Car battery business. The 10 Largest and Most Important Battery Companies in…

Car battery business

As the auto market embraces electric vehicles, battery demand is soaring. Bold moves in gigafactory construction, supply chain strategy, and talent acquisition can help industry players get ahead.

As the world shifts up a gear in its transition to electric vehicles, the demand for batteries has skyrocketed in major automotive markets in Europe and the United States. Automotive and battery manufacturers face a difficult period of uncertainty in the battery supply chain, and many are turning to building their own battery gigafactories or forming joint ventures to address squeezed supply.

The demand is expected to grow by around 30 percent, nearing 4,500 gigawatt-hours (GWh) a year globally by 2030, and the battery value chain is expected to increase by as much as ten times between 2020 and 2030 to reach annual revenue as high as 410 billion. 1 Nicolò Campagnol, Alexander Pfeiffer, and Christer Tryggestad, “Capturing the battery value-chain opportunity,” McKinsey, January 7, 2022. In 2030, 40 percent of demand for lithium-ion batteries is expected to come from China (Exhibit 1). The forecast points to an even split between the two most common chemistries: lithium iron phosphate (LFP) and lithium nickel manganese cobalt oxide (NMC). Approximately 90 percent of the demand will come from mobility applications—most importantly, electric vehicles (EVs). Overall, the growth has catalyzed an unprecedented level of investment that battery manufacturers must get right to stay competitive while other industries pursue the same scarce resources.

This speed of scaling new technology leads to notable challenges: shortages of labor and materials, delays in the construction of gigafactories to produce batteries at scale, and competition for resources in the supply chain, among others. In fact, the battery supply chain risks facing a situation similar to the current semiconductor chip shortage, where demand growth has outstripped capital investment in new supply. Furthermore, environ­mental, social, and governance (ESG) factors will play a more significant role—raising another set of issues that companies need to address.

The situation is difficult and novel. Yet it presents significant opportunities for growth across the value chain for those who choose to address the issues at hand and accelerate their move into the EV battery market. These players are of three primary types: incumbent battery manufacturers expanding their operations, auto OEMs entering the space to support their EV ambitions, and smaller new entrants using disruptive technologies.

This article focuses on three key measures for preventing or responding to EV battery shortages: industrialization and scale-up of gigafactories, strategies to find and retain talent, and establishment of a robust and efficient supply chain.

Cost-effective scale-up of gigafactories

Once facilities come online, first-year yields are often only around 60 percent of nameplate capacity, with losses split evenly between higher-than-expected yield losses and machine downtime. Quality issues during battery manufacturing also present a challenge in terms of both reputation and finance; for example, recalling batteries for 100,000 vehicles could turn a 5 percent profit into a net loss of more than 150 percent, due to lost sales and reimbursement costs.

Best practice for facing these challenges focuses on three critical building blocks: factory design, construction schedule optimization, and governance and performance management structures.

Factory design

To build in flexibility, companies could consider factory designs that are as modularized as possible, including prefabricated complex factory components. Companies could also adjust standard factory design in line with local battery plant design standards and optimize for space (such as clean-room volume) and cost.

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Factory layout based on simple process flow, combined with a serious reduction of material conveyance, could further reduce operating expenses and production time. Reconsidering the different production processes not as separate areas but as pieces that fit together seamlessly could also help drive design efficiency. Allowing enough room for additional capacity would avoid extensive factory redesign down the line.

Construction schedule

Once a design is finalized, a robust, fully optimized construction schedule needs to be developed for the factory to be built without delays and extra expenses. A fundamental role of the construction or project delivery team is to avoid hindering the critical paths of equipment production; compared with conventional manufacturing environments, battery production equipment is vastly more complex to deliver and ramp up. Labor demand could be forecast by project stage against local supply to predict shortages and adjust the schedule accordingly, thereby limiting the degree and impact of reduced labor supply. Cutting-edge and AI-driven scheduling software could help determine optimal paths, such as the load-balancing capacity of different trades on the construction site, and could schedule updates as soon as new information becomes available.

