Emerging Battery Companies In Asia Pacific

Battery consumption in the Asia Pacific region is increasing and battery companies are advancing their production and distribution to meet the increasing demands.

This advancement is however challenged and adoption of increasingly diverse approaches to develop batteries for different segments is critical providing an opportunity for companies to grow.

Definition / Scope
Market Overview
Market Risks
Top Market Opportunities
Market Drivers
Industry Challenges
Technology Trends
Regulatory Trends
Market Size and Forecast
Market Outlook
Technology Roadmap
Competitive Landscape
Competitive Factors
Key Market Players
Strategic Conclusion
References
Appendix

Definition / Scope

Asia-Pacific is the emerging rapid grower for batteries globally as it is regarded as fast pacing hotbed for battery-related investments and new innovation to this technological aspect flourishing with research and development .

Batteries are divided into two classes: primary and secondary. Primary batteries are the ones that serve for single use and they are discarded afterward.

These batteries have higher capacity and initial voltage with sloping discharge curve whereas, Secondary batteries are the rechargeable ones that can serve for multiple times use and are for long term use. They have a lower capacity and initial voltage, a flat discharge curve, higher self-discharge rates and varying recharge life ratings

Some common batteries include a sealed lead acid battery, nickel cadmium battery, nickel-metal hydride battery, and lithium-ion batteries among others. Different applications of batteries include portable computers, cellular phones, home appliances, audio and video equipment, toys, and electric vehicles

Market Overview

Asia-Pacific is dominating the battery market due to the rising demand for automobiles and industrialization. The developing countries in Asia-Pacific such as China and India are expected to hold the largest market share of the battery market due to rising automotive production activities. Rising demand from the consumer electronics segment and an increasing number of electric vehicles in China and Japan are driving the market towards growth

The Asia Pacific battery market was valued over US$ 50 million in 2018 and the industry is becoming consolidated; competition will remain intense. The top Japanese suppliers held 80% of the market last year, but emerging companies are making strong in-roads. BYD Battery Co. Ltd. in China is an example of a major new global battery producer. LG Electronics Inc. and Samsung Electronics Co. Ltd. in South Korea are following. These companies are gaining ground due to low pricing and improving quality.

Due to cost advantages, lighter-weight, and ongoing improvements, lithium-ion (Li-Ion) batteries are increasingly finding use in high-drain applications such as consumer electronics and cordless electric power tools. Manufacturers are increasingly turning away from lower-value nickel metal in favor of Li-Ion, which offers greater power density.

Li-Ion batteries are forecast to decrease in price in the near future, which will support demand. Li-Ion is also the most popular battery chemistry in energy storage systems and will continue to dominate battery chemistries utilized in this application going forward.

Lead acid batteries are mostly used batteries in automobiles such as two-wheelers, three-wheelers, four-wheelers, commercial vehicles, and public transport. The Asia Pacific automobile market is one of the largest industries with over 42 million passenger cars sold in 2017.

The rapid urbanization and industrialization trend in various developing countries across the globe is one among the main drivers of the lead-acid battery market. Electronic cigarettes (e-cigarettes) are another niche market with the potential to offer significant future growth

Market Risks

The price fluctuation of raw materials is a key factor for high production costs. The supply of raw materials that make up the batteries such as lithium, cobalt, and lead fluctuates. The excessive usage of the raw materials used in the batteries leads to its shrinkage. The fluctuating prices of the raw materials in battery manufacturing primarily hampers the growth of the market and acts as market risk.

The lead prices account for approximately 49% of the overall cost of the lead-acid batteries produced. Lead prices are highly volatile and any disturbance in the raw material prices has a huge impact on the supply chain affecting the overall profitability of lead-acid battery companies. Similarly, cobalt prices are expected to surge, which, in turn, could directly impact the production costs of the companies.

Likewise, the lack of economic recycling and re-use schemes pose a threat to the emerging secondary battery companies as the demand keeps increasing. In 2018, the number of batteries that were recyclers was estimated at about 97,000 tonnes.

Of these as much as 67,000 tonnes was processed in China and 18,000 tonnes in South Korea. As companies lack a good working recycling system for batteries, hazardous waste is disposed of. A lot of the batteries are collected by small, unlicensed vendors who dispose of them after selling the lead to other manufacturers.

Top Market Opportunities

The demand for electric vehicles is expected to grow by 30 million in 2030; this is a potential market for the companies to tap into. This enables the companies to strengthen their manufacturing/production base and plan expansions as the demand for battery increases. Lishen is planning to expand its production base by 20GWh by 2020.

Multiple APAC countries have policies that favor energy storage systems, like subsidies for consumers adopting the new technologies, thereby increasing the local demand for the products. Japanese policies support residential and business entities which install lithium-ion batteries to lower the purchasing cost. This has widened the market for emerging players like SK Innovation and Lishen, allowing them to establish their consumer base.

