There’s a wave of consolidation looming across the electric vehicle battery supply chain as the industry in China looks to raise quality and prepares for a demand surge, according to a sector consultant.
Bloomberg New Energy Finance
February 24, 2019 At 10:53 PM
Source: Bloomberg News
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There’s A Wave Of Consolidation Looming Across The Electric Vehicle Battery Supply Chain As The Industry In China Looks To Raise Quality And Prepares For A Demand Surge, According To A Sector Consultant.
Reorganization To Be Focus Through 2020: Wisdom Intelligence
Investors Need A Longer-Term View On New Lithium Projects
The Next Two Years Are Likely To Be A Period Of Reorganization As The Industry Adapts To Shifting Policy On EV Subsidies In China And Navigates Overcapacity Of Materials, Including Battery Separators And Lithium Chemicals, Said Eileen Hao , Chairman Of Wisdom Intelligence And Technology (Nanjing) Co., An Adviser To Cell Producers, Automakers And Miners.
“It Will Happen Almost In The Whole Industry Chain,” Said Hao. Some Smaller Companies “Are Just Going Out Of Business” Because They Are Struggling With Cashflow And Also Lack Sufficient Scale To Produce The Highest Quality Materials Or Components, She Said Friday In An Interview In Perth.
Vehicle Producers In China Are Likely To Consider More Vertical Integration With Raw Material Companies, Helping To Secure Supply Chains Before Demand Dramatically Advances From Next Year, Wisdom’s Hao Said. China’s Government May Also Encourage Rationalization In The Sector, As Previously Happened In The Rare Earths Industry, She Said.
Changes To China’s EV Subsidy Regime, Which Will Favor Suppliers Of Batteries Able To Power Cars For Longer Distances Before Recharging, Should Spark A Bout Of Consolidation, Argonaut Securities (Asia) Ltd. Said In A Note Last Month. The Number Of Lithium-Ion Battery Producers In China Fell To 90 In 2018 From 135 A Year Earlier, And Will Decline Further This Year, Argonaut Said.
To Read More On The EV Battery Supply Chain, Click Here
Consolidation Among Producers Of Lithium Compounds Will Help Reduce Overcapacity In China, Wisdom’s Hao Said. Prices Of Lithium Hydroxide And Lithium Carbonate, Key Chemicals Used In The Manufacturing Of Rechargeable Batteries, Are Poised To Decline In 2019 On An Abundance Of Production Capacity In The Short Term.
Investors Would Be Wrong To Withhold Backing For New Lithium Projects, Based On The Market’s Current Status, As Prices Retreat From Frenzied Gains In 2016 And 2017, Said Hao, An Adviser To Companies Including Battery-To-EV Maker BYD Co. And Raw Materials Producers Including Neometals Ltd.
“People Say They Are Not Going To Invest In Anybody Because There’s Plenty Of Supply,” She Said. “These Projects Are For 2025, They Are Not For 2019, And They Need To Realize That To Get A Mine Up And Running Does Take Time.”
Forecasts For Rising Demand Underscore The Need For More New Capacity Over The Longer Term. Lithium-Ion Battery Demand For Passenger EVs May Rise More Than 30-Fold Through 2030, According To BloombergNEF.
By David Stringer