Analysis of the Lithium Battery Industry in 2023: Supply and Demand Insights

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Demand for Lithium Batteries:

In recent years, the global market for new energy vehicles has seen significant growth, especially in China, where the industry has surged beyond the global average. This trend suggests a robust future for the sector.

The global new energy vehicle market exhibited substantial growth in 2022, with sales reaching 10.522 million units, marking a 55.9% year-on-year increase. It’s anticipated that by 2025, global sales will hit 21.446 million units, pushing the penetration rate to 23%. China, specifically, has played a pivotal role, with sales reaching 6.884 million units in 2022 and an expected surge to 12.845 million units by 2025.

The rapid rise of new energy vehicles and energy storage systems has propelled the global demand for lithium batteries. Power batteries, vital for new energy vehicles, dominate this demand, while energy storage batteries contribute to new growth opportunities. The global demand for lithium-ion batteries in 2021 was 562.4GWh, where China accounted for 59.4%. Forecasts predict the global demand will reach 680 GWh by the end of 2023, valued at 660 billion RMB.

By 2025, demand is projected to skyrocket to 1,778 GWh, surpassing 1.4 trillion RMB. Power batteries constitute the main demand structure, with energy storage batteries emerging as a growing segment, increasing from 7% in 2021 to 14% in 2022.

Supply of Lithium Batteries:

Global production of lithium batteries has rapidly expanded in recent years, with China leading as the largest producer worldwide. The 2022 global lithium battery production reached 839 GWh, a 55.7% increase from the previous year, projected to rise to 2345 GWh by 2025.

China, Japan, and South Korea are major producers, with Chinese enterprises taking a leading role. China’s output accounted for 77% of the global market in 2022. The industry operates under an oligopoly pattern, with the global CR10 reaching 90% and CR3 at 64.3%.

Despite ample supply, industry leaders face the challenge of stagnant profits, and small enterprises may experience further market pressure. The industry’s high concentration indicates intensified competition, while profit margins for downstream enterprises are under strain due to increased battery prices.

Insights and Implications:

The lithium battery industry stands at a significant growth juncture, expecting rapid market expansion, possibly reaching over 1.4 trillion RMB by 2025. However, the surplus supply poses challenges to maintaining profit margins.

The industry landscape is fiercely competitive, favoring market concentration. Future improvements in environmental standards and technology may further enhance industry consolidation, squeezing opportunities for smaller enterprises.

To remain competitive, especially for smaller entities, the focus must be on advancements in battery materials, technology, and quality standards to carve out a resilient position in this evolving market.