While electric vehicles are rapidly becoming widespread with the green transformation, it is noteworthy that countries, especially China and the USA, accelerate their battery investments. The USA follows China in battery production capacity. The United States holds about 6 percent of global battery production capacity. European countries collectively account for about 10 percent of global battery production.
The increasing demand for batteries with the electrification of cars causes companies and governments to make record investments in this field to compete. Described as the “future oil”, lithium-ion batteries are not only the backbone of electric vehicles, but also one of the competitive elements between countries.
While the need for sustainable energy increases with the energy crisis that started with the Russia-Ukraine war, companies and countries that want to dominate the market are trying to shape the battery industry with huge investments.
Record investment in capacity increase
While record investments to increase battery production capacity have attracted attention after the Kovid-19 epidemic, many countries, especially China and the USA, are encouraging battery production to increase their independence and competitiveness in this field.
Investments to increase battery production capacity are expected to increase further in the coming years. In this context, the total lithium-ion battery capacity, which was approximately 1,037 gigawatt hours worldwide last year, is expected to reach 4,323 gigawatt hours in 2026 and 6,693 gigawatt hours in 2031 with new investments.
China is the leader
According to the information compiled by the AA correspondent, China is currently the leader in lithium-ion battery production capacity. It is known that China has about 80 percent of the global lithium-ion battery production capacity and leads the battery race.
China is also said to dominate other areas of the battery supply chain, including mining and refining battery minerals such as lithium and graphite.
The US transferred $54 billion in incentives
The USA follows China in battery production capacity. The United States holds about 6 percent of global battery production capacity.
In electric vehicles, which are seen as the future of the automotive industry, the USA is establishing “gigafactories”, which are defined as huge factories for the production of lithium ion batteries in places where heavy industry was once concentrated, with the principle of “being the leader”.
As automakers from around the world race to meet the demand for all-electric, zero-emission vehicles, a new “battery generation” appears to be emerging in the United States.
With the ascension of US President Joe Biden, more than 54 billion dollars of incentives were transferred to new battery projects, and it is stated that significant support was provided especially for renewable energy and gained momentum with the “Reducing Inflation Act” enacted in August.
It is noted that the Inflation Reduction Act will likely have an even greater impact as it lowers the cost of rare minerals, battery components and battery cells through direct incentives.
A study by Credit Suisse states that the Inflation Reduction Act could generate $1.7 trillion in private investment over the next 10 years. The Swiss bank describes Biden’s green move as “the most ambitious and comprehensive investment in tackling climate change”.
Europe’s share will rise to 25 percent by 2025
European countries collectively account for about 10 percent of global battery production.
Countries such as Hungary and Poland, where large battery manufacturers such as SK Innovation and LG Chem have facilities in Europe, are among the top European countries in battery production capacity.
While German automakers also want to be a part of the green revolution, they are taking steps to expand their presence in the USA due to the incentives provided.
It is known that Volkswagen opened a $22 million battery laboratory in Chattanooga, Tennessee in June, while Mercedes-Benz opened a new battery factory in Alabama in March at a cost of approximately $1 billion.
Europe’s share of global lithium-ion battery production capacity is predicted to rise to 25 percent by 2025.
Big oil companies are also trying to get a share of the pie.
Not only do automakers invest in electric mobility, big oil companies such as BP and Shell are also looking for big investments in this area to get a share of the pie.
While investors as well as governments are demanding that companies cut emissions and become climate neutral, many oil companies are investing in the electric mobility market rather than resisting change, as it is a booming and profitable market. Companies are increasing their investment in charging infrastructure services and even battery research for electric vehicles, focusing on bringing greener energy to the grid.