Secondary batteries find their applications across varied industry verticals such as energy storage systems, electric vehicles, and uninterrupted power supply. The power sector has failed to meet the rising demand from end-user industries, due to which UPS have become a necessity.

Hence, a majority of businesses have a power backup plan in place to deal with intermittent power outages. Demand for UPS in APAC is set to witness further growth during the forecast period. The emerging companies like Lishen and SK Innovation have a diverse range of products to meet the demand.

Market Drivers

Asia Pacific is the largest market and rapidly growing industry for battery production. The region is also pacing the market for battery-related investments and for research and development of new technological advancement . On the basis of the region, Asia-Pacific and North America are estimated to be the key markets for industrial batteries as the surge in industrial activities and need for high capacity power backup in these regions

Countries like Japan, China, South Korea are leading the market in the region and countries such as India, Australia have shown tremendous growth in the past few years . The factors that are driving the Asia Pacific market are the huge demand for UPS in industrial sectors such as oil & gas, manufacturing, consumer electronics, chemical, and healthcare is boosting the market growth.

The Emergence of APAC Companies in the Battery Market:

It is expected about 140 million electric cars to be on the roads by 2030. Rising demand in the electric vehicles market will impact the type of battery used and be drivers of the growth in Asian countries. The emerging market for energy storage and distributed generation through renewable energy will also boost the growth of the market.

The emerging players operating in the market include SK Innovation, YUASA, PEVE, Zhuoneng, AESC, BAK Battery Co Ltd., Kokam, GP and ATL among others, which offers the end users with advanced technologies, hence influencing the market.

Strengthening economic growth across the emerging economies accompanied by a significant expansion in the data center, telecommunication, and automotive industries will drive the market growth

Industry Challenges

Although the market growth of the battery industry in the Asia Pacific is augmenting, several factors are challenging the market for emerging battery companies such as:

Market penetration and Brand Recognition: The market penetration of emerging companies like AESC, BAK Battery Co Ltd., and GP is lower than that of the established companies like Samsung and Panasonic. The brand recognition of companies like Cellennium, Enax, E-One Moli and Rongke is lower than that of companies like CATL, Lishen, and BYD, thereby making the competition fierce and market penetration difficult.
Lack of Awareness about Lithium-ion Benefits: The ability of Lithium-ion batteries to store portable energy, in the long run, is uncertain. Although Lithium batteries are expensive at present, the shortage of raw materials present in these batteries may become an issue. As compared to lead-acid batteries, the high cost of Lithium-ion batteries and lack of awareness with regard to its benefits may pose a challenge to its growth in market

Technology Trends

LIBs: Lithium batteries represent the most important advance in battery technology in recent years. Lithium batteries now power a diverse range of devices:

consumer electronics such as laptop computers, cell phones, etc
cordless tool and appliances
medical devices like cardiac pacemakers, defibrillators, pumps, etc
defense and homeland security such as army vests, remote sensors, etc
aerospace such as Mars exploration rovers, telecommunications, etc
transportation like hybrid electric vehicles and plug-in hybrid electric vehicles & all-electric vehicle

Wireless charging: Wireless battery charging is a technology that is being widely used – initially with items like smartphones, but many more areas are using it with over 200 million wireless charging-enabled devices shipped in 2016.

Wireless charging is making inroads in the healthcare, automotive and manufacturing industries because it offers the promise of increased mobility and advances that could allow tiny internet of things (IoT) devices to get power many feet away from a charger.

Pricing Trends

Lithium-ion battery costs are falling rapidly as companies expand manufacturing facilities, unlocking economies of scale. Energy cell costs have fallen from US$1000/kWh in 2010 to US$209/kWh in 2017. This cost reduction is opening up new demand applications for lithium-ion and making lithium-ion batteries superior to other battery technologies on power, performance, and cost.

Similarly, with respect to grid market, the growth rate of 9.1% CAGR is expected during 2015-2020. The profits will rise from US$9.21 billion in 2015 to US$14.25 billion in 2020. Likewise, the cost of Li-ion battery is expected to fall to US$100/kWh by 2020 as companies like Panasonic, LG Chem, BYD, and SDI further expand global battery manufacturing capacity.

Regulatory Trends

Multiple APAC countries have favorable renewable energy storage policies that promote domestic consumption. The Chinese government is providing subsidies to local battery companies to cater to the increasing demand for batteries.

At 2015, China temporarily restricted the use of NMC/NCA based batteries on e-buses for safety reasons. Recently, the Chinese government announced new standards to strengthen its regulation of providing NEV purchase subsidies only to NEV models equipped with batteries from qualified and registered EV battery makers. The local company Guoxuan is on the list and all 25 are local makers.

Japan also has a subsidy program to support up to 66% or two-thirds of the purchase cost for homes and businesses that install lithium-ion batteries. In 2014, METI (Japanese Ministry of Economy, Trade, and Industry) launched a US$100 million subsidy program to incentivise the commercial and residential update of Lithium-ion batteries.

