Major EV battery markets aim to reduce dependence on China
As Chinese players target emerging markets
As of October 2024, Chinese battery manufacturers dominate the global electric vehicle (EV) battery market, holding approximately two-thirds of the market share. This dominance is primarily attributed to their control over vital raw materials and their rapid adaptation to technological advancements, enabling them to outperform competitors.
Prominent players such as CATL, BYD, Gotion Hi-Tech, CALB, EVE Power, and others have solidified China’s leading position in the EV battery sector, which has alarmed Western nations.
In response, the United States and Europe are significantly ramping up investments in domestic battery supply chains while imposing higher tariffs on Chinese EVs and components to mitigate reliance on Chinese suppliers.
The escalation of tariffs is a strategic move to counteract the growing influence of Chinese manufacturers. In the first half of 2024, the US increased tariffs on Chinese EVs from 25% to 100% and raised tariffs on batteries and components from 7.5% to 25%.
Moreover, a 25% tariff was introduced on graphite and permanent magnets, which were previously untaxed. Similarly, European countries have imposed various tariffs on Chinese-made EVs, with rates varying depending on the manufacturer, such as 7.8% for Tesla and as high as 35.3% for SAIC.
This trend of tariff increases reflects a broader strategy by Western nations to boost their battery production capabilities.
Countering China
Reports indicate that significant investments are being made to establish new manufacturing facilities and joint ventures in the US, Europe, South Korea, and Japan. These efforts aim to create a more resilient and self-sufficient supply chain that reduces vulnerability to foreign dominance, particularly from China.
In light of these trade barriers, Chinese manufacturers are not sitting idle. They seek to expand their market presence in emerging regions, including Southeast Asia, Latin America, the Middle East, Europe, and Mexico.
This strategic pivot is designed to offset the impact of tariffs and explore new opportunities for growth outside of traditional markets. The geopolitical landscape surrounding EV batteries continues to shift, with trade restrictions and tensions influencing the global market dynamics.
The interplay of these geopolitical developments is likely to shape the future of the global EV battery market. Western nations will strive for greater independence from Chinese manufacturers while Chinese companies seek new avenues for expansion. As the competition intensifies, the outcome will have profound implications for the global automotive industry and the future of electric mobility.
As the demand for EV batteries surges, the global EV battery market experienced a remarkable 19% year-over-year growth in the first half of 2024.
Projections indicate that global EV battery demand will exceed 1.1 GWh by 2025, driven by the addition of nearly 20 million new electric vehicles. By 2030, demand is expected to approach a staggering 4 TWh, underscoring the urgency for countries to establish robust local supply chains.
In this evolving scenario, the average battery capacity for battery electric vehicles (BEVs) reached 64.7 kWh, a 6% increase compared to the previous year. In comparison, plug-in hybrid electric vehicles (PHEVs) saw an average capacity of 23.1 kWh, marking a 14% growth. The rising demand for smart electric vehicles, particularly in China, continues to be a significant driver of these trends.
Featured image: A Chinese EV battery maker showcases its latest technology at the 2024 Beijing Auto Show. Credit: Arnold Pinto
