Chinese battery companies, known for their strength in lithium iron phosphate (LFP) batteries, are leveraging ternary batteries, which are the mainstay products of Korean battery companies, to increase their market share in Europe.
According to a report titled “Factors and Implications for Chinese Companies’ Increased Market Share in the European Electric Vehicle Battery Market” published by the Korea Institute for International Economic Policy (KIEP) on Oct. 19, the rising market share of Chinese battery companies in Europe is attributed to the increased adoption of Chinese-made ternary batteries.
While the European market share of Chinese battery companies was merely 11.8% in 2019, it saw consistent growth, reaching 40.1% between January and July this year. On the contrary, Korean companies’ share surged to 70.6% in 2021 but dropped to 57.0% during the same period this year.
Research indicates that Chinese companies are boosting their market share through the export of ternary batteries instead of their main LFP products. The report found that 90% of the European sales volume of Chinese battery companies consisted of ternary batteries, leading to the diagnosis that “the driving force behind the rise of Chinese companies in the European market is not LFP but ternary batteries.”
Data from SNE Research cited in the report shows that CATL, ranking second in the European market following LG Energy Solution, had a battery deployment of 29.4 gigawatt-hours (GWh) from January to July 2023, of which 26.8GWh (91%) were ternary batteries. Last year, the proportion of CATL’s ternary batteries was even higher at 96%.
The report also mentioned other Chinese companies like Farasis and CALB supplying ternary batteries to European automakers.
In contrast, the market share of LFP, the primary product of Chinese battery companies, in the European EV market stood at just 1.5% last year and 3.5% between January and July this year.
The ternary batteries exported by Chinese companies to Europe mainly include mid-nickel products like NCM523 and NCM622. While Korean companies target premium lines with high-nickel products, Chinese companies have secured customers by offering relatively cheaper mid-nickel ternary batteries.
China holds 85% of the ternary precursor market and has vertically integrated the supply chain for battery minerals and materials, giving it a superior cost competitiveness.
Assessments suggest that Chinese companies are rapidly catching up with Korean companies in ternary battery technology, reducing the technological gap to approximately two years. CATL, a leading Chinese battery company, invested around 1.8 trillion won (US$1.3 billion) in research and development (R&D) in the first half of this year alone.
With Chinese companies expanding their technological territory even into the ternary batteries, which are the forte of Korean companies, competition in the European market is expected to intensify.
Chinese battery companies, expanding beyond their domestic market, continue to invest in Europe, with projections estimating their production capacity in Europe to reach 465 GWh by 2030 (compared to 856 GWh for Korea).
Korean companies are currently developing products such as high-voltage mid-nickel batteries, cobalt-free batteries, and manganese-rich batteries. Their strategy is to maintain performance while strengthening cost competitiveness.