Coordination between factory design engineers and base construction workers—using an integrated digital twin of the factory to support ideation and action—is the key to effective construction planning. Critical-path lengths could be reduced by running as many construction steps in parallel as possible, while digital and lean construction tools could be leveraged to improve the productivity of inexperienced workers.

Governance and performance management structures

Detailed governance procedures and performance management are essential to successful construction and to meeting planned start-of-production dates. Companies could create the necessary capability and performance management systems, such as scrapping-rate KPIs, at the head office and local level. They could also consider working with engineering or design firms to set up centers of competency to ensure that labor is used effectively with any available engineering, procurement, and construction management (EPCM) systems. Thereafter, a coordination model between the local facility, head office, and center of competence could be established to ensure closed-loop communication and synchronization between stakeholders.

All employees would need to be trained as early as possible, leveraging company and industry experts. Having leadership present can avoid bottlenecks in decision making. Principles such as ownership and flexibility to pivot on decisions can provide the basis for training and company culture.

Effective talent and labor retention strategy

A successful gigafactory project needs a highly competent and productive workforce, both during construction and in the subsequent operation of the factory. One of the most important practices here is to make the local labor market a key factor in site selection to ensure a sufficient supply of needed skill sets relative to industry activity in the area. Decision factors could include available construction and operations labor, the attractive­ness of the region within a reasonable commuting radius, and regional labor pools that could be tapped into—for example, for trades with limited local capacity. Another best practice is to invest in local infrastructure to facilitate a localized cell component supply base.

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Companies could consider offering training to local supervisors at existing facilities to transfer best practices and navigate cultural differences. They also may need to look beyond the local labor market to fulfill the demand for technicians and battery technical specialists.

Robust and efficient supply chains

To avoid delays and cost overruns, companies need to consider sourcing—particularly battery manufacturing equipment and raw materials—during construction and production operations. All aspects of the battery value chain are expected to grow rapidly through 2030, with cell production and material extraction being the largest markets (Exhibit 2). That growth will likely create ongoing supply chain challenges.

Battery manufacturing equipment

For battery-specific equipment, lead times of one and a half years from ordering to commissioning are common because of the Rapid growth in gigafactory construction. In fact, some OEMs are starting to secure critical equipment now for construction planned for 2025.

For battery-specific equipment, lead times of one and a half years from ordering to commissioning are common because of the Rapid growth in gigafactory construction.

To secure the supply of battery manufacturing equipment, companies can choose from four approaches. The ideal scenario is to secure supply from equipment suppliers that have existing battery expertise; the next best option would be to find ones with similar expertise. A few OEMs might also leverage their own equipment expertise from other industries to revolutionize the production of battery manufacturing equipment or—in the most disruptive scenario—redesign the cell manufacturing process through technological innovation.

Raw materials

Developing a robust strategy for procuring raw materials can help companies control costs and secure factory ramp-up. Raw materials come from either newly extracted and refined metals or recycled end-of-life batteries or production scrap.

Newly extracted materials present challenges. They are expected to represent the vast majority of total supply through 2030, so battery manufacturers are highly dependent on commodity material prices. And recent supply chain disruptions have significantly increased the price of key materials by more than 20 percent, which caused the costs of lithium-ion batteries to increase in 2021—the first time in many years.

Strengthening the supply of raw materials. In the short term, battery manufacturers could consider signing multiyear supply contracts with mining companies to limit the effect of price fluctuations. In the longer term, as more batteries reach end of life, battery recycling could provide materials both from the manufacturers’ own batteries and from other sources. Manufacturers could include a recycling agreement in the original battery sale, which would further expand the potential supply. Larger manufacturers might also consider investing directly in raw-material extraction and refining to secure supply and gain exposure to the rapidly expanding value pool of materials.

Localizing the supply chain. While significant investments across the battery value chain are expected globally, there is an increasing trend toward localizing battery manufacturing near EV manufacturing facilities. That said, the supply chain for battery manufacturing has not yet coalesced around this trend.

