Recently, EVE Battery made an announcement regarding the signing of a Memorandum of Understanding with Energy Absolute Public Company Limited. The collaborative objective of the two entities is to establish a joint venture in Thailand, aimed at constructing a battery production facility with a minimum capacity of 6 GWh. The joint venture will serve as the primary entity responsible for overseeing the implementation of this initiative.
As per EVE Battery’s statement, the MOU signing paves the way for seamless integration of valuable resources and synergies between the two entities. This integration is aimed at facilitating the seamless advancement of their international business endeavors. Through this collaborative effort, the aim is to effectively address the demands of customers in Thailand and throughout Southeast Asia, while simultaneously bolstering the companies’ impact, overall competitiveness, and global reach within the lithium battery market. This strategic move marks a significant stride in the companies’ worldwide industrial expansion efforts.
Amidst the rapid growth of the new energy vehicle and energy storage sectors, the demand for lithium batteries is intensifying. The global expansion of China’s lithium industry is gaining momentum, as prominent battery enterprises make remarkable strides in capturing a substantial portion of overseas market shares. Moreover, emerging domestic players have successfully amassed their resources and are progressively making inroads into mainstream clientele and international markets.
Why Opt for Overseas Manufacturing Facilities?
As commonly understood, the domestic lithium industry chain has reached a mature stage. When companies contemplate establishing factories abroad, they inevitably confront challenges such as escalated costs, labor shortages, limited industrial land availability, power inadequacies, and divergent work cultures.
Given these obstacles, what prompts them to persist with the notion of overseas factory construction?
The answer lies in the relentless expansion of international markets. The conventional approach of transporting batteries from domestic facilities to overseas markets via shipping or other transportation methods is no longer the most cost-effective solution. Consequently, the option of establishing manufacturing units overseas becomes a priority. It has been observed that numerous Chinese power battery enterprises are opting to set up factories in Europe. This strategic choice primarily stems from the presence of European automobile manufacturers in the region. By shortening the distance between the demand and supply side through local manufacturing, costs can be minimized to their utmost extent.
Furthermore, the imposition of constraints on the localization of lithium industry chain in international markets, exemplified by measures like the U.S. IRA Act and European carbon emission policies, has also spurred China’s enterprises into proactively strategizing their presence in overseas markets. As localization initiatives gain traction in Europe and the United States, the overseas demand has surged, prompting Chinese lithium enterprises to expedite the expansion of their production capacities abroad.
The overseas establishment of manufacturing facilities by power battery enterprises holds the potential for cost mitigation. Additionally, when viewed through the lens of bolstering supply chain robustness, this approach empowers enterprises for the future, thereby enhancing their ability to engage in global competition.
Battery Industry: Domestic Enterprises Venture Abroad for Manufacturing
Lithium industry players are ramping up their global expansion efforts once again. Renowned companies like CATL, EVE Battery, and Gotion High Tech have unveiled substantial battery orders from international automotive giants, prompting them to accelerate their overseas factory construction endeavors. In the midst of this flourishing market, numerous participants in the lithium sector are making significant strides by establishing manufacturing facilities overseas. This strategic push is driven by their ambition to vie for clientele and secure a share of the burgeoning orders.
Let’s take CATL as the initial example. Over recent years, CATL has been steadfastly expanding its overseas production capacity. In the European market, its inaugural overseas manufacturing facility has been established in Thuringia, Germany, with a projected output of 14 GWh. CATL has publicly stated that this facility is primed for large-scale production, featuring localized manufacturing and supply capabilities tailored to the European clientele. CATL’s subsequent European venture is slated for Debrecen, Hungary, aiming for an impressive capacity of 100 GWh.
Turning to the U.S. market, CATL has embarked on a groundbreaking approach in partnership with Ford, leveraging technological licensing. Their strategy involves a substantial $3.5 billion investment to create a 35 GWh lithium iron phosphate battery plant in the state of Michigan. This innovative tactic effectively serves as a buffer against policy uncertainties.
Furthermore, Envision Group, Gotion High Tech, EVE Battery energy, SVOLT, Farasis Energy, and other trailblazing enterprises are also making swift inroads into international markets, expediting the establishment of a comprehensive global industrial footprint. Based on preliminary data, China’s lithium battery companies are collectively planning overseas manufacturing capacities exceeding 600GWh.
Development in Overseas Market among Lithium Battery Enterprises
Midstream material enterprises are also accelerating their presence in the international arena.
The impetus behind facilitating Chinese enterprises to capitalize on the current global surge in energy storage lies in the inherent advantages embedded within China’s lithium industry chain. These advantages position Chinese enterprises at the forefront of reaping benefits from the rapid expansion of the energy storage market. In the realm of lithium, China boasts an exceptionally comprehensive industrial ecosystem, underpinned by years of technological prowess and resource accumulation. Additionally, the nation possesses a wealth of mineral resources. Consequently, both Europe and North America find themselves reliant on China’s industrial chain to a considerable extent in order to satisfy their own requisites.
Starting from 2023, midstream material enterprises have significantly ramped up their activities in international markets. When it comes to battery materials, China boasts an impressive production capacity, commanding 42% of the global total for positive electrode materials, 65% for negative electrode materials, 65% for electrolytes, and 43% for separators. These statistics unequivocally illustrate China's commanding presence across pivotal stages of lithium battery material manufacturing.
Layout Progress of Anode Material Enterprises in Overseas Markets
In the realm of anode materials, manufacturers are actively pursuing global opportunities to expand their business horizons and bolster their market shares. Their primary objectives revolve around establishing manufacturing facilities and cultivating commercial operations across key regions in Asia (Indonesia and South Korea) and Europe (Hungary, France, Finland), among others. On the front of ternary materials, the year 2023 has witnessed notable momentum from companies like Easpring and Ronbay Technology, who have accelerated their capacity deployment strategies. They’ve made substantial investments, with Easpring committing to a 60,000-ton anode materials project in Finland, while Ronbay Technology embarked on an 80,000-ton project in South Korea.
In a recent move, Ronbay Technology convened a conference focused on their globalization strategy, targeting core production capacities in East Asia, North America, and Europe. Additionally, they have ambitious plans to expand global production capacities encompassing ternary cathode materials, ternary precursor materials, sodium electrode cathode materials, and lithium manganese ferro-manganese phosphate materials. As for lithium iron materials, Lopal has undertaken a significant endeavor by launching a 100,000-ton lithium iron phosphate cathode materials project in Indonesia.
Turning to anode precursor materials, Huayou Cobalt has embarked on an expansive journey, orchestrating cooperative ventures in Indonesia, South Korea, and Hungary. Similarly, manufacturers like CNGR, Dowstone Tech, and GEM have invested in precursor projects, solidifying their commitments through cooperation agreements with Korean counterparts.
In the arena of battery equipment, leading technology and superior performance have catapulted prominent equipment companies such as Wuxi Lead Intelligence, Yinghe Technology, Lyric, and Hymson to secure a considerable number of orders from European clients. This trend underscores China’s growing prominence as a preferred choice within the European power battery industry. With precise development within the European market assuming paramount importance, enterprises within the battery industry chain stand to reap substantial benefits.