In mid-August, CATL announced that they plan to launch the "Shenxing" battery in the first quarter of the coming year, signaling the beginning of the "era of rapid electric vehicle charging" through its mass production. The world's largest electric vehicle battery manufacturer from China stated that the lithium iron phosphate (LFP) battery would enable a range of 400 kilometers with just a 10-minute charge. Compared to Tesla's Supercharger, which, according to the US electric car pioneer, can add up to 275 kilometers of range in 15 minutes, the charging break would be shorter, and the driving distance longer. Furthermore, a full charge of "Shenxing" is said to provide enough power for 700 kilometers, a range achieved by only a few electric cars until now.

The announcement of the world market leader in electric car batteries, which last year opened its first factory outside of China and the largest one in Western Europe to date in Thuringia (Thüringen), addressed a crucial criterion in electric car purchasing decisions: range. However, it was just one of many news stories in the past month about the global efforts to further develop the most important and valuable component of electric cars.

Reports that the EU Commission supports the Taiwanese battery producer Prologium with 1.5 billion euros for its "Prometheus" project to develop solid-state batteries, or that the world's fifth-largest battery producer SK On from South Korea invests 1 billion euros in the construction of another domestic Gigafactory, once again underscore that the battery market for full electric (BEV) and plug-in hybrid vehicles (PHEV) is dominated by players from Asia. Furthermore, the Chinese battery manufacturer Jiangxi Judian just recently announced to start the construction of a solid-state battery production plant. Data from the Korean market research institute SNE Research in mid-2023 shows that six out of the ten largest battery suppliers came from China, with LG Energy Solutions, SK On, and Samsung SDI representing South Korea, and Panasonic Japan. The batteries installed worldwide in the first half of the year had a storage capacity of 304.3 gigawatt-hours (GWh) – more than 50% higher than in the same period of the previous year.

Industry-leading CATL, whose batteries are used in Tesla models 3 and Y among others, accounted for 112 (71.7 in the previous year) GWh. With a slightly increased market share at approximately 36.8% (compared to 35.4% in the previous year) CATL continued to hold a significant lead over BYD. The second biggest battery maker accounted for 15.7% of the market (11.6%). The market share of LG ES, whose batteries are used in VW models ID.3 and ID.4, remained unchanged at 14.5%. The combined share in the market of the three Korean companies decreased in comparison to the preceding year to 23.9% (26.1% in the previous year).

Market observers believe that the dominance of battery manufacturers from China and other parts of Asia will continue to exist, although perhaps not as strongly as before. A significant portion of battery cells will be required for electric vehicles in the lower and middle price segments, observes Daniel Arand, an automotive expert at Alix Partners, in an interview with Börsen-Zeitung. "Due to their better cost position, established Asian manufacturers will continue to have an advantage in this regard."

While an expansion of local battery cell production is becoming apparent in various regions, Asian manufacturers are involved as well. Lukas Weymann, who researches battery-related topics at the Fraunhofer Institute for Systems and Innovation Research (Fraunhofer ISI) in Karlsruhe, expects that battery cell production in Europe and North America, driven by both domestic and Asian players, will grow significantly and gain market share. However, more than half of the cells are still likely to be manufactured by Chinese companies in 2030, and around 50% of all globally produced cells will originate from China. Production in Europe could reach around a quarter of the market share, as per announcements from various companies, while production in the US could account for about one-fifth. Similar expectations are anticipated by Jörn Neuhausen, Head of Electromobility at Strategy& Germany, the strategy consulting arm of PwC, who believes that with a strong increase in European cell manufacturers, a production share of approximately 25% in Europe is possible.

The Association of the Automotive Industry (VDA) emphasizes that local production in Germany and Europe is important for achieving a more independent battery supply, building competence, and ensuring employment and prosperity in times of technological change. Nevertheless, local battery production only makes sense if it is also competitive. "Its success depends on the conditions at the location." According to the VDA, the competitive conditions required for establishing local battery production in Germany and Europe include faster planning and approval processes, as well as competitive energy prices. Currently, the high cost of electricity is a particular concern. "Urgent action is needed here: generation capacities must be expanded, and the electricity tax must be promptly reduced to the European minimum level."

The example of the Swedish battery specialist Northvolt illustrates the need for an active industrial policy given the prevailing conditions. In order to ensure that the challenger to established cell producers in Asia does not delay or question plans for the construction of a Gigafactory in Heide, Schleswig-Holstein, the federal and state governments had to make concessions to the startup. One big concern were the extensive incentive programs in other regions such as the Inflation Reduction Act in the USA. If the EU Commission approves the state aid based on the "Temporary Crisis and Transition Framework" (TCTF), the decision to build "Northvolt Three" - as it currently seems - could soon be made. This project, associated with investments of approximately 5 billion euros and expected to create 3,000 jobs directly at the factory site, envisions a planned production volume of 60 GWh - which would mean cells for 1 million electric cars per year.

The investments required for the construction of a Gigafactory are currently estimated at $50 million to $100 million per GWh of annual production capacity. It's worth noting that there are regional differences in these estimates, with China being at the lower end of the range and Europe falling somewhere in the middle due to stricter regulatory requirements. Weymann estimates that the total volume of investments in cell production in Europe could range from 50 billion to 200 billion euros in 2030. Still, making precise predictions is challenging. Whether the announced production capacity of over 2,000 GWh for Europe will be sufficient is questionable, according to Daniel Arand of Alix Partners. "Not all projects are likely to be realized in the stated scope or within the intended timeframe." Examples like Varta or Britishvolt, whose capacity expansion has been delayed compared to their initial plans, may be joined by others in the same situation.

Arand notes that many announcements come from smaller and less-established providers. "We expect a consolidation and a reduction in the capacity that has been announced so far, especially among the smaller cell producers." At the same time, new providers could enter the market, and some existing players might expand their plans. Neuhausen estimates that the announced projects will likely exceed expected demand by about 50%. Both, in Europe and globally, a consolidation in cell production is anticipated: "Not every project will become a reality."

Whether automakers should pursue their own cell production is considered an entrepreneurial decision, comments the VDA. There is no right or wrong answer in this regard. Fraunhofer-ISI expert Weymann suggests that both collaborations or joint ventures and in-house cell manufacturing offer advantages.