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US and Europe will rule battery market by 2030.

 

After years of state support and Beijing’s desire to cut its own reliance on oil imports, China produces three-quarters of the world’s batteries and dominates production of their materials and components. The bank’s analysts say demand for finished batteries could be met without China within the next three to five years, thanks largely to big investments in the US by South Korean conglomerates LG and SK, which have been attracted by massive subsidies from US taxpayers. Goldman forecasts that the market share of the Korean battery makers in the US will rise to about 55 per cent in three years, from 11 per cent in 2021. The passage of the Inflation Reduction Act in August means huge tax benefits and other subsidies for localising battery supply chains and fuelling the uptake of EVs.

Goldman expects the «average eligible EV in the US» will receive more than $10,000 in benefits. Ross Gregory, partner of electric vehicle consultancy New Electric Partners, said despite the passage of the IRA and the surge in gigafactory investment, the Goldman costs estimate appeared far too low, the timeframe optimistic, and the expectations for the impact of battery recycling unrealistic. « As an example, there hasn’t been a notable Australian greenfield battery mining project developed with any foreign major investment at all,» he said. «The likely growth of EV infrastructure in China over that period is going to be so massive that it will still outstrip Europe and the US».

Reducing China’s dominance in battery materials and components is also seen as a challenge. Goldman analysts said this could be unwound by protectionist policies in Europe and the US, alternative battery chemistries and battery recycling. Still, the underlying economics of EV battery production in the west stands as a fundamental barrier. «We note capex per unit implied from recent company announcements in the US is 78 per cent higher than China,» the analysts noted.
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  1. Michael22 November 2022 at 12:28

    I don't think the US and Europe combined can take down China when it comes to batteries. Not even in the next 10-15 years. They would need a miracle to do it but they can grow in this industry considerably and should do so. We shouldn't rely on 1-2 countries for anything, no matter who those are.

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