China
China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a population exceeding 1.4 billion, slightly ahead of India. China spans the equivalent of five time zones and ...
produced more than 15 billion units of
lithium-ion batteries
A lithium-ion or Li-ion battery is a type of rechargeable battery which uses the reversible reduction of lithium ions to store energy. It is the predominant battery type used in portable consumer electronics and electric vehicles. It also se ...
in 2019, which accounts for 73% of the world’s 316 giga
watt-hours capacity. China is a major producer of both lithium batteries and electric vehicles, with favorable policies for manufacturers and consumers. Chinese made lithium-ion batteries were
exported mainly to Hong Kong, the United States, Germany, Korea, and Vietnam. One of the major drivers of the demand for lithium-ion batteries comes from the
electric vehicle industry
An electric vehicle (EV) is a vehicle that uses one or more electric motors for propulsion. It can be powered by a collector system, with electricity from extravehicular sources, or it can be powered autonomously by a battery (sometimes ch ...
since lithium-ion batteries have high
energy density for their weight. In the decade since 2008, the production of lithium batteries has tripled.
Background
Prior to lithium-ion battery technologies,
rechargeable batteries
A rechargeable battery, storage battery, or secondary cell (formally a type of energy accumulator), is a type of electrical battery which can be charged, discharged into a load, and recharged many times, as opposed to a disposable or prima ...
for cars were mostly of the
lead-acid type. Although the production cost is cheaper, lead-acid batteries are inferior in their capacity, depth of recharge, efficiency, and lifespan. Charging lithium-ion batteries are four times faster than lead-acid batteries, making it more conceivable for frequently used applications such as mobile phones. Further, lithium-ion batteries are 55% lighter than its counterpart which is a significant metric in applications such as electric vehicles which consumes energy based on the total weight of the system. Lead-acid batteries have a lower lifespan with preferred 100% state-of-charge to keep their conditions.
Lithium battery technologies are commonly used in
smartphones,
laptops
A laptop, laptop computer, or notebook computer is a small, portable personal computer (PC) with a screen and alphanumeric keyboard. Laptops typically have a clam shell form factor with the screen mounted on the inside of the upper li ...
, and many other portable devices.
History
In the 1990s, China had its first breakthrough with its state enterprise
China Electronics Corporation
China Electronics Corporation (, CEC) is a Chinese state-owned company and one of the largest producers of telecom equipment in China for both civilian and military purposes. successfully developing its own Model 18650 lithium battery which was ready for
mass production
Mass production, also known as flow production or continuous production, is the production of substantial amounts of standardized products in a constant flow, including and especially on assembly lines. Together with job production and batch ...
. Although in this early stage, there was not much capital invested in the market, most of the research was dedicated to small consumer electronic products such as translators, music players, or cameras. With all of the varying consumer products, there are different needs for its battery, thus there is not a centralized demand for heavy research in the field. From 2001 to 2008, early players like BYD, Shenzhen Bike Battery, and Tianjin Lishen Battery have grown their investments in battery research and brought substantial growth to the Chinese lithium battery industry. From 2008 to 2016, the rise of smart devices like cell phones, tablets, or laptops prompted further demand for batteries. Since then, many technology companies have sourced their batteries from China for their advancement in battery development and competitive pricing. However, there were moments of stagnation during this period with issues of scaling and meaning the demands from across the world. Also during this time, concepts such as electric vehicles have become more prominent but require more research. Since 2016, the Chinese government has set favorable policies for electric vehicle development. These policies include providing loans to manufacturers, different
tax break
Tax break also known as tax preferences, tax concession, and tax relief, are a method of reduction to the tax liability of taxpayers. Government usually applies them to stimulate the economy and increase the solvency of the population. By this fi ...
s enjoyed from the entire supply line, or invitations for foreign investments and consumption of their battery products. Currently, the lithium battery industry in China continues to grow under the accelerating trend for electric vehicles, applications in military equipment,
5G services, and more.
Market
Before the 2000s, battery production was dominated by Japan with its superior technologies, by companies like
Panasonic
formerly between 1935 and 2008 and the first incarnation of between 2008 and 2022, is a major Japanese multinational corporation, multinational Conglomerate (company), conglomerate corporation, headquartered in Kadoma, Osaka, Kadoma, Osaka P ...
, 88% of the world’s lithium battery production. In the following two decades, China invested heavily in its sourcing and manufacturing processes. Since 2015, China surpassed Japan, Korea, and the rest of the world and became the largest exporter of lithium batteries. Combined with Japan and Korea, China and the two countries account for 95% of lithium battery production in the world.
