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General Market Commentary
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General Energy
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General Market Commentary
Rise of The Lithium Ion Battery Megafactories: What Does 2018 Hold?
Since Benchmark Mineral Intelligence coined the term Battery Megafactory in 2014 the landscape of the lithium ion battery industry has changed significantly.
Early on, Benchmark noticed a step change in the way battery supply and demand was developing and the corresponding growth in the size of planned cell production plants on a multi-gigawatt scale. These larger facilities, with a capacity of producing 1GWh or more of cells per year (megafactories) were to become the new standard for the industry.
At the time, there were only three planned plants, Tesla’s Gigafactory in the US, LG Chem’s plant in Nanjing, China and Foxconn’s plant in Anhui, China which didn’t make it off the drawing board.
Today the Benchmark Mineral Intelligence megafactory tracker includes 26 battery cell plants that are either in production and due to expand capacity or new operations due to be in production by 2021.
The combined planned capacity of these plants is 344.5GWh. To put that into perspective total lithium ion cell demand in 2017 is estimated at 100GWh.
In the past 3 years China has been leading the way in investment for these megafactories, but more recently the rest of the world – most notably Europe – has woken up to the energy storage revolution and the need for locally produced cells.
China is still by far the dominant force in the industry with 49% of planned capacity totalling 169 GWh, the most recently added Chinese megafactory to the tracker was number 24, Great Power’s planned 10GWh plant in Guangzhou.
Following China is the EU, totalling 23% of planned capacity or 78.5GWh. Prior to 2017, the EU was falling far behind the rest of the world, with just one plant planned by LG Chem in Poland with 5GWh capacity.
The acceleration of activity in the European market was driven by two facilities – TerraE’s 34GWh facility in Germany and Northvolt’s 32GWh offering in Sweden. Europe is also the home for megafactory number 25, SK Innovations plant in Hungary with a capacity of 7.5 GWh.
Whilst the US is third on the list, with 53GWh and 15% of capacity it is worth noting that Tesla has further expansions planned for the Gigafactory beyond 2021 and have stated publicly that they expect to be able to achieve 150GWh out of the plant, no small feat as they get to grips with the mass market scale of production of the Model 3.
Lithium ion in 2018? More of the same
So what does the future hold? Benchmark expects the trend to continue into 2018 with new plant announcements likely.
Tesla is still to release official details of the planned facility in Shanghai , China which we fully expect to become a vertically integrated battery facility, and there will likely be further offerings (or joint ventures) from other auto manufacturers looking to build the foundations to become leaders in the EV space.
Raw material security is now firmly on the agenda of many major auto manufacturers – VW and China’s Great Wall Motor have been the most active in trying to secure lithium and cobalt of late.