Why can Tesla become one of the top two players in the global power battery market?

Market research firm SNE Research released data on the global power battery market shipment rankings in March, showing that the top three in the power battery market are CATL, LG Chem and Panasonic, of which LG Chem and Panasonic are both power battery suppliers for Tesla .

Before 2018, the top two players in the global power battery market were CATL and Panasonic, each of which accounted for more than 20% of the global power battery market. BYD, which ranked third, and LG Chem, which ranked fourth, were far behind the top two, with market shares of 11.6% and 7.5%, respectively.

CATL has achieved global dominance in the power battery market over the years, which is inseparable from the development of China's new energy vehicle market. Due to China's market subsidy policy, China's new energy vehicle sales have grown rapidly, and since 2015, China has become the world's largest new energy vehicle market.

In 2015, the Ministry of Industry and Information Technology formulated the "Automotive Power Battery Industry Standard Conditions". If the power batteries installed in new energy vehicles are not included in the catalogue, they will not be able to receive subsidies. The power battery companies included in the catalogue are all domestic companies. As a result, domestic power battery companies have obtained favorable development conditions. CATL has been the world's largest power battery company for many years, relying on China, the world's largest new energy vehicle market.

Panasonic was able to become the world's second largest power battery company at the time, benefiting from its status as Tesla's only power battery supplier. With Tesla's support alone, Panasonic's power battery shipments were already comparable to those of CATL, which shows how huge Tesla's demand for power batteries is.

In June 2019, China abolished the "Standard Conditions for the Automotive Power Battery Industry". Foreign-funded power battery companies have entered the Chinese market to set up factories, including LG Chem, which hopes to share in China, the world's largest power battery market.

At the end of 2019, Tesla's factory in Shanghai went into production. With the reduction in costs, Tesla significantly reduced the selling price of model 3 in the Chinese market. The sales of model 3 in the Chinese market increased sharply, with monthly sales quickly exceeding 10,000 units and ranking first in China's new energy vehicle sales.

LG Chem became the only power battery supplier for Tesla's Shanghai factory, and as a result, LG Chem's power battery shipments in 2019 increased by more than 60%; due to the reduction in domestic subsidies for new energy vehicles from July 2019, BYD's new energy vehicle sales declined in the second half of 2019, and BYD's power battery shipments fell by 5.93% in 2019. As a result of this, LG Chem defeated BYD by a slight advantage of 1.03 percentage points in 2019 to become the world's third largest power battery company.

Since 2020, Tesla's model 3 monthly sales in the Chinese market have basically remained above 10,000 units, and the monthly sales in December 2020 exceeded 23,000 units. With the increase in model 3 sales, LG Chem's share in the global power battery market has steadily increased, and its position as the world's third largest power battery company has become increasingly solid.

At the end of 2020, Tesla put the Model Y into production at its Shanghai factory. With the reduction in costs, the price of this model in the Chinese market dropped by 160,000 yuan, and its monthly sales exceeded 10,000 units. LG Chem's power battery shipments have further increased. Data released by SNE Research showed that in the first quarter of this year, CATL, Panasonic, and LG Chem ranked among the top three in the global power battery market, with market shares of 32%, 20%, and 17%, respectively. BYD, which ranked fourth, only accounted for 7%.

From the data in the first quarter of this year, it can be seen that Tesla alone supports two of the world's top three power battery companies, while other power battery companies are supported by many automobile companies. This shows how powerful Tesla is.