China has the fourth-largest known lithium reserve with 1 million tons, behind Chile, Australia, and Argentina. Thus making them one of the biggest exports and capable candidates for developing lithium battery technologies. China continues to buy stakes in mining operations around the world. The world's largest lithium mine in Australia,
Greenbushes, is controlled by China’s
Tianqi Lithium
Tianqi Lithium Corp (; previously Sichuan Tianqi Lithium Industries, Inc.) is a Chinese mining and manufacturing company based in Sichuan.
As of 2018, the company controls more 46% of the production of lithium worldwide.
Production
World product ...
with its 51% stake.
In the decade since 2010, the market capitalization of China’s lithium battery has had an average annual growth of 14%. Of China's more than 15 billion units of lithium batteries produced in 2019, China mainly exported to Hong Kong, United States, Germany, Korea, Vietnam, and others, where products and applications of the batteries are manufactured.
Source: The
General Administration of Customs of China
Production
China’s crucial role in the development of lithium batteries can be highlighted by its lithium cell manufacturing capacity which accounts for 73% of the world’s 316 giga
watt-hours capacity. Its competitive edge comes from the low labor and production costs which attract foreign companies that can only find more expensive quotes from their local suppliers. In 2019, there were 131.6GWh produced in China, and Cairn Energy Research Advisors projects an annual production of 800 GWh by 2027. The battery production concerning the consumer demand is near saturation in China, however consumer demand for lithium batteries applications on vehicles is expected to have continual growth in the upcoming decades. The current market capitalization for lithium batteries in China is 190 billion yuan (roughly 30 billion dollars), it is projected that by 2026 the market capitalization will reach 268 billion yuan(42 billion dollars). During the Covid-19 pandemic, growth in the industry was higher than expected, not only did it not slow down but had accelerated. It came from China’s quick recovery and reopening of manufacturing, along with the rise in demand for new energy vehicles in Europe.
The highest cost of electric vehicles comes from their battery packs, which account for 30% of the manufacturing cost of a car. In the past decade, scientists and manufacturers were able to reduce the cost from above $1,100 per kilowatt-hour to $137/kWh in 2020. This is a significant 89% drop in the cost for both lithium batteries and the production of an electric vehicle.
Market segment
Lithium battery products are divided into many categories with the selection in
electrolyte
An electrolyte is a medium containing ions that is electrically conducting through the movement of those ions, but not conducting electrons. This includes most soluble salts, acids, and bases dissolved in a polar solvent, such as water. Upon dis ...
material, battery shape, anode/cathode material, covering material, and whether or not it is rechargeable. Different selection of these categories determine different variations of lithium battery products. There is micro-competition within the Chinese battery manufacturing companies to achieve the best quality products at the cheapest cost. Recently, there is a growth in using man-made
graphite
Graphite () is a crystalline form of the element carbon. It consists of stacked layers of graphene. Graphite occurs naturally and is the most stable form of carbon under standard conditions. Synthetic and natural graphite are consumed on large ...
in replacement of graphite ore. In 2020, man-made graphite dominated the material selection for anode and cathode with 84% of the market share. In the upstream of lithium battery production, there is material sourcing from lithium,
cobalt
Cobalt is a chemical element with the symbol Co and atomic number 27. As with nickel, cobalt is found in the Earth's crust only in a chemically combined form, save for small deposits found in alloys of natural meteoric iron. The free element, pr ...
,
manganese
Manganese is a chemical element with the symbol Mn and atomic number 25. It is a hard, brittle, silvery metal, often found in minerals in combination with iron. Manganese is a transition metal with a multifaceted array of industrial alloy use ...
, and
nickel mine A nickel mine is a mine that produces nickel. Some mines produce nickel primarily, while some mines produce nickel as a side-product of some other metal that has a higher concentration in the ore.
Geology
Nickel occurs in two general types of or ...
s, along with
graphite ore. Upstream also includes processing these materials from the mines into electrolytes, cathodes, anodes, etc. Midstream involves the design of the battery and manufacturing the batteries from electrolytes, cathodes, anodes, and other pre-processed parts. Downstream is the application of lithium batteries, such as cellphones, laptops, and cars. There are three main categories for products in the downstream - energy storage, consumer, and motor. The motor has the largest share with 53.95%, with consumers in second at 43.16%. The consumer segment is near saturation, while the motor segment is witnessing fast growth in global policies favoring electric vehicles. There are currently 72 Chinese companies in the race to produce lithium car batteries with Contemporary Amperex Technology leading with 50% of the market share.
