As the United States implements the Inflation Reduction Act (IRA), the supply of electrolyte is expected to fall short of demand. Since Chinese electrolyte companies are unable to enter the U.S. market, it is anticipated that the role of Enchem, the largest domestic electrolyte producer, will grow to cover the shortfall.
According to industry sources on the 2nd, the total electrolyte demand in the U.S. is estimated to be 130,000 tons in 2023, 410,000 tons in 2024, approximately 450,000 tons in 2025, and about 500,000 tons in 2026.
This estimate is based on the projected total production capacity of secondary battery manufacturers in the U.S. It is expected to surge from 180 GWh this year to 310 GWh next year, then grow to 580 GWh in 2025 and 660 GWh in 2026. As secondary battery production increases, electrolyte demand is also expected to rise.
Founded in 2012, Enchem ranks as the fourth largest company in the global electrolyte market by market share. The top three companies worldwide are Chinese firms. Chinese companies have secured a strong market position by achieving economies of scale based on solid domestic demand.
On March 31, detailed guidelines of the U.S. IRA, focusing on the "de-Chinaization of raw materials," were announced, prompting secondary battery companies to focus on securing supply chains that can replace Chinese suppliers. Enchem has set a plan to rapidly expand its market share in the electrolyte sector. Enchem established its U.S. subsidiary in 2019 and is operating a plant in Georgia.
According to expansion plans of major electrolyte companies in the U.S., excluding Chinese firms, the production capacity of domestic and Japanese electrolyte companies other than Enchem is around 200,000 tons, which is insufficient compared to the estimated electrolyte demand of 500,000 tons in 2026. Enchem plans to continue expanding from its existing Georgia plant to produce 300,000 tons annually by 2026.
Enchem is pursuing vertical integration by expanding into the core material business that constitutes electrolytes. On the 17th, it established a joint venture with KOSDAQ-listed company Joongang D&M to expand into the lithium salt (LiPF6) business, a key electrolyte material. The lithium salt (LiPF6) market is also currently led by Chinese companies.
With the implementation of the IRA, the trend of de-Chinaization is expected to accelerate in the lithium salt market as well. The joint venture between Enchem and Joongang D&M will enter the North American lithium salt market by leveraging Enchem’s market position and supply chain in the U.S. As of 2025, the demand for lithium salt (LiPF6) for electrolytes in the U.S. and Europe is 160,000 tons, while production outside China is only 21,000 tons.
Through the joint venture, Enchem and Joongang D&M aim to increase lithium salt production capacity to 100,000 tons. This scale targets entry into the U.S. and European markets by utilizing Enchem’s overseas supply chain.
Currently, the largest lithium salt producer’s total production capacity is about 40,000 tons annually. Expansion plans for lithium salt production outside China remain minimal until 2025. If the joint venture between Enchem and Joongang D&M proceeds as planned, it is expected to create growth opportunities in the lithium salt market.
Recently, key executives of Enchem reportedly visited the U.S. to further specify their growth strategy in the American market. They are making efforts not only to build factories but also to expand the base of local customers.
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