International automakers accelerate development of lithium batteries, ditch Chinese-made powertrains
January 21, 2024

International automakers accelerate development of lithium batteries, ditch Chinese-made powertrains

A growing market electric vehicles continues to fuel demand lithium batteries. Companies such as CATL, BYD, LG Electronics, SK Group and Panasonic are reportedly increasing investment in powertrains due to possible battery shortages.

Automotive supply companies say that when batteries become in high demand, some automakers will consider sourcing an entire powertrain service to ensure component supply. However, European, American and Japanese car manufacturers will not follow that direction because they are afraid of losing their dominance in production.

Chinese battery companies cover over 60% of lithium battery supply worldwide, with CATL and BYD supplying half of global demand.

Chinese domestic car manufacturers occupy about 60% of the domestic market share. As the trade war continues in 2024, many Chinese auto companies have expanded operations outside the country, putting pressure on international automakers and joint venture companies in China.

Car manufacturers will have to maneuver carefully in the lithium battery market

Sources claim that batteries account for 30% to 40% of electric vehicle costs, and as automakers rely heavily on battery suppliers, they can practically control only 60% to 70% of vehicle production. China has also developed its semiconductor and software capabilities. International automakers are expected to have to maneuver carefully in the lithium battery market.

These companies have tried to reduce their dependence on Chinese suppliers. This situation provides more opportunities for Taiwanese suppliers to position themselves as experts in tier-1 or tier-2 sectors. They also have experience in information and communication technologies, mass production and the international market.

On the other hand, Chinese battery makers are likely to face challenges from automakers. In addition to BYD, companies such as Great Wall Motor, Nio, Geely and many other Chinese auto companies have intensified their battery development.

South Korean companies LG Energy Solution, SK On and Samsung SDI have announced their plans to manufacture LFP batteries. It is expected to challenge Chinese competitors, which hold over 90% of the LFP battery market, between 2025 and 2026, it says DigiTimes. “K-trio” focused on ternary batteries. Mass production of LFP batteries takes a significant amount of time, primarily because OEMs must certify the products.

In order not to fall out of favor with Chinese manufacturers, international car manufacturers are also developing their own batteries. For example, Tesla runs on its 46800 ternary batteries. Toyota and Volkswagen are trying to make a battery with a solid electrolyte. Automakers are also actively involved in integrated circuit (IC) design, inviting Taiwanese factories to build plants in Europe, the United States and Japan.