30% of the world’s EV battery marketTesla’s factory in Shanghai now produces more cars than its plant in California. Some of the batteries that drive them are Chinese-made and the minerals that power the batteries are largely refined and mined by Chinese companies.
As the world transitions to electric vehicles (EVs), companies are racing to secure and strengthen their positions in the battery supply chain, from mineral extraction and processing to battery and EV manufacturing.
The sector has seen a move towards vertical integration – where one company controls a number of steps along the supply chain – to guarantee supply and, in some cases, to improve transparency.
And in what has been dubbed, the “battery arms race”, China is in pole position.
China is the world’s biggest market for EVs with total sales of 1.3m vehicles last year, more than 40% of sales worldwide. Chinese battery-maker CATL controls about . And cobalt specialist suppliers Darton Commodities estimate that Chinese refineries supplied 85% of the world’s battery-ready cobalt last year; a mineral that helps to improve the stability of lithium-ion batteries.
Most of that cobalt comes from the Democratic Republic of the Congo (DRC), where almost 70% of the mining sector is dominated by Chinese companies.
In Europe too, companies are beginning to gain on China’s lead. By the end of the decade, the continent is expected to have 28 factories producing lithium-ion cells, with production capacity due to increase by 1440% from 2020 levels, according to Darton Commodities. That growth is being driven by companies such as Britishvolt in Northumberland and Sweden’s Northvolt, as well as Asian firms expanding production into Europe.
AdvertisementHowever, European investment in mining and the production of battery precursor and cathode materials is not keeping pace, says Andries Gerbens at Darton. “China will eventually become less dominant. Nonetheless, it will remain a big player,” he says.
The US, however, lags behind, despite a $174bn investment “to win the EV market”, announced as part of President Joe Biden’s $2tn infrastructure package in April, although this has since been slimmed down.
Simon Moores, CEO of Benchmark Mineral Intelligence told a US Senate committee in June that China is building the equivalent of one battery megafactory a week compared with one every four months in the US.
He warned: “A new global lithium-ion economy is being created, yet any ambitions for the United States to be a leader … continue to only creep forward and be outstripped by China and Europe.”
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