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Survey carried out by BNEF (BloombergNEF) pointed out that the China continues to dominate global battery supply chain rankings of lithium-ion, for the third time in a row, both for 2022 and its projection for 2027, thanks to continued support for EV (electric vehicle) demand and investments in raw materials.
The country currently houses 75% of all battery cell manufacturing capacity and 90% of anode and electrolyte production. Rising lithium prices have also led to greater investment in carbonate and hydroxide refinery facilities in the country, making it the leading refiner of battery metals worldwide.
Despite this growth, the research showed that other countries are applying policies to create demand for batteries and secure raw materials needed to support your transition for electric vehicles.
According to BNEF, Canada rose to second place this year, which reflects its large raw material resources and mining activity, as well as its strong positioning in environmental, social and governance factors and infrastructure, innovation and industry .
The lack of significant cell and component manufacturing capacity means that most of the value of these resources is realized outside the country, although recent announcements from companies such as BASF, General Motors and Posco show an increase in battery investments.
“This year, changes in overall rankings were driven primarily by increased access to several key raw materials and manufacturing capabilities domestically,” said Allan Ray Restauro, metals and mining analyst at BNEF and lead author of the report.
“Countries that are not necessarily the largest producers or manufacturers, but have a significant presence in multiple areas in the extraction of metals and minerals for batteries, as well as manufacturing, have fared better than countries that primarily excel in a single commodity or component”, he pointed out.
According to the executive, success in the battery supply chain is increasingly determined by more than one category or metric. “A solid foundation in the wealth of domestically realized resources, reinforced by responsible and ethical production, is the main theme of this year’s rankings, as countries and industry strive for a sustainable supply chain.”
The US fell to third place in the rankings despite strong growth in demand for batteries due to the Inflation Reduction Act. The country ranked in the top 10 in all categories except ESG, where they ranked 16th.
According to the study, strong battery demand for stationary storage and rapidly accelerating passenger vehicle sales (increasing from 5% in 2022 to 34% in 2027) ensure it is at the top of the leaderboard.
Despite the US recording the biggest improvement of any country in raw materials for 2022, it will still depend on battery raw material imports, especially from its free trade partners such as Australia.
“The Inflation Reduction Act is a big boon for U.S. battery demand, but more importantly, it will change the supply landscape in the coming years,” commented Yayoi Sekine, head of energy storage at BNEF.
“The law is the closest thing to battery industrial policy the U.S. has ever had, and it makes this the most exciting decade for the American battery industry. Companies seek to maximize incentives for the production of battery cells, modules and materials and meet credit requirements for electric vehicles, which will bring more capacity to the country and its allies”, he added.
European market
Most European countries declined their overall performance this year, with Finland and the Czech Republic being the only exceptions. Finland ranked first in Europe and ranked fourth overall.
The report indicated that the country's growing battery metals supply chain, relatively clean electrical grid, and quality infrastructure position it favorably among the top lithium-ion battery countries.
A lack of domestic raw materials from Germany and Sweden has led to a drop in their rankings in 2022. Despite the continent's low raw materials scores, battery manufacturing is growing.
Germany and Hungary will increase their battery manufacturing capacity to match Poland as cell and component factories come online in the coming years.
“Many European countries are successfully capitalizing on the potential of their supply chain, but the declining trend in the region this year indicates that growth in Europe is starting to be outpaced by North Americans and Asians,” said Ellie Gomes-Callus, metals and mining analyst at BNEF.
“European countries such as the Czech Republic, Hungary and Poland continue to have advantages in their ability to provide cleaner and more sustainable supply chains. This will reinforce their growth ambitions and advance their case as preferred destinations for investment in battery manufacturing,” he emphasized.
Other markets
China, South Korea and Japan were the top three countries across all battery manufacturing metrics. They have historically had the most established manufacturing bases, with supportive industrial policies.
U.S. cell production capacity surpassed Japan in 2014 and South Korea in 2016. Most operational multi-gigawatt-hour cell manufacturing facilities in the world are owned by a Chinese, Japanese, or Korean company (the Tesla's Nevada Gigafactory was developed in conjunction with Panasonic).
In 2022, South Korea and Japan announced domestic and overseas expansions of cell production capacity as well as supply chain strategies to secure critical materials.
In BNEF's 2027 rankings, South American countries recorded the biggest drops, mainly Brazil and Bolivia. Brazil remains a strong competitor due to the strength of its raw materials, but has fallen to 21st place in the 2022 rankings due to poor ESG performance.
According to BloombergNEF, Bolivia was at the bottom of the rankings this year. It only performed well in 2021 in raw materials due to its huge lithium reserves.
Most resource-rich countries rank low in the overall score as they generally lack domestic battery manufacturing capacity and demand for electric vehicles.
Countries such as Indonesia, Chile, South Africa and the Democratic Republic of Congo are seeking to reverse this trend by using the competitiveness of their raw materials as an advantage to attract downstream investment across the supply chain.
Policy incentives to boost EV adoption, clean energy supply and industrial infrastructure will help these resource-rich countries attract the downstream investment needed to build domestic lithium-ion battery supply chains.
In the report, BNEF ranks 30 leading countries in the lithium-ion battery supply chain based on 45 metrics across five key themes:
- Availability and supply of essential raw materials;
- Manufacturing of battery cells and components;
- Local demand for electric vehicles and energy storage;
- Infrastructure, innovation and industry;
- ESG considerations.
