Last year, the share of domestic battery makers in the European market decreased.
Chinese companies, which are being checked by the US, are turning their eyes to the European market and stealing their market share. Europe is an important market for the battery industry as it records the second largest sales of electric vehicles in the world. However, as domestic companies are concentrating their investments in North America, where they can benefit from the Inflation Reduction Act (IRA), there are concerns that European market leadership may be lost to Chinese companies .
China to increase European investment
According to SNE Research, a market research institute, Korean companies accounted for 63.4% of the battery market in the entire European Union last year. It decreased by 7.1%p (points) from the previous year. In the meantime, the market share of Chinese companies has increased. The European market share of Chinese companies, which was 22.6% in 2021, increased to 34% last year. The market share gap between Korea and China, which was 48.1%p during this period, also narrowed to 29.4%p.
EU EV battery market share trend in Korea, China, and Japan / Graphic = Bizwatch
China’s market share is growing rapidly because the US restricted Chinese companies from entering the market through IRAs . Starting this year, the US has blocked the procurement of core battery minerals from ‘concerned countries’ such as China through the IRA . Chinese companies have chosen Europe as an alternative to the US market. In fact , Chinese companies such as
Ningdusdai ( CATL ) are making large-scale investments in the EU market with the support of their own governments. CATL completed its first overseas production base in Erfurt, Germany in December last year. Currently, a battery production plant with a total capacity of 100GWh (gigawatt hour) is being built in Debrecen, Hungary.
As of the end of last year, domestic battery makers’ battery production capacity in Europe was 116.5GWh, accounting for 42.5% of the total (274.2GWh). However, industry observers say that domestic battery makers are expanding their investments in North America, where they can benefit from IRAs, and that their European market share is highly likely to continue to decline .
An official from the battery industry said, “We are investing preferentially in North America, where IRA benefits are greater than in Europe . ” explained.
Kim Hee-young, a researcher at the Korea International Trade Association, said, “Due to the nature of the battery industry, where economies of scale are important, Korean companies’ competitiveness will decline if they begin to be pushed out of the EU market.” ) based on batteries, it is highly likely to increase its market share in the EU .”
Battery companies ‘gathered in Europe’
As the proportion of electric vehicles in Europe is rapidly increasing, the industry calls for domestic battery makers to expand their investments in the European market.
According to market researcher EV Volume, a total of 2.68 million electric vehicles were sold in Europe last year. It is the second highest after China, where a total of 6.18 million units were sold. Sales of electric vehicles in the EU are expected to increase rapidly as sales of internal combustion engine vehicles are banned in the EU from 2035 .
As the sales volume of electric vehicles increases, the demand for batteries, an essential component, also increases. According to McKinsey, demand for lithium-ion batteries in the EU is expected to reach a total of 1.1 TWh (terawatt hour) in 2030, accounting for about 23.4% of the total market. The fact that the EU
has recently announced support measures for the battery industry similar to the US IRA is also a factor that increases the growth potential of the European battery market. The EU announced the ‘Temporary Crisis and Transition Framework ( TCTF )’ in March and raised the upper limit of electric vehicle battery subsidies. In addition, the Carbon Neutral Industry Act announced in the same month ( Through NZIA Net Zero Industry Act ), technical and manpower support for carbon-neutral fields, including batteries, has been expanded. Thanks to various support measures from
the EU , battery makers in other countries as well as China have begun to build battery production plants in Europe. This is because the EU has stipulated that a certain percentage of key raw materials for batteries be procured within the EU through the CRMA (Critical Raw Material Act ) . Sweden’s Northvolt recently decided to build a new battery plant in Schleswig-Holstein, Germany. According to foreign media, the total investment amount is more than 600 million euros (approximately 866.1 billion won). Prologium, a Taiwanese all-solid-state battery company, also decided to build a super-large battery factory by investing 5.2 billion euros (about 7.5063 trillion won)스포츠토토 in Dunkirk, France. The mass production is scheduled for 2026, and it is planned to gradually increase the capacity to 60GWh per year by 2031. This is a scale that can be installed in about 750,000 electric vehicles. As foreign battery makers are actively targeting the European market, the proportion of domestic makers is expected to gradually decrease. Kim Gyeong-hoon, a researcher at the Korea International Trade Association, said, “Battery is a contract-to-order industry, so large-scale investment must be preceded, but our companies are facing a lack of investment funds in the EU .
“It is difficult to make rapid additional investments in response to the increase in battery demand,” he said. “Considering the plant construction and commissioning period to secure yield, the result of competition for orders within the next 1-2 years will determine market share after 5-6 years.” Therefore, the ability to raise short-term funds will determine the success or failure of the competition to win orders.”