Electric vehicles in China
China is the world’s largest consumer of electric vehicles, with 400,000
electric bus
An electric bus is a bus that is propelled using electric motors as opposed to an internal combustion engine. Electric buses can store the needed electricity on-board, or be fed continuously from an external source. The majority of buses ...
es in 2019, it houses 99% of the world’s electric buses. With Chinese policies favoring electric cars both for manufacturers and consumers, 1.3 million EVs were sold in China in 2020 alone, which represented 41% of global EV sales. China has the goal of pushing electric vehicles to become 40 percent of all car sales by 2030.
In 2020, 46.5% of lithium battery demand comes from electric vehicles, far exceeding the previous lead of smart mobile devices. As the largest consumer of EVs, China itself has a large demand for lithium batteries to produce these EVs. In April 2021, China has reported a total of 8.4 GWh of lithium batteries installed in their electric vehicles, this represents a 134% increase from the year before.
Lithium battery related companies in China
Ganfeng
Ganfeng Lithium
Ganfeng Lithium Co., Ltd. is a company that produces lithium, lithium products, other metals, and batteries in mainland China and globally. It was founded by Li Liangbin in 2000 and is headquartered in Xinyu, Jiangxi.
It is the largest lithiu ...
is the largest lithium supplier in China and the third-largest in the world, it is vertically integrated so includes in its business resource development, refining and processing, battery manufacturing, battery recycling, and others. It has a leading advantage with its patented inventions throughout battery production such as extraction technologies, recycling technologies from lithium wastes, and more. All of these pioneering technologies contribute to a high
energy conversion efficiency and long-life energy storage. The company is also involved in the development of lithium extraction projects internationally, such as in
Sonora
Sonora (), officially Estado Libre y Soberano de Sonora ( en, Free and Sovereign State of Sonora), is one of the 31 states which, along with Mexico City, comprise the Administrative divisions of Mexico, Federal Entities of Mexico. The state is d ...
Mexico
Mexico (Spanish: México), officially the United Mexican States, is a country in the southern portion of North America. It is bordered to the north by the United States; to the south and west by the Pacific Ocean; to the southeast by Guatema ...
, with the prospect to produce 35,000 tonnes of lithium per year.
Contemporary Amperex Technology
Contemporary Amperex Technology
Contemporary Amperex Technology Co. Limited (), abbreviated as CATL, is a Chinese battery manufacturer and technology company founded in 2011 that specializes in the manufacturing of lithium-ion batteries for electric vehicles and energy storage s ...
is one of the largest lithium battery producers in China and was responsible for 45.5% of battery installation in the country. In 2019, Contemporary Amperex Technology has a net income of 39.14 billion yuan with 18% of China’s lithium battery exports. During that year it had more than 32 GWh of lithium battery installation for electric vehicles, placing it first in the world ahead of Panasonic of Japan and LG of Korea. It provides lithium batteries for many companies around the world. Contemporary Amperex Technology is a long-time supplier for Tesla, which uses its LFP batteries to build its latest models. Lithium iron phosphate batteries (LFP) tend to have a lower energy density compared to traditional lithium batteries that also utilize cobalt, but have been sought after by the competitive price advantage without the expensive element. Recently, the company has made significant progress in LFP with changes to the battery architectures that improved its energy density, thus allowing the battery for wider EV use.
China Aviation Lithium Battery Technology Co.
China Aviation Lithium Battery Technology Co. (CALB) was formed in 2015 as part of state-owned aerospace and defense firm
Aviation Industry Corp of China Ltd. In 2022, it is going to become public in Hong Kong for $2 billion. As of July 2022, CALB has a market share in China of 11.2 percent. It is the second-largest maker of ternary nickel batteries.
