China’s Battery Supply Chain Top BNEF Ranking for Third Consecutive Year; Canada is in 2nd place, the US falls to 3rd place – Green Car Congress | CarTailz

China continues to dominate BloombergNEF’s (BNEF) global lithium-ion battery supply chain ranking for the third consecutive year, both for 2022 and its forecast for 2027, on continued support for electric vehicle demand and commodity investment.

China currently hosts 75% of total battery cell production capacity and 90% of anode and electrolyte production. Soaring lithium prices have also led to increased investment in carbonate and hydroxide refining facilities in the country, making it the world’s leading refiner of battery metals.

Despite this growth, other countries are enforcing policies to increase demand for batteries and secure raw materials needed for the EV transition.

The ranking released at the BNEF Summit Bali sees Canada move up to second place this year, reflecting its large resource resources and mining activities, as well as its good positioning in environmental, social and governance (ESG), infrastructure and innovation, and industry.

A lack of significant manufacturing capacity for cells and components means most of the value of these resources is being realized outside the country, although recent announcements from companies including BASF, General Motors and Posco show a surge in battery investment.

This year, the changes in the overall rankings were mainly due to better domestic access to several key raw materials and manufacturing capabilities. Countries that are not necessarily the largest producers or manufacturers, but have a significant presence in multiple areas involved in battery metals and minerals extraction and manufacturing, fared better than countries that primarily excel in a single raw material or component . Increasingly, success in the battery supply chain is determined by more than one category or metric. A solid foundation of domestically realized resource abundance, backed by responsible and ethical production, is the main theme of this year’s ranking as countries and industry strive towards a sustainable supply chain.

—Allan Ray Restauro, BNEF Metals & Mining Analyst and lead author

The US fell to third place in the ranking despite strong growth in battery demand due to the Inflation Reduction Act. The US placed in the top 10 in all categories except ESG, where it was 16thth. Strong battery demand for stationary storage and rapidly increasing passenger car sales (rising from 5% in 2022 to 34% by 2027) keep it high in the rankings. Despite the US posting the largest improvement of any country in raw materials for 2022, it will continue to rely on raw material imports for batteries, particularly from its free trade partners like Australia.

The Inflation Reduction Act is a major upside for battery demand in the US, but more importantly, it will change the supply landscape for years to come. The legislation comes as close as possible to battery industry policy the US has ever had, making this the most exciting decade yet for the US battery industry. Companies are trying to maximize incentives to produce battery cells, modules and materials and meet EV credit requirements, which will bring more capacity to the country and its allies.

—Yayoi Sekine, Head of Energy Storage at BNEF

Most European countries have declined in overall performance this year, with the exception of Finland and the Czech Republic. Finland ranked highest in Europe and fourth overall. The country’s growing battery metals supply chain, relatively clean grid and high-quality infrastructure position it favorably among the top countries for lithium-ion batteries.

The lack of domestic raw materials in Germany and Sweden caused their ranking to drop in 2022. Despite the continent’s low raw material values, battery production is growing. Germany and Hungary will increase their battery manufacturing capacities to match Poland as cell and component plants come online in the coming years.

Many European countries are successfully harnessing their supply chain potential, but the region’s trend of decline this year suggests that growth in Europe is beginning to be outpaced by North American and Asian countries. European countries like the Czech Republic, Hungary and Poland continue to have advantages in their ability to provide cleaner and more sustainable supply chains. This will boost their growth ambitions and strengthen their position as preferred targets for battery manufacturing investments.

—Ellie Gomes-Callus, Metals and Mining Analyst at BNEF

China, South Korea and Japan were the top three countries in all battery manufacturing metrics. They have historically had the most established manufacturing bases with supportive industrial policies. Cell production capacity in the US surpassed Japan in 2014 and South Korea in 2016. Most of the world’s operating multi-gigawatt-hour cell manufacturing plants are owned by a Chinese, Japanese, or Korean company (Teslas Nevada Gigafactory was jointly developed with Panasonic). In 2022, South Korea and Japan each announced the expansion of cell production capacities at home and abroad and supply chain strategies to secure key materials.

In the 2027 BNEF rankings, countries in South America are seeing the largest declines, notably Brazil and Bolivia. Brazil remains a strong contender given its commodity strength but fell back to 21stSt in the 2022 ranking due to poor performance in ESG. Bolivia was at the bottom of the rankings this year. It only performed well in commodities in 2021 due to its massive lithium reserves.

Most resource-rich countries rank low in the overall score as they generally lack battery manufacturing capacity and domestic demand for electric vehicles. Countries like Indonesia, Chile, South Africa and the Democratic Republic of the Congo are trying to reverse this trend by using their commodity competitiveness as an advantage to attract downstream investments throughout the supply chain. Policy incentives to encourage EV adoption, clean energy supply, and industrial infrastructure will help these resource-rich countries attract the downstream investment needed to build domestic lithium-ion battery supply chains.

In the report, BNEF ranks 30 leading countries across the lithium-ion battery supply chain based on 45 metrics on five key themes: availability and supply of key raw materials; Manufacture of battery cells and components; local demand for electric vehicles and energy storage; infrastructure, innovation and industry, and ESG considerations. The report contains a current ranking for 2022 and a forward-looking one up to 2027.

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