The global lithium-ion battery industry has evolved over the past decade, forming a three-way competitive landscape dominated by China, Japan, and South Korea. However, the future of this structure is uncertain as traditional automotive powers in Europe and the United States are now entering the power battery market with renewed vigor. This shift could significantly disrupt the existing balance.
China, once seen as a low-end player due to limited technology, is now making a strong comeback. With the world's largest consumer market at its back, Chinese companies have been rapidly advancing their technological capabilities and commercialization efforts. The top 10 lithium battery manufacturers globally saw their combined market share rise to 72% in 2016, up from 68% in 2015. Companies like CATL (Ningde Times) and BYD have gained significant traction, with CATL’s valuation surpassing RMB 85 billion.
From a technical standpoint, while Japan and South Korea still lead in ternary battery technology, the gap is narrowing. Chinese manufacturers have made substantial progress in developing lithium iron phosphate (LFP) batteries, which are cost-effective and well-suited for certain applications. Additionally, many Chinese firms have been researching ternary materials for years, positioning themselves for long-term growth.
Another key factor is raw material supply. In the past, most battery materials were imported from Japan and South Korea. Today, China has become a major supplier, offering cost advantages that make it more attractive for global manufacturers. As a result, even Japanese and Korean battery producers rely heavily on Chinese components.
South Korea, on the other hand, faces growing challenges. Regulatory barriers in China have made it difficult for Korean battery giants like LG Chem and Samsung SDI to compete effectively. Several of their factories in China have been shut down or underutilized, and they’ve struggled to gain access to government subsidies. Meanwhile, incidents such as the "Sade" controversy have further weakened their position in the Chinese market.
In contrast, Japanese companies are taking advantage of the situation. Panasonic, for example, is setting up a joint venture in Suzhou to produce Tesla-compatible batteries. Other Japanese firms are also expanding their presence in China, aiming to capture a larger share of the growing new energy vehicle market.
China's power battery industry is now more self-sufficient than ever. Domestic suppliers like BYD, CATL, and Gotion are thriving, supported by a robust local supply chain and lower production costs. As a result, foreign battery makers are finding it increasingly difficult to compete in China.
With China’s dominance in the new energy vehicle market and its growing influence in the global battery sector, the traditional three-point world may soon be reshaped. While the future remains uncertain, one thing is clear: China is no longer just a player—it’s a rising force in the power battery industry.
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