Despite a global pandemic, the past year saw Li-ion battery manufacturing capacity continue to expand to meet the growing need for batteries from the automotive industry. While overall sales of vehicles declined roughly 15%, electric vehicles showed resilience, as BEV and PHEV powertrain sales continued to increase. Interest in the Li-ion battery space remains at a critical high, with 2020 marking a turning point in electric vehicle adoption. With BEV sales set to increase dramatically, what will global Li-ion cell manufacturing capacity be in three years? Who are the key players driving this growth?
To answer these questions, we have compiled each manufacturer's current manufacturing capacity for large-format cells, along with the targets, through primary and secondary research. We compare the current and future capacities of the projected top 15 Li-ion manufacturing companies and the stacked area plot showing where this expansion will take place, depending on the geographical distribution.
Lux expects the global annual Li-ion manufacturing capacity to more than triple by 2024. CATL has led the pack, with the production level increasing by as much as four times and most of the GWh production coming in from China. The top five Li-ion cell manufacturers in 2021 are now from China and South Korea. Europe has emerged as a top destination for battery giants, with SK Innovation announcing an additional 10 GWh of production along with the already-announced 30 GWh in Hungary. Meanwhile, Chinese companies have started working on their new factories in Europe. Svolt announced an additional 24 GWh by the end of 2023 in Germany, and CATL is aiming to expand to 230 GWh of capacity across all facilities. This is reflected in the chart depicting the geographic distribution of cell manufacturing, which shows China's market share shrinking from 72% to 62% in 2024.
We can expect Hungary and Germany to start manufacturing batteries, and the combined capacities of the European manufacturing facilities are now clearly second only to China; thus, clients should expect continued announcements of new factories. The most notable insight is the decline in the market share of Japan and South Korea, although the rest of Asia has seen a slight increase, as companies are expanding across different countries in Asia. Energy Absolute announced an investment of $190 million and is expected to develop a 2 GWh plant in Thailand by the end of 2021.
Looking ahead, three important factors will determine the development of Li-ion manufacturing and the outlook for capacities in the future:
- Chinese companies are expanding fast, and they are making their mark by announcing various production facilities in Europe and Asia. Europe is quickly becoming a manufacturing hub for batteries due in part to government support for local manufacturing and stronger incentives for BEV adoption.
- The U.S. proposed a $174 billion package to promote electric vehicle adoption that includes investment in the domestic supply chain and increasing manufacturing capacity in the region. While there is some uncertainty as to how much of this will pass, one key limitation for the region will be a lack of strong penalties for missing emissions targets. If battery supplies tighten, it will be the first region automakers de-prioritize for launching new electric vehicles.
- Automakers will enter the cell manufacturing space. Volkswagen and Tesla recently announced their plans to develop their cells, while even some automakers like Ford – a smaller and typically more cautious automaker – have invested in battery startups and talked about needing to make their own batteries. Suppliers are still needed, as we expect few major automakers to make all of their cells, but Lux expects automakers will begin to populate the list of top manufacturers in the next decade.