Similarly, battery raw-material refining takes place primarily in Asia, with potentially fewer prospects for localization than battery and equipment manufacturing. Since unrefined raw materials typically have lower fractions of the target material, refining facilities are preferentially based near the sources of raw materials, rather than their end markets. A further complication is that metal refining is an energy-intensive process, making energy cost-competitiveness another critical factor when selecting refinery locations.

Buying batteries from other suppliers. The challenges outlined above, as well as the large capital cost of gigafactories, leave some EV players buying batteries from larger suppliers rather than investing in their own gigafactories. This is often a tactically defensible decision for smaller players that are planning only a limited entry into the EV space, as well as for companies wanting to maintain strategic flexibility. For instance, start-ups may lack the assets required to build a gigafactory or the time to wait until construction is complete.

Larger companies entering the more nascent subsectors within EV markets—such as electric trucks or buses—may consider buying batteries because of the low demand expected for these specialized applications in the foreseeable future. And companies that prefer to be fast followers may choose to buy batteries initially as a way to learn about which technologies will become dominant and to ascertain their anticipated battery needs before making large capital investments.

EVE

Described as one of the most inventive EV battery manufacturers in the industry, EVE has continually overcome some of the most challenging technical problems in the car battery industry again and again. Thanks to their more than 2,200 researchers and developers and more than 3,600 patents, EVE might not be as large as some of these other manufacturers but it’s still worth including here because of the sheer amount of innovation and creativity coming from this company on a regular basis.

Automotive Energy Supply Corporation, also known as AESC, emerged in 2007 as a joint lithium-ion battery venture between companies Nissan, NEC, and Tokin Corporation. Far ahead of much of the competition in their interest in EV batteries, AESC eventually led to the production and innovation of the Nissan Leaf. The Leaf was one of the first electric vehicles to hit the market and remains one of the most popular options on the market today. AESC continues to improve its EV batteries on an annual basis, which makes them deserving of a spot here on this list.

Grepow

As one of the planet’s biggest battery manufacturers, Grepow sets itself even further ahead of the competition with its highly customizable product. Known for the production and distribution of specially shaped batteries with a high discharge rate, Grepow quickly made a name for itself by providing clients with advanced research, development, production, and sales capabilities for more than 20 years now.

CALB Technology, also known as China Aviation Lithium Battery Technology, is currently China’s largest battery manufacturer with a reach across the planet. CALB USA, based in California, specializes in the creation and distribution of special lithium-ion batteries. While the company has only recently entered into the electric vehicle sphere, there’s no doubt that CALB’s continued advancement will keep them a part of this important list.

SKI

SK Innovation, also known as SKI, is a leading innovator in the Korean energy industry — not just today, but for the past half-century. SKI’s lithium-ion batteries were the first to successfully bring high-energy ternary materials to the electric vehicle industry, making them an essential part of this list of the largest and most important battery companies in the world. SKI might be localized to South Korea for the time being, but there’s no doubt their remarkable technology could grow even bigger around the globe in the years to come.

Samsung SDI — a division of Samsung created to manufacture EV batteries and other various electronic materials — stands apart from the competition because of its wide variety of uses and products. From IT devices to appliances to Energy Storage Systems (ESS) to electric vehicles and everything in between, Samsung SDI belongs on this list because of the sheer number of useful products under the company’s banner.

BYD

BYD, Ltd. — an abbreviation for Build Your Dreams — is a Chinese manufacturing conglomerate currently working hard to create an EV battery that redefines the industry’s pre-existing safety standards. Created with the intention of squashing safety concerns once and for all, BYD ranks among the largest and most important battery companies because of this determination and drive to do something new and improved.

Panasonic’s lithium-ion batteries can be found in both hybrid and electric vehicles alike (including Tesla, which relies on Panasonic and Panasonic alone for its advanced battery). Created in close collaboration with the car companies themselves, Panasonic’s lithium batteries are both efficient and environmentally friendly. At Panasonic, being conscious of their environmental impact is just as essential as creating an efficient and effective car battery. This is what makes them one of the best and most important battery companies in the world.

