Utilisation of capacity in China’s battery industry was down to 45% during 2022 and the rate has declined further in 2023, according to UK commodity consulting company CRU.
In a research note issued on 5 September, it said the planned gigafactory capacity in China will be 4,200 GWh by 2030, corresponding to twice the number of batteries necessary to turn all vehicles in China into electric vehicles (EVs). It based its findings on primary research by its battery team on recent site visits.
“A dramatic influx of investment by both new and incumbent manufacturers has led to an increasingly crowded battery market in China. However, the Chinese market can be characterised as a near-oligopoly, where CATL and BYD hold a colossal 73% market share,” it stated.
In 2022 the Chinese battery cell manufacturing capacity was estimated to 893 GWh, with 480 GWh exported and 261 GWh consumed within China. Six of the world’s top 10 battery manufacturers are headquartered in China. Bloomberg and the newsletter Elements report that total capacity of all battery types in China is expected to be 6,197 GWh. Analysts point to China’s dominance being due its control of anode, cathode and other refined battery material production.
Bloomberg has estimated that China’s competitors will have to invest $87–102 billion to catch up with China and to replace imports with local supply chains for batteries by 2030.
Zhu Huarong, chairman of Changan Automobile: “China’s power battery industry is currently suffering from a serious overcapacity and the sector is bound to return to a rational state. The actual need is 1,000–1,200 GWh, not the planned 4,200 GWh. High battery prices were caused by factors including raw material price increases, capital speculation, sellers’ hesitation to sell and middlemen hoarding.”
Morgan Stanley analyst Jack Lu’s team stated that despite a near-term recovery in orders for China’s battery industry, there will still be excess battery capacity and price competition is inevitable. “More and more second-tier battery suppliers are adopting increasingly aggressive pricing strategies, and market leader CATL may have to do the same.”
Photo: CATL presenting its new superfast charging battery at a launch in Beijing in August