The US and Sweden in the next five years are likely to gain importance in the global supply chain for lithium-ion (Li-ion) batteries that is dominated by China, according to a country ranking compiled by Bloomberg New Energy Finance (BNEF).

China in 2020 topped the ranking, having quickly surpassed Japan and Korea that were leaders in the previous decade, thanks to the Asian giant’s large domestic battery demand of 72 gigawatt hours. China also controls 80% of the world’s raw material refining, 77% of its cell capacity and 60% of its component manufacturing, according to BNEF data.

“Chinese manufacturers, like CATL, have come from nothing to being world-leading in less than 10 years,” said James Frith, BNEF’s head of energy storage.

“The next decade will be particularly interesting as Europe and the US try to create their own battery champions to challenge Asian incumbents who are already building capacity in both places.

“While Europe is launching initiatives to capture more of the raw material value chain, the US is slower to react on this.”

BNEF ranks countries in the Li-ion battery supply chain according to five key themes – raw materials, cell and component manufacturing, environment, RII (regulations, innovation and infrastructure), as well as end demand.

Europeans support manufacturers

The European Union as well as some of its member states, such as Germany, France, or Sweden, recently have promised massive support to attract investments into cell and battery manufacturing, in an effort to diminish their dependency on Asian imports.

The German government, for example, in August has pledged $525m in support to finance a battery cell factory by Northvolt in Sweden, which is also backed by German carmakers VW and BMW.

BNEF said as the demand for electric vehicles grows, there is an increasing need for cell manufacturing close to automotive production. Next to cell plants, the rest of the supply chain is also slowing making its way to Europe. Helped by strong environmental credentials, five European countries made it into the top ten in the 2020 ranking – Germany (rank 4), the UK (7), Finland and France (both at 8), and Sweden (10).

In 2025, the analysts see the ranking still dominated by China and followed by Japan - as in 2020 - but the US are seen moving up to the third spot, followed by Sweden (4), Canada (5), and Germany (6).

The positions expected in the ranking for 2025 are based on a country’s current trajectory, but if a country enacts “targeted policies and regulations”, there is ample time to improve its position, BNEF said.

The upcoming US elections, for example, could change things. If the US were to increase investments in raw materials and promote the adoption of EVs, it could even overtake Japan and China to be number one in 2025.

By contrast, the UK could see its position in the rankings fall in 2025 if it becomes unable to access the large demand in continental Europe, which, at 152GWh, will be around five times the size of its domestic market, BNEF said.

Transition

US and Sweden seen gaining muscle in Li-ion battery supply chain dominated by China: BNEF