Chinese Dominance

Despite efforts from the United States and Europe to increase the domestic production of batteries, the market is still dominated by Asian suppliers.

The top 10 producers are all Asian companies.

Currently, Chinese companies make up 56% of the EV battery market, followed by Korean companies (26%) and Japanese manufacturers (10%).

The leading battery supplier, CATL, expanded its market share from 32% in 2021 to 34% in 2022. One-third of the world’s EV batteries come from the Chinese company. CATL provides lithium-ion batteries to Tesla, Peugeot, Hyundai, Honda, BMW, Toyota, Volkswagen, and Volvo.

Despite facing strict scrutiny after EV battery-fire recalls in the United States, LG Energy Solution remains the second-biggest battery manufacturer. In 2021, the South Korean supplier agreed to reimburse General Motors 450.9 billion to cover the 143,000 Chevy Bolt EVs recalled due to fire risks from faulty batteries.

BYD took the third spot from Panasonic as it nearly doubled its market share over the last year. The Warren Buffett-backed company is the world’s third-largest automaker by market cap, but it also produces batteries sold in markets around the world. Recent sales figures point to BYD overtaking LG Energy Solution in market share the coming months or years.

The Age of Battery Power

Electric vehicles are here to stay, while internal combustion engine (ICE) vehicles are set to fade away in the coming decades. Recently, General Motors announced that it aims to stop selling ICE vehicles by 2035, while Audi plans to stop producing such models by 2033.

Besides EVs, battery technology is essential for the energy transition, providing storage capacity for intermittent solar and wind generation.

As battery makers work to supply the EV transition’s increasing demand and improve energy density in their products, we can expect more interesting developments within this industry.

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Shanghai Electric Guoxuan New Energy Technology Co., ltd.

Increasing its market share by a further 1%, Shanghai Electric Guoxuan New Energy Technology Co., Ltd (Guoxuan) provides advanced battery technology with a standardised production line design with a system-level refined thermal design and build. Quality is a critical component of its battery production, which is managed by a Cloud-based platform, leveraging real-time system monitoring and optimisation.

CALB supplies high-tech battery solutions that meet the needs of China’s public transport sector, by developing innovative units for public e-buses, but also powering vans, trucks, and delivery vehicles for the likes of UPS.

Samsung SDI

The battery development and renewable energy arm of Samsung is a critical player in the EV market. With a 5% market share, the business marks the integration of automotive and technology as it provides customers with batteries for vehicles, as well as other electronic components.

The battery developments from SK On supplied units to Hyundai, Kia, and is working in collaboration with other leading manufacturers. The firm expects to grow in other areas that support e-mobility, such as battery-as-a-service (BaaS) offerings and designing solutions for energy storage.

Panasonic

We’re not referring to the arm of the business that makes TVs and other appliances. As an electronics organisation, Panasonic is one of the main providers for the industry as it remains at the forefront of battery innovation for EVs. The company celebrates 40 years of battery leadership across various markets.

The battery manufacturer, BYD is wasting no time in electrifying the Asian market, which resulted in the growing EV manufacturer that we see in the news almost daily. The company has grown significantly with operations venturing into US and European markets to take on some of the leading car manufacturers on the planet.

LG Energy Solutions

In September 2022, LG Energy Solutions received an order for EV batteries exceeding US200bn and has become one of the most desirable businesses to work with to secure battery supply for the mass production of cars. The company offers more than just power solutions, providing the tech to manage battery systems and integrate them into vehicle bodies.

CATL provides some of the most sophisticated battery technologies globally and holds the majority market share globally, let alone among the entirety of Asia.

The company provides for various industry applications, enabling battery-electric solutions for mining and construction as well as the main transport solutions. The firm is also driving port electrification through innovation and has high stakes in EV infrastructure.

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