EV battery market is divided into three parts, competing for the next-generation car market

As the automotive industry shifts to all-electric vehicles, automotive batteries and power-related components will play an important role in the future. In September 20201, an analysis report released by South Korea's SNE Research showed that the world's largest supplier of EV (Electric Vehicle) batteries is still China's Contemporary Amperex Technology (CATL), which has grown by 6.9% to 30.3%, leading the pack. The second-ranked company is South Korea's LG Energy Solution, which has a market share of 24.5%, and has also grown by 1.5% over last year. China's BYD ranked fourth with a market share of 7.7% and a growth of 1.9%. In addition, Japan's PANASONIC and South Korea's SDI ranked third and sixth with -7.5% (13.3%) and -1.7% (4.9%), respectively. The growth rate of South Korea's SK On, which ranked fifth, was 0%. It can be seen that South Korean companies are catching up with Chinese battery companies by engulfing PANASONIC's market.

EV battery three kingdoms battle for the top spot

Lithium-ion batteries were developed by Akira Yoshino, who won the Nobel Prize in Chemistry. In the past, Japan was the main leader in research and development. However, with the rapid increase in global electric vehicle ( EV ) sales, competition in the automotive battery market has become increasingly fierce, and China has become the largest lithium-ion battery producer. Although Chinese companies currently occupy the largest market share, the three major Korean battery companies are actively seizing more market share while maintaining their market size, while Japanese companies are constantly losing market share under the pressure of the two enemies (Figure 1).

Figure 1: Global EV battery market supply from January to August 2021. Korean companies are catching up and threatening China's dominance. (source: South Korea's SNE Research; compiled by CTIMES)

According to data from SNE Research, the total amount of electric vehicle batteries from January to August 2009 was 162.0GWh, an increase of about 2.4 times over the previous year. However, due to the strong sales of Chinese and Korean companies, PANASONIC's market share performance has not only not grown relatively, but has deteriorated. PANASONIC analyzed the situation and found that with the global rush to invest in EV cars, TESAL is no longer the leader. The era of monopolizing the electric vehicle market has ended. In addition, Chinese and Korean battery companies can quickly grasp this change and actively expand their sales force. Therefore, the digital performance is very eye-catching, but PANASONIC did not fully grasp this wave, which led to a continuous retreat in market share. On the other hand, Prime Planet Energy & Solutions, a joint venture between PANASONIC and Toyota, plans to reduce the production cost of EV batteries

by 50% in 2022 to increase market share. Toyota has also invested 1.5 trillion yen and is expected to develop and produce EV batteries by 2030. Among them, 1 trillion yen of investment is used to establish a battery production line. By 2025, Toyota will add 10 new lithium-ion battery production lines. In addition, it is expected to gradually increase the number of production lines by 10 or more per year before 2030. At the same time, it is also cooperating with battery manufacturers to establish a production system. It is expected that there will be a total of 70 battery production lines with an annual output of more than 200GWh. In terms of development, Toyota plans to achieve the goal of reducing battery production costs by more than 50% by 2030 through two efforts. Including: 1. Reduce battery costs by more than 30%: Utilize the development of low-cost battery materials and mass production technology.

二、提高EV车30%的用电效率（耗电量），藉此再降低30%的电池容量成本。

三、EV车与电池的整合发展：包括将透过减少行驶阻力、减轻重量、改善空气动力学、避免剎车损耗等机械方面的努力，以及采用更高效率的功率组件，和电源管理来实现。

因此，在完善EV车基本特性的同时，也将采用新一代高效电池。以更具竞争力的价格来提供电动车（图二）。

Figure 2: The goal of reducing battery costs is achieved through the integrated development of EV vehicles and batteries (source: Toyota Motor; compiled by CTIMES)

外界却不看好这样的的计划，原因是韩国业者经开始投入研发如何降低电池生产成本，以及韩国媒体普遍认为，长期以来PANASONIC只专注于与TESLA和丰田来往，而对外面的电动车世界没有太大的兴趣，因此质疑PANASONIC是否真能藉此提升市占率。

Actively develop battery materials other than lithium-ion for automobiles

For automotive batteries, lithium is almost irreplaceable today, which has led to a surge in the production and use of lithium-ion battery raw materials, and also caused prices to continue to soar, forcing car manufacturers and battery manufacturers to do everything they can to find newer battery materials and process methods.

The world's lithium reserves are approximately 111 million tons, and are distributed in only a few countries, including Chile (40%), Australia (20%), and China and Argentina (less than 10%). The distribution is quite uneven (Figure 3).

