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Asian manufacturers seen leading global EV battery market: S&P
Oversupply, consolidation looming over China.
Electric vehicle (EV) battery manufacturers in Asia are expected to further boost their investments in factories abroad to keep their global lead, according to S&P Global Ratings.
The credit rating agency said Asian companies will continue to expand their presence globally with Chinese firms seen increasing their market share in Europe amid ongoing tension between the US and China, which will pave the way for Korean and Japanese manufacturers to capture the North American market.
It said the EV market’s fast-changing dynamics give current market leaders the “first mover” advantages like China’s Contemporary Amperex Technology Co. Ltd (CATL) as well as Korea’s LG Energy Solution (LG Ensol)
Currently the world’s largest supplier of EV batteries, CATL is projected to keep its number one spot through 2025 while LG Ensol will remain in the top three.
“We believe battery makers with stronger export channels and global alliances will outperform in the coming years,” S&P said In a research note dated 4 October.
“They've built up capacity for a market that has not yet fully arrived. To keep their lead, they now need to shift more investments abroad, even with oversupply in some home markets,” it added.
S&P expects China’s domestic EV battery manufacturing to see a “meaningful consolidation” over the next three to five years as weaker companies struggle to stay afloat in a market flooded with supply and crowded with small players.
Ramping up exports will bode well for Chinese players already established in the global auto supply chains, it said, especially in Europe where there is less political risk and the EV market is rising fast.
Korean battery makers, meanwhile, will likely shift their focus to the US in the next two to three years as they chase the existing tax perks that incentivizes the establishment of onshore production facilities.
Japan’s Panasonic is also expected to set up onshore factories in America as it expands its battery business overseas, albeit in a less aggressive approach than its Chinese and Korean counterparts.
