This Battery Summit was held at the Tokyo Gakushi Kaikan on January 14, 2022. In this article, we will try to summarize by listening to a video presentation in English that was provided for this event by SMM (Shanghai Metals Market) of China and was played at the venue on the day of the event.

 

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SMM's presentation was titled "China New Energy Vehicle and Power Battery Industry Development and Review". Mr. Gono, an analyst of the company, was in charge. The focus was on the spread of NEVs (New Energy Vehicles) in China, especially the LFP batteries (lithium iron phosphate batteries), which are a type of lithium-ion batteries that are becoming more popular in China.

 

First of all, the NEV market in China is experiencing a large-scale expansion. Going back to the process of dissemination, before 2018, NEV was not a very attractive option for consumers because the technology was in the early stages, the development of auxiliary facilities was not sufficient, and the cost was high. As a result, the sales volume was not good. There are three main drivers of increased demand from that point to the present: national policy, continued cost reductions, and increased consumer acceptance of EVs.

 

EV sales in 2020 fell again due to a pandemic caused by the new coronavirus and suspension of production, but in the latter half of the same year, NEV demand in China recovered and surged. Along with this, the sales volume is also accompanied by this, and this situation is said to continue until now.

 

NEV sales volume (estimated) in China in 2021 is 3.49 million units (growth rate 12%). By 2025, it is expected to reach 10 million units annually and a growth rate of 25%. As for the future outlook, it was stated that with the development of battery technology, the cost-effectiveness of EVs will eventually catch up with that of conventional vehicles.

 

 

Graph of NEV production in the world and China (from presentation materials)

 

 

Next, looking at the power battery market in China, this demand will increase explosively in 2021. It is expected that this growth will continue in the future. It can also be seen that the transportation volume has been increasing continuously in recent years. It is predicted that it will increase from 170 GWh in 2021 to 617 GWh in 2025.

 

By type of battery, the percentage of LFP batteries is increasing rapidly. From 38 percent in 2018 to 53 percent in 2021 (although the table predicts that the percentage of LFP will fall below 50 percent again in 2025).

 

 

Graph Trends in the LIB market in China and breakdown by battery type (from presentation materials)

 

 

So why are LFP batteries so popular in China?

 

1. Soaring raw material prices this year

As a result, there are automobile manufacturers such as Tesla that are shifting the batteries used from ternary batteries (Ternary Batteries) to relatively inexpensive LFP batteries.

 

 

2. Abolition of subsidies

China's NEV market is gradually shifting from policy-led to consumption-led, and the national subsidy policy is scheduled to be completely abolished by the end of 2022. By the way, if you look at the history of China's national policy on NEV, it can be roughly divided into three eras: 2009-2013: early policy, 2013-2019: large subsidy period, 2019-2022 : It was a period of rapid decline in subsidies.

 

From 2017 to 2019, there were many companies that chose high energy density tertiary batteries to obtain subsidies (= cost reduction as a result), but China's new energy subsidies after 2019 Under the gold policy, relatively fixed NEV technical indicators were required, and manufacturers who needed to further reduce costs were gradually switching to LFP batteries.

 

 

 3. 3. Technological progress

In China, new technologies have been born in recent years. For example, advances in battery technology such as CTP and blades and the explosive increase in low-end models provide the growth base for LFP batteries.

 

The future forecast is that the market share of LFP batteries in China will continue to expand in the short term, that is, for the next 1-2 years. Will the percentage peak around 2022? However, in the long run, ternary batteries, which are also advantageous in terms of energy density, will continue to be the mainstream.

 

 

Breakdown of power batteries by battery and demand for LEP raw materials (from presentation materials)

 

 

(IRUNIVERSE AC)

 

 

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