[Dominating Chinese Battery] '1000km per Charge' Technology and Price Competitiveness with Sodium Battery

Supply Chain, Technological Capability, and Government Support 'Triple Harmony'
Promoting Quantitative Growth Centered on LFP Batteries
Rapid Increase in NCM Battery Patent Numbers

Editor's NoteThe growth of the Chinese battery market is fierce. Backed by massive domestic subsidies, China has achieved economies of scale and continuous technological innovation in the battery sector. As a result, it has secured a market share well over half of the global battery market. Even South Korea, which is fiercely competing with China in batteries, is absolutely dependent on China in the minerals and materials sectors. The dependence on China in the materials sector, from mineral raw materials such as lithium and nickel, which are basic raw materials, to precursors (cathode material raw materials), exceeds 80%. We took a closer look at the competitiveness and market situation of the rapidly growing Chinese battery market and the response strategies of Korean companies.

Time magazine in the United States selected China's Ningde Times (CATL)'s 'Qilin' battery as one of the inventions that changed our lives. This battery, which CATL began mass production of in the first quarter of this year, is said to be able to travel 1,000 km on a single charge. By applying a single intermediate layer structure to the battery pack, it reduced volume and increased energy density. It not only extends driving range but also keeps the battery cooler, allowing faster charging. It takes only 10 minutes to increase the battery charge from 10% to 80%.

Chinese battery company Hina Battery partnered with electric vehicle manufacturer JAC Motors last month to introduce the first electric vehicle equipped with a sodium-ion battery in China. The driving range per charge is about 250 km, which is only half the level of current electric vehicles. However, related companies believe this product could change the market landscape.

Sodium-ion batteries use sodium instead of expensive minerals like lithium or nickel, making them cheaper. It is said to be a 'game changer' that can significantly reduce the price of electric vehicles. CATL also plans to establish a sodium-ion battery supply chain this year.

China's 'battery rise' is accelerating. Although Chinese battery companies already dominate half of the global battery market, they say they are 'still hungry.' Under the support of the Chinese government, they have secured a solid supply chain from raw materials to electric vehicles, gaining an advantage over Korean and Japanese competitors. In the future, they may also overwhelm Korea and Japan technologically.

Although the United States has belatedly started strengthening its supply chain to check China, it is expected to be difficult to completely exclude China. Our battery companies are competing with Chinese companies through a high-quality strategy, but at the same time, they are in a position to strengthen supply chain cooperation.

More than half of the batteries applied to electric vehicles sold worldwide last year were Chinese batteries. SNE Research estimated that among the 690 GWh of batteries used for electric vehicles worldwide last year, CATL accounted for 270 GWh (39.1%). BYD achieved a 12.2% share with 84 GWh. Also, CALB, Guoxuan, EVE, and Sunwoda were among the top 10.

On the other hand, the combined market share of the three Korean companies LG Energy Solution (92 GWh), Samsung SDI (27 GWh), and SK On (44 GWh) was only 23.6%. The market share of Korean batteries is less than half that of China.

In particular, BYD, which has achieved vertical integration of batteries and electric vehicles, rapidly grew to a global market share of 17.6% as of January, catching up with LG Energy Solution (13.0%). BYD, which surpassed Tesla last year to become the world's top electric vehicle seller, plans to launch new commercial vehicle models in Europe and Japan. It is expected to enter the Korean market within this year.

A major strength of Chinese batteries is cost competitiveness. They have pursued quantitative growth centered on inexpensive lithium iron phosphate (LFP) batteries. The low price comes from the raw material supply chain secured by China. China controls the entire value chain from mineral mining to processing and production, holding the market in key minerals.

China also holds the world's highest market shares in battery components: 65% in cathode materials, 42% in anode materials, 65% in electrolytes, and 43% in separators. This is why there are expectations that the detailed regulations of the Inflation Reduction Act (IRA) to be announced by the U.S. at the end of this month will significantly retreat from initially excluding China. Without China, it is almost impossible to make batteries.

In the past, Chinese batteries were evaluated as cheap but technologically inferior products. However, the situation has changed recently.

Regarding LFP battery patents, China had fewer applications than the U.S., Korea, and Japan from 2010 to 2015, but in 2021, it filed the most patents. China has also filed the most patents for nickel-cobalt-manganese (NCM) batteries, where Korean companies have strengths, since 2016. The technological gap is narrowing.

However, there are voices of concern about rapid growth even within China. Chinese President Xi Jinping expressed mixed feelings at a closed-door meeting with business representatives held in line with the National People's Congress (NPC) on the 6th (local time), saying, "I am pleased that China's vehicle battery company CATL has become the world's largest battery company, but at the same time, I am worried." This is interpreted as concern over the recent slowdown in the Chinese electric vehicle market, which has grown with subsidies, leading to battery inventory accumulation.

Experts advise that we must compete fiercely with China in the global market while cooperating closely. Eun-Kyo Cho, a senior researcher at the Korea Institute for Industrial Economics and Trade, said, "Since dependence on China for key minerals is high, we need to strengthen the supply chain through diversification strategies to compete in advanced markets such as the U.S. and Europe."

However, China cannot be excluded. Researcher Cho added, "We will also seek new opportunities for cooperation in third countries by utilizing China's supply chain." This means establishing a battery strategy toward China that involves both competition and cooperation, which may sound contradictory at first glance.