After four years of consecutive growth, the global battery market is experiencing a bit of a setback this year, with a “sizeable” decline in investments according to Rystad Energy research.
The decline can be largely attributed to a drop in battery infrastructure investments in mainland China, Rystad Energy said, as China grapples with policy change, increased electric vehicle (EV) adoption, supply shortages, rising raw material costs, and capacity expansion.
China has largely maintained its position in lithium-ion battery development due to its early adoption of industrial-scale projects and “rapid” production growth to match its EV expansion plans, Rystad Energy said. This led to a production surge of more than 40% in both 2021 and 2022. Although the pace of annual growth has slowed since 2022, Rystad Energy argues this is a “consequence of maturity and sustained capacity expansion.” Now that China is self-sufficient in its own battery supply, it’s looking at Europe and the U.S., where manufacturers are still progressing from the planning stage to production.
The U.S. has experienced exponential growth in lithium demand with increasing concerns over supply chain security, Rystad Energy said. Europe and the U.S. are both struggling with getting their industrial infrastructure up to speed, but policies are being implemented to reduce the reliance on Chinese supply chains.
“China’s dominance in battery investment and lithium trade seems unshakeable for the foreseeable future, given their control over key resources,” asserted Duo Fu, vice president of battery market research at Rystad Energy. “However, building a battery factory from scratch takes years and navigating local regulations adds even more time. This means the market two years from now remains unpredictable. Collaboration across the entire supply chain is crucial for the industry’s health”
China is consolidating its domestic industry as it aims to offer “higher-quality” battery products through diversified technological advancements, Rystad Energy said. Some companies from non-traditional sectors unable to compete on price have since left the market following a slowdown in demand.
