The Electric: The U.S. Is Ramping Up. China Is Ramping Up Faster
In recent months, the U.S. and Europe have taken enormous steps to eliminate China's near-monopoly on lithium-ion batteries, the strategic heart of electric vehicles, as the industry begins to take off. But this week we look at the reality that China's dominance of batteries is likely only to become greater by the end of the decade, and that Western production will have to grow faster if the U.S. and Europe want to catch up.
A few days after signing a law last month creating a $100 billion war chest to build a U.S. battery industry and loosen China’s grip on the global supply chain, President Joe Biden crowed, “American manufacturing is roaring back.” He added, “I believe we can own the future of the automotive market.”
The U.S. may one day supply its own electric vehicle batteries, but China’s hold on the industry—powered by a dozen years of massive state and private corporate spending—is on track to only grow this decade. In one new analysis, Benchmark Mineral Intelligence, a U.K.-based battery research firm, projects that in 2030 Chinese companies will manufacture 87% of the world’s cathodes, the nervous system of a lithium-ion battery, up from 78% this year.
Others, including the U.S., have gotten serious about EVs. The cathode output outside China will increase 2.8 times this decade, Benchmark projects. But China’s output will grow an astounding 5.3 times, extending its dominance. “China is really going to maintain its status as the stronghold of the cathode value chain,” said George Miller, a Benchmark analyst.
The new forecast, which aligns with those of other leading research firms, suggests that even in the 2030s, Western companies will have extreme difficulty dislodging China as the dominant force in the global battery industry. The U.S.-based industry could go some distance toward serving the needs of U.S.-based EV companies, but will still rely heavily on China. For now, as we have argued, U.S. battery makers have much to learn from China as they get started.
