The global sales volume of electric vehicles (EV) is expected to increase by 29% in 2023, reaching 13.7 million units, with a penetration rate of 17% on global vehicle market according to an analysis by the renowned technology market organization Canalys. China is expected to maintain its position as the largest EV market, with local sales projected to reach 7.6 million units, accounting for 55.5% of the global new energy vehicle market. The market trends of EV not only affect the installation rhythm of power batteries but also their materials and prices. As end-user car companies continue to demand lower costs and improved performance from power batteries, the power battery industry is expected to face new challenges and changes in 2024.
Fast Charging
One of the challenges is the increasing demand the battery with fast-charging performance to address the range anxiety of EV. Currently, Chinese companies have achieved widespread application of 4C fast charging, and some of them have developed batteries that can meet 6C fast charging scenarios. More advanced 8C batteries are also in the research and development stage. On August 16 of last year, CATL, a Chinese battery giant, released a 4C "Shenxing" super-charging battery made of lithium iron phosphate, attracting more and more battery manufacturers to iterate fast-charging batteries towards super fast charging, long endurance, low cost, and high safety.
The development of fast-charging batteries is underpinned by advancements in electrode materials, electrolyte formulations, and battery management systems. These improvements allow for faster ion transport and heat dissipation, which are critical for fast charging. For instance, silicon-doped anodes or advanced cathode materials like nickel-rich NMC (nickel manganese cobalt) can improve charge rates. These materials offer better conductivity with higher energy density, and enabling faster charging without losing battery life or safety.
Moreover, the fast-charging infrastructure is also evolving to support these advancements. Ultra-fast charging stations is capable of delivering 350 kW or more are being deployed, which can charge compatible EVs to 80% within 20 minutes. This development not only reduces charging time but also enhances the usability and convenience of EVs, further more promoting their adoption.
Battery Capacity
Another challenge is the impending rise of large cylindrical batteries to address mileage anxiety. Among many new cells and new technologies, the commercialization path of large cylindrical cells is clearer. First proposed by leading car company Tesla, large cylindrical cells have obvious advantages in capacity, safety, energy density, and rate performance compared to small cylindrical or square cells. As production efficiency and yield are improved, car companies like BMW and NIO have also started to adopt high-capacity cells. In October 2023, Tesla's 4680 cell production exceeded 20 million units, marking the completion of Tesla's "from 0 to 1" phase and entering a new stage in the industrialization process of large cylindrical cells.
The 4680 cells introduced by Tesla bring several technical improvements. One of the key advancements is the tables design, which reduces internal resistance and allows for faster charging/discharging. This design simplifies manufacturing, improves thermal management, and contributing to the overall performance included safety of the battery.
In terms of energy density, large cylindrical cells offer significant improvements over previous cell formats. For instance, Tesla's 4680 cells have the energy density of around 300 Wh/kg, which is about 20% higher than the company's previous 2170 cells. The increase in energy density translates to longer driving range, addressing one of the main concerns of potential EV buyers.
Other battery manufacturers are also developing large-format cells. For instance, CATL is working on its own version of large cylindrical cells, known as the "Cell to Pack" (CTP) technology. These cells are expected to offer similar benefits in terms of energy density and charging speed, further pushing the boundaries of EV performance.
Industrialization of LMFP
Many battery companies are trying to improve the comprehensive performance of power batteries, with the industrialization of LMFP (lithium manganese iron phosphate) cells accelerating. Compared to LFP (lithium iron phosphate) cells, LMFP cells have higher energy density and better low-temperature performance: the introduction of manganese can increase its theoretical energy density by 10-20%. At -20°C conditions, the capacity of LMFP cells can reach 95% of that at normal temperature. Compared to ternary lithium cells, LMFP cells also shows higher stability and cost advantages.
The superior performance of LMFP cells can attribute to the material science aspects of these batteries. The introduction of manganese into the crystal structure of the cathode material enhances electronic and ionic conductivity, which improves the overall performance of the battery. Moreover, LMFP cells exhibit better low-temperature performance, which is a critical factor for EVs operating in cold climates.
The latest LMFP cell prototypes have shown promising results. For instance, CATL's LMFP cells have the specific energy of around 180 Wh/kg, which is significantly higher than traditional LFP cells. Moreover, LMFP cells have demonstrated excellent cycle life, with a capacity retention of over 80% after 1000 cycles. These performance metrics make LMFP cells an attractive option for next-generation EV batteries.
Global Market Expansion
In 2023, China EV exports reached 1.203 million units, a year-on-year increase of 77.6%, to Europe, Southeast Asia, Middle East, and South America as the main destination. With the rapid momentum of China's EV going overseas, the overseas expansion of China's lithium battery industry chain is accelerated. This includes domestic car companies represented by BYD and SAIC, as well as battery companies like CATL and EVE Energy. Chinese EV companies are mainly focusing on Southeast Asia and Europe. Compared to the past when Chinese battery companies went overseas in the form of Packs and modules, in 2024, they are going overseas market which have gradually shifted to planning battery cell production capacity. It is expected that the overseas expansion of China's lithium battery industry chain will bring new perspectives to battery companies in the global market.
Chinese companies have established significant investments, joint ventures, and partnerships abroad, reflecting their global expansion strategy regarding EV with power battery. For instance, CATL has announced plans to build a new battery factory in Germany, which will be the company's first overseas production facility. Similarly, BYD has established a joint venture with Toyota to develop EVs for the Chinese market.
Securing raw material supplies is a strategic priority for these companies. Lithium, cobalt, and nickel are critical for the production of lithium-ion batteries, and their supply is subject to geopolitical risks. Chinese companies have been actively investing in mining projects and forming partnerships with raw material suppliers to ensure a stable supply. It happened on manufacturing facilities, know-how transferring, and manpower as well.
In terms of market share, Chinese EV and battery companies are making significant inroads in key regions like Europe and Southeast Asia. For instance, CATL has become the largest supplier of EV batteries in Europe, with a market share of over 40%. Similarly, BYD has become a major player in the Southeast Asian EV market, with its vehicles accounting for a significant portion of EV sales in the region.
In conclusion, the power battery industry is undergoing significant changes and advancements, driven by the increasing demand for EVs. Fast charging, large cylindrical cells, and LMFP cells are some of the key trends shaping the industry. As Chinese companies continue to innovate and expand globally, they are expected to play a pivotal role in the future of the power battery industry.
