China is dominating the global battery market backed by overwhelming growth in its home market. Stopping China’s rise in the global battery industry has become a big challenge for Korea, which ranks second in the market behind Chinese companies as well as the United States and Europe.
Six of the world’s top 10 battery companies in 2023 were Chinese (CATL, BYD, CALB, Guoxuan, EVE and Xinwangda), according to market research firm SNE Research on Feb. 12. Their combined market share stood at 63.5 percent.
Korean companies accounted for 23.1 percent of the market in 2023 with three in the top 10. The trio was LG Energy Solution, SK on and Samsung SDI. Japan was led by Panasonic while posting a 6.4 percent share.
The share of the three Korean battery makers shrank by 1.6 percentage points from 24.7 percent in 2022, while that of Chinese battery makers expanded by 3.9 percentage points, further increasing its market dominance.
In particular, CATL and BYD, the world’s No. 1 and No. 2 players, recorded high growth rates of 40.8 percent and 57.9 percent, respectively. LG Energy Solutions slipped to third place, losing the second spot to BYD for the first time on an annual basis. BYD is a company that makes batteries and electric vehicles together, and has been growing rapidly due to its overwhelming price competitiveness.
China’s influence is on the uptick in the global EV market and not just in batteries. Last year, BYD surpassed Tesla to take the top spot in annual global electric vehicle deliveries (BEVs plus PHEVs, including commercial vehicles). Its market share reached 20.5 percent. Tesla came in second with 12.9 percent.
Governments of other nations are scrambling to come up with measures to stifle China’s rise in the global EV and battery industries. The United States has been wary of China’s battery production through the Inflation Reduction Act (IRA) and, more recently, Chinese EV sales.
“Electric vehicles and autonomous vehicles collect a tremendous amount of information about drivers, the locations of the vehicles, and what is going on around the vehicles,” U.S. Commerce Secretary Gina Raimondo told the Atlantic Council, a think tank, in January. “We don’t want that kind of information falling into the hands of China.”
Former U.S. President Donald Trump, a leading Republican presidential candidate, vowed to get tougher with China, saying on social media channels that Biden administration was selling the auto industry to “a big, powerful China.”
Europe is also tightening trade barriers against Chinese electric vehicles. In October of 2023, the European Union announced that it was launching a 13-month anti-subsidy investigation into Chinese EVs. “The global market is being flooded with cheap Chinese electric vehicles,” said EU Commissioner Ursula Von der Leyen. “Massive state subsidies keep the prices of Chinese EVs low, distorting the market.”
Korea also recently announced a plan to overhaul electric vehicle subsidies. The main features of the reform are that more subsidies will be given to high-performance EVs, and battery efficiency and recyclability will be the main criteria on subsidies. This favors electric vehicles with high performance batteries from Korean companies and Korean-made electric cars with higher mileage than that of Chinese electric cars.
China, too, monitored these global moves and began to strike back. Recently, the Chinese government has prepared a national plan involving both central and local governments and the central bank to support Chinese companies’ trade in new energy-powered vehicles.