Energy & Chemicals Industry Analysis

China’s Power Battery Market Shuffled in 2019

In 2018, the sales value of li-ion batteries in China reached CNY 172.70 billion, increasing by 8.70% YOY; the production volume of li-ion batteries reached 124.20 billion watts, increasing by 23.10% YOY. The fast expansion of the lithium-ion market was mainly driven by the growth of power batteries for new energy vehicles. In 2018, the sales value of li-ion power batteries reached CNY 89 billion, increasing by 14.10% YOY; the production volume reached 65 billion watt-hours, increasing by 45.70% YOY. The newly installed capacity of ternary batteries was 33.10 billion watt-hours, accounting for 58.20% of the newly installed capacity of power batteries; the newly installed capacity of LFP batteries was 22.19 billion watt-hours, accounting for 39%.

China is the world’s largest lithium battery market. Rapid development has brought about many problems, which requires breakthroughs in battery safety and application of new materials. Frequent battery safety incidents have aroused great concern from the government. For example, the new subsidy policy released in 2019 slows down the improvement of battery energy density.

With lower subsidies, whole-industrial-chain cooperation is required for reducing battery production costs.On one hand, battery manufacturers need to expand production scale. On the other hand, they should raise the automation level of production lines for higher product consistency and quality. The batteries produced by Japanese and Southern Korean enterprises are of higher quality than those made by Chinese enterprises. And they also have great cost advantages. If China opens its new energy vehicle market, domestic automakers are likely to purchase batteries from abroad, which will be a great challenge to Chinese battery manufacturers.

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