Europe and the US are set to challenge China’s lithium-ion battery supply chain dominance in the next decade, according to industry analysts BloombergNEF.
The US’ move up the rankings to second this year— where it’s forcast to remain for 2026— was helped by having the second largest EV market after China, and federal policy aimed at establishing a domestic battery supply chain.
The assertions were made in the analysts’ second annual ‘Global Lithium-Ion Battery Supply Chain Ranking’ report.
The report ranks 30 leading countries across the lithium-ion battery supply chain based on 41 metrics across five key themes: availability and supply of key raw materials; manufacturing of battery cells and components; local demand for electric vehicles and energy storage; and policy and environmental considerations.
James Frith, BNEF’s head of energy storage, said: “The US has many of the ingredients needed to foster a domestic lithium-ion battery value chain, but in the past, individual companies like Tesla have had to forge a path by themselves.
“Now that there is policy support in place, we are seeing a coordinated effort from companies across the supply chain to anchor more value within the country.”
Europe’s rise up the ranking is helped by Finland opening the world’s largest refinery for nickel and cobalt sulphate, and Umicore and BASF investing in the country; and Northvolt gigafactory in Sweden, which will be the first European-owned plant of its size when commissioned later this year.
While European countries are ranked individually in the BNEF report, the ability for tariff-free trade between countries in Europe means that, as a continent, its battery demand is second only to China.
If ranking Europe as a whole, it comes first in BNEF’s ranking in 2021 and 2026.
For example, Germany (3rd), Sweden (4th), Finland (6th), Norway (7th) and France (9th) all rank inside the top 10, with the UK coming in at 11thplace.
Cecilia L’Ecluse (pictured), energy storage analyst at BNEF said: “Europe has set the ambitious goal of supplying all of its own battery demand for the region by 2025, and has committed billions of euros in state aid to attract investments in the battery supply chain. We are now starting to see the results of this effort.”
However, China continues to dominate global lithium-ion battery supply chain ranking up to 2026, thanks to continued investment and strong local and global demand for its lithium-ion batteries.
China hosts 80% of all battery cell manufacturing capacity today, with capacity expected to more than double to more than 2TWh in the next five years.
South Korea (10th) and Japan (8th) rank lower in 2021 compared to last year, but Japan is on track to rise up through the ranking to take third place in 2026, as domestic demand increases alongside continued investments in materials refining and component production.
However, both countries environmental scores continue to hold them back— a result of the high carbon intensity of their power grids.
Resource rich countries
Most resource-rich countries rank lower in the supply chain ranking as they generally lack a domestic battery supply chain and battery demand. However, some of these countries, such as Australia (13th) and Finland, have managed to move up the rankings.
Allan Ray Restauro, metals analyst at BNEF commented: “A few resource-rich countries are leveraging their metals supply to attract more investments into their domestic battery industry.
“Indonesia is shifting its focus downstream to become a key player in the global battery value chain, while Canada and Finland are looking to provide a greener alternative for battery metals supply.
“Countries like Australia, Philippines and South Africa also have potential to capitalise on their resource wealth to retain more value from the supply chain.”