BYD Company
As one of the early leaders in China’s lithium battery industry,
BYD Company
BYD Co. Ltd. ("Build Your Dreams" Chinese: 比亚迪股份有限公司) is a publicly listed Chinese conglomerate manufacturing company headquartered in Shenzhen, Guangdong, China. It was founded by Wang Chuanfu in February 1995.[Nio
are two wrathful and muscular guardians of the Buddha standing today at the entrance of many Buddhist temples in East Asian Buddhism in the form of frightening wrestler-like statues. They are dharmapala manifestations of the bodhisattva Vajra ...]
is one of the leading electric vehicle brands in China. Currently, it does not produce its lithium batteries and has relied on sources such as Contemporary Amperex Technology, however, to help achieve better margins for the sales of its electric cars, they have invested heavily in the factories and research in lithium battery technologies. Recently they have launched a program for
battery swapping
A battery swapping (or switching) station allow electric vehicles to exchange a discharged battery pack for a charged one as an alternative to plugging the vehicle into a charging station. Battery swapping is common in electric forklift applicatio ...
which allows users to swap out their used battery for a fully charged battery in public stations. The program aims to tackle the problem of charging time and limited
charging stations in the country, also by displacing the battery removing battery ownership from part of the vehicle, the cars could be sold at a much cheaper price.
Challenges and controversies
The procedure to produce lithium batteries is long and complex, from mining to refining, cathode production, cell production, to module assembly, before passing on to original equipment manufacturers. Each of those steps encompasses many micro-steps that require precision and time to ensure its quality. Take the procedure of formation or aging within module assembly, it could take up to 3 weeks for each batch which contributes to 30% of the manufacturing cost.
As most mining processes are invasive to the surrounding area,
lithium mining
Lithium (from el, λίθος, lithos, lit=stone) is a chemical element with the symbol Li and atomic number 3. It is a soft, silvery-white alkali metal. Under standard conditions, it is the least dense metal and the least dense solid ele ...
has also met serious controversies about the impact it has on the surrounding area. The controversy of lithium mining comes from its need for water - mining one ton of lithium requires of water. Yet, the largest mines in the world reside in Argentina, Bolivia, and Chile, which often face droughts and have serious demand for fresh water from the local farmers. Thus the extraction of lithium has often been linked to increased
drought
A drought is defined as drier than normal conditions.Douville, H., K. Raghavan, J. Renwick, R.P. Allan, P.A. Arias, M. Barlow, R. Cerezo-Mota, A. Cherchi, T.Y. Gan, J. Gergis, D. Jiang, A. Khan, W. Pokam Mba, D. Rosenfeld, J. Tierney, an ...
s. In several of the lithium mines there are reports of chemical leaks in the nearby water source, these chemicals such as
hydrochloric acid
Hydrochloric acid, also known as muriatic acid, is an aqueous solution of hydrogen chloride. It is a colorless solution with a distinctive pungent smell. It is classified as a strong acid
Acid strength is the tendency of an acid, symbol ...
are toxic to living organisms. Other reports may attribute lithium mining to damage to the
soil
Soil, also commonly referred to as earth or dirt, is a mixture of organic matter, minerals, gases, liquids, and organisms that together support life. Some scientific definitions distinguish ''dirt'' from ''soil'' by restricting the former te ...
and
air contamination. Thus, some activists have warned about the environmental impact of lithium mining.
Environmental implications
As the world starts to act on the
climate crisis
''Climate crisis'' is a term describing global warming and climate change, and their impacts. The term and the alternative term ''climate emergency'' have been used to describe the threat of global warming to humanity (and their planet), and to u ...
, many countries have set targets to
lower carbon emissions. Many countries are slowly moving to
ban gasoline-powered vehicles on the road - Norway with targeted tradition completed by 2025, and the U.S, Japan, and many other European countries set their timeline near 2035. During this transition, lithium would continue to have a trending relevance in the production of electric vehicles. In 2019 transportation accounts for 28% of energy consumption in the United States. This means a total shift from petroleum, biofuels, natural gas, or other fuels that currently power our cars could mean a 28% reduction in our CO
2 reduction. While we are searching for alternative energy sources from windmills, solar panels, hydropower, or nuclear fusions, lithium batteries play an important role as storage units for applications such as electric vehicles.
Lithium batteries and electric vehicles do not directly reduce
carbon emissions, as the energy that is stored in car batteries can still come from many different sources, including
fossil fuel burning. However, the advancement of lithium batteries allowed for the development of electric vehicles which removed our dependence on gasoline to power our vehicles. As the world continues to find alternative energy sources for generating electricity, we would have the containers and platforms to power our vehicles without gasoline.
A bottleneck in the development of electric vehicles comes from the availability of charging stations. Although China has currently set up the most charging stations in the world, with more than 1.32 million stations, of which 550,000 of those are for public use, these numbers are still far from the needs of all-electric vehicle users if it wishes to scale.
References
{{Reflist
Mining in China
Electronics industry in the People's Republic of China
Automotive industry in China
Lithium-ion batteries
Energy in China