Figure 3: Distribution of lithium material reserves in major producing countries, with a total reserve of about 111 million tons. (Source: U.S. Geological Survey; compiled by CTIMES)

As for the annual global lithium production, it was about 300,000 tons in 2017, about 400,000 tons in 2018, and steadily expanded to about 450,000 tons in 2019. In 2020, affected by COVID-19, the production was roughly the same as in 2019 at 433,000 tons. Australia is currently the world's largest lithium producer, accounting for about 50%, Chile accounts for about 20%, and together with China, Argentina and other four countries, they have accounted for more than 90% of the production. It is estimated that China's future production may increase slightly, because some salt lakes in China can obtain lithium, and some lithium ores can be mined. In addition, low-quality ores that have not been explored before are also being planned (Figure 4).

Figure 4: Major lithium material producing countries, with an annual output of approximately 433,000 tons in 2020. (source: U.S. Geological Survey; compiled by CTIMES)

In terms of price, since 2016, a surge in Chinese purchases has pushed prices up to around $18,000 per ton. In mid-2018, it was around $12,000, although it fell to around $5,000 at the end of 2020. It is currently rising again to $10,000 due to increased demand from China.

There are currently two ways to produce lithium materials: from ore mining or from brine reaction. The estimated cost of producing from ore is about $6,000 per ton; the price of $5,000 in 2020 is already lower than the production cost. The cost of obtaining lithium materials by brine reaction is lower than mining, about $4,000. Regardless of ore mining or brine reaction, the price of $5,000 is very hard for producers.

LG and SK change strategy and start producing low-cost LFP

As mentioned above, Korean companies have already started to develop low-cost automotive batteries. For example, LG Energy Solutions and SK on have changed their traditional strategies and started to use lithium iron phosphate (LFP) as a material to develop a new generation of automotive batteries. In the past, these three Korean battery companies were not interested in LFP. Basically, most of the companies that use LFP as a battery material are Chinese companies. Because it does not require the use of cobalt and nickel, it is cheaper than lithium-ion batteries in terms of cost, but the disadvantage is that the driving range is shorter than that of lithium-ion batteries.

In addition, the risk of fire of LFP is much lower than that of lithium-ion batteries. The most important point is that electric vehicles have begun to move towards low prices, and the demand for LFP is increasing. In such an environment, Korean companies feel that relying solely on technical capabilities can no longer bring advantages, and they must make adjustments under fierce price competition. Based on the fact that the patent of LFP will expire on April 27, 2022, LG Energy Solutions and SK on have begun to change their strategies and start producing cheaper automotive batteries at a lower cost.

Adjusting the cobalt-nickel ratio of NCMA to reduce material costs

LG Energy Solutions plans to produce and supply Lamination-type NCMA long batteries (580mm X 113mm) for GM heavy-duty electric trucks in Korea from October to December 2021. Currently, GM heavy-duty electric trucks use NCM622 (nickel 6: cobalt 2: manganese 2). Because the new Lamination-type NCMA long battery uses about 15% less cobalt material, the cost is much lower than NCM622.

至于GM和LG Chem的合资公司Ultium Cells LLC也将在2022年开始投产。Ultium Cells LLC已与北美电池回收商Li-Cycle签订采购镍、钴、锂和石墨等电池原材料的合约，重复使用材料藉以降低成本。而LG Energy Solutions也和Hyundai Motor合资于印度尼西亚建立年产10GWh的NCMA电池，由于印度尼西亚是全球最大镍储量国家，藉此在当地设厂就近取得镍原料，预计将可降低30%~40%的原材料采购成本。

SK on also plans to start producing low-cost NCM batteries at its plant in Georgia, the United States, in 2023, using a material ratio of 90% nickel, 5% cobalt and 5% manganese. It is expected to further develop NCM batteries containing 94% nickel in 2025. In addition, SK on also reduces greenhouse gas emissions through patented technology to extract high-purity lithium hydroxide from waste batteries.

Setting up factories overseas to cope with trade protectionism

According to market forecasts, the shortage of EV batteries will become more serious starting in 2023. Coupled with the impact of trade protectionism, China, the United States, and Europe have adopted policies that are favorable to their own electric vehicles and automotive batteries. Therefore, the three Korean battery companies are actively setting up production plants overseas to reduce the impact of trade protectionism, especially actively setting up factories in North America. For example, LG Energy Solutions has 4 factories and SK on has 5 factories. Samsung SDI is also actively planning to set up factories overseas.

In terms of annual production capacity, LG Energy Solutions expects to reach 155GWh by the end of 2021 and increase to 430GWh in 2025. SK on aims to increase to 40GWh in 2021, 220GWh in 2025, and further to a world-leading 500GWh in 2030. Samsung SDI's annual battery production capacity reached 30GWh at the end of 2020.