Rising demand from electric vehicles (EV) and challenges in securing raw materials would deliver a battery supply crunch for automakers already grappling with a chip crisis, a key Chinese manufacturer said.
“When the chip shortage is over, the major supply shortage the industry faces would be batteries,” Yang Hongxin (楊紅新), chairman of SVolt Energy Technology Co (蜂巢能源科技), which has struck an agreement with Jeep-maker Stellantis NV, said in an interview. “The production capacity of battery cells will be tight in the next few years because expansion takes time.”
Global automakers are rapidly adding electric models as battery prices plunge and as governments set deadlines to phase out sales of new combustion-engine cars to help meet climate targets. Demand for lithium-ion batteries from transport and energy storage will surge to as much as 5.9 terawatt-hours a year in 2030, putting a strain on supply chains, BloombergNEF (BNEF) said in an annual New Energy Outlook report published on Wednesday.
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Availability of sufficient lithium products, copper foil and some cathode materials could become a constraint on the battery sector’s efforts to keep pace with demand, Yang said.
Current high raw material prices might not ease until the second half of next year and “the price pressure will have to be shared along the supply chain,” he said.
All key battery metals have seen prices advance over the past year, with lithium carbonate in China more than doubling. Gains in cobalt sulfate prices indicate a bottleneck in production of the material, BNEF said.
“Batteries could be the next EV component facing a potential shortage,” said Dennis Ip (葉捷賢), a Hong Kong-based analyst at Daiwa Capital Markets.
Lithium materials could be in deficit for the next two to three years, a factor that would potentially add to the cost of an electric vehicle, he said.
Changzhou-based SVolt, a spin-off of automaker Great Wall Motor Co (長城汽車), is seeking to add further exposure to lithium production, and is examining potential targets, including mines and salt lake operations in China, Yang said.
The producer is planning an aggressive expansion in manufacturing and aiming to have capacity of more than 200 gigawatt-hours by 2025 from less than 1 gigawatt-hour last year. That compares with proposals from industry leader Contemporary Amperex Technology Co to lift capacity to 550 gigawatt-hours, including joint projects, by the same date, BNEF data showed.
SVolt has announced about US$4.6 billion in four new expansion projects since the start of the year, including a 2 billion euros (US$2.4 billion) facility in Germany that would be the firm’s first factory in Europe. The company is also considering the addition of one or two further production bases in China, Yang said.
The company is continuing to plan to list on the Star board of the Shanghai Stock Exchange late next year or early in 2023, Yang said.
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