battery market is the continuous decrease in the prices of lithium-ion batteries.
Global Lithium-ion Battery Market: Overview
- According to Bloomberg New Energy Finance (BNEF), the price of lithium-ion batteries decreased from US$ 1,000 / kWh in 2010 to US$ 273 / kWh in 2016, a drop of 73.0%. The United States Advanced Battery Consortium has set a target of US$ 250 / kWh for 2020.
- Prominent lithium-ion batteries used in the automobile sector are lithium-nickel-cobalt-aluminum (NCA), lithium-nickel-manganese-cobalt (NMC), lithium-manganese spinel (LMO), lithium titanate (LTO), lithium-iron phosphate (LFP), etc. Lithium-ion batteries made from LFP technology have higher safety characteristics and higher usable capacities.
- Across the globe, rise in the sales of electric vehicles (EVs) is driving the demand for lithium-ion batteries. Apart from developed countries, even in developing countries such as China, governments have mandated car makers with capacity of 50,000 units/ year to ensure that EV sales account for at least 8.0% of their sales in 2018.
- A lithium-ion battery consists of a cathode, anode, separator, and electrolyte. In the value chain analysis of the global lithium-ion battery market, the main players are raw material suppliers, separator suppliers, anode suppliers, cathode suppliers, electrolyte suppliers, lithium-ion battery manufacturers, and end users.
- The main raw material for the manufacture of lithium-ion batteries is lithium. Lithium is extracted from lithium ore, and is marketed in the form of lithium carbonate, lithium hydroxide, or lithium chloride. China dominates the lithium processing industry, accounting for ~ 90% of the world’s lithium hydroxide supply. Lithium carbonate, lithium hydroxide, or lithium chloride are used in the manufacturing of cathode for lithium-ion batteries.
- Lithium-ion battery manufacturers such as LG Chem, Panasonic Corporation, and BYD Co Ltd have undertaken backward integration, and are manufacturing the cathodes of their lithium-ion batteries.
- Japanese and South Korean companies are some of the prominent market players in the global lithium-ion battery market. In recent years, China has moved up the value chain and has developed its own in-house lithium-ion battery manufacturing capacity.
Global Lithium-ion Battery Market: Bifurcation
- Based on product, the lithium ion battery market has been categorized into cells/ modules, battery packs, and energy storage systems (ESS).
- On the basis of end-user industry, the global lithium ion battery market is bifurcated into consumer electronics, automotive, and grid energy & industrial.
- In terms of region, the report classifies the market into North America, Europe, Asia Pacific, Middle East & Africa (MEA), and South America. Regions have been analyzed in terms of value and volume shipments in the lithium ion battery market industry. Moreover, region-wise prominent countries covered in the report include the U.S, Canada, Germany, the U.K., France, China, Japan, South Korea, South Africa, GCC, and Brazil.
Global Lithium-ion Battery Market: Rules & Regulations
- As lithium-ion batteries are hazardous material, various regulations regarding the shipment of these batteries have been laid down. The International Air Transport Association (IATA) has set regulations regarding the shipment of lithium-ion batteries in its IATA Dangerous Goods Regulations (DGR).
- Globally, lithium-ion batteries can be shipped as individual cells or group of cells (batteries); batteries/ cell packed with a smartphone or tablet but separated from the electronic equipment and batteries/ cells contained in an equipment.
- Regulations state that, lithium-ion cells and batteries are banned from being transported as cargo or in passenger aircrafts.
- The packaging of lithium-ion batteries must be done in accordance with Packing Instruction (PI) 965. Lithium-ion batteries must be packed in accordance with Section IA or Section IB of PI 965, and must not be packed with the same outer packaging with dangerous goods classified in Class 1 (explosives).
- The packaging of lithium-ion batteries must contain the label “Cargo Aircraft Only,” and marked “UN3480.” The minimum packaging dimension of packing lithium-ion batteries is 120 mm wide x 110 mm high.
The increasing presence of gas detector manufacturers and growing distribution networks across the world are anticipated to offer lucrative opportunities during the forecast period. Some of the major players in the lithium-ion battery market include
- BYD Company Limited
- A123 Systems LLC
- Panasonic Corporation
- Samsung SDI Co. Ltd
- Amperex Technology Limited (ATL)
- LG Chem, Ltd.
- Murata Manufacturing Co. Ltd.
- Toshiba Corporation
- Clarios Power Solutions
- Maxell Holdings
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