Quick Bites | Can we make EV batteries without China?

With the growing market share of Electric Vehicles in overall automobile markets, we need to consider China’s dominant position in the global electric car battery industry and the challenges faced by other countries in catching up. China currently leads in every step of the lithium-ion battery production process, from mining rare minerals to manufacturing the final battery components. This control gives China a significant economic and geopolitical advantage, which may take decades for other countries to overcome.

Source: New York Times


China has secured a cheap and steady supply of essential rare minerals by acquiring stakes in mining companies worldwide, including cobalt mines in Congo and lithium mining operations. China’s control over these minerals enables it to determine who gets access and at what price. Additionally, China’s investments in countries like Indonesia position it to become the largest controller of nickel, another crucial battery mineral.

Most of the minerals mined globally are sent to China for refining into battery-grade materials. Chinese refineries benefit from government support, cheap land, and energy, allowing them to refine minerals at larger volumes and lower costs compared to other countries. Western countries have limited processing capabilities, partly based on environmental standards, which poses a challenge in achieving self-reliance in the battery supply chain.

China also dominates the production of battery components, including cathodes, anodes, separators, and electrolytes. Cathodes, in particular, are the most difficult and energy-intensive component to manufacture. China’s investments in cheaper alternatives, such as lithium iron phosphate (LFP) cathodes, have given it a significant market share. Other countries seeking to enter the battery industry often need to collaborate with Chinese companies to gain access to the necessary expertise.

China’s dominance extends to battery assembly and electric car production. Chinese manufacturers like CATL (Contemporary Amperex Technology) and BYD (Build Your Dreams) have become the largest in the world, benefiting from years of state funding and experience. They can build battery factories at lower costs due to factors such as lower labour costs and cheaper land.

While the US and other developed countries are striving to develop battery industries, they face challenges such as high capital costs, thin profit margins, and the need to train workers in new skills. China’s substantial investments in research incentives, government contracts, and consumer subsidies have helped it lead in production, equipment, and product design.

Some believe that achieving self-reliance in the battery supply chain without cooperation with China is nearly impossible. Companies worldwide will likely seek partnerships with Chinese manufacturers to enter or expand in the industry. China’s dominant position in the electric car battery sector provides it with a significant advantage that may be challenging for other countries to overcome in the near future.



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