Later, METI estimated US$779 million scheme program for battery installations and energy efficient technologies. The Korean government promotion for photovoltaics and energy storage systems provides a platform for the local emerging companies in the market .

Market Size and Forecast

The Asia Pacific dominated the global battery market with revenue of over USD 50 billion in 2018. The market is expected to witness the growth of 7.55% CAGR during the forecasting period of 2019-2023. The market is classified on the basis of battery type and country.

On the basis of country, China, Japan, South Korea, and the remaining regional countries will be influencing the market growth during the forecasting period. China, Japan & Korea accounts for almost 90% of world li-ion battery cell production.

China makes up 50% of the demand for EVs and battery capacity globally. On the basis of battery type, the market is segmented into lead-acid battery, lithium-ion battery, and others. .

APAC Battery Market by Country:
The China market holds the largest market share in Battery Market by Country with the market share of over US$ 44 Billion in 2018 and would continue to be a dominant market; growing at a CAGR of 7.4% during the forecast period.

The market would attain a value of US$ 62.8 Billion by 2023. Growing adoption of electric vehicles coupled with government initiatives to promote sustainable energy utilization will drive the battery market size. According to EIA, China accounted for 336 thousand electric vehicle sales in 2016 .

The Japan battery market in 2018 was valued about US$ 6.73 Billion and is expected to witness a growth of 7.6% during the forecasting period. Government focus to limit emissions along with shifting trend towards renewable energy utilization will further help the market growth.

The Korea battery Market size is expected to reach US$ 8.58 billion by 2023 from US$ 5.9 Billion of 2018, rising at a market growth of 7.7% CAGR during the forecast period. Korea’s Green Energy Policy is likely to contribute to growth in demand for batteries through an increase in supporting EV infrastructure.

The EV sales in South Korea have been projected to grow from 121,812 units in 2018 to 423,448 units in 2022, registering a strong CAGR of 36.5% during the forecast period .

APAC Battery Market by Type:
The APAC lithium-ion battery market is anticipated to expand at CAGR of 10.8% during the forecast period. The market which was valued at US$24 Billion in 2018 is likely to touch US$40.44 Billion by the end of the forecast period due to increasing adoption of these batteries in smartphones, tablets, Pcs, and laptops.

The APAC lead-acid battery market with a value of US$ 20.8 Billion in 2018 is expected to continue its competency. The market is expected to reach over US$ 25.9 Billion by 2023. The Asia-Pacific lead-acid battery market is anticipated to rise with the CAGR of 4.50%

Market Outlook

The strongest market growth of 7.55% CAGR is anticipated in the APAC as China further solidifies its position as the largest producer of batteries in the world. Other countries in the region, including South Korea and Japan, will also register strong growth in demand for battery materials

China is the leading country, generating the highest wind energy. The production of wind energy is expected to significantly increase over the years. Wind capacity output is likely to cross 200 GW by 2020, driving the demand for energy storage systems in the country, and as a result, it is expected to positively influence the demand for batteries.

Increasing demand for mobiles and tablets in various countries including India, China, Japan, and Thailand is expected to drive the demand for lithium-ion batteries during the forecast period. Consumer electronics is presumed to contribute half of the overall global revenue during the forecast time span.

It is emerging as the leading key segment application with a swift pace and making the gain. Transportation will be the largest application in the APAC lead-acid battery market during the forecast period while stationary industrial is expected as the second largest contributor with the CAGR of 8.5% during the period.

China has tremendous market potential due to increasing lithium-ion battery production. The government of the nation also has been offering favorable grounds with subsidies for electric vehicles, which is expected to create immense market potential over the forecast period

While Li-ion is the faster-growing segment, lead-acid is the bigger market segment with most of the demand coming from automotive SLI battery. Telecom, household and industrial inverters, motives, and e-bikes are other key applications gaining momentum in the lead-acid segment due to rapid urbanization and initiatives to utilize renewable energy resources more efficiently.

Technology Roadmap

The technological advancement in the battery has led to the discovery solid-state lithium-ion battery two years ago that can fully charge in just 7 minutes. Also, the promising discovery on line is Lithium sulphur batteries that can store a large charge.

Similarly, the recent discovery of gold nanowire batteries has enabled to withstand more recharging than ever before, hundreds of times within their lifetime

A new generation of energy-hungry electronic devices, such as digital cameras, camera phones and high-performance portable computing devices, will drive the growth. Electronic cigarettes (e-cigarettes) are another niche market with the potential to offer significant future growth.

Competitive Landscape

While innovation in battery technologies is proceeding at a rapid pace worldwide, battery development is booming in APAC. APAC battery companies currently have around 50 GWh of production capacity, equivalent to 50% or more of global output (consumer electronics/automotive battery capacity combined), and have monopolistic shares of 50%-80% of core component materials, such as cathode materials and separators.

Looking at the competitive landscape, companies from countries like Japan, China, South Korea are leading the market as the emerging battery companies in APAC. The growth is coming from both automotive and industrial sectors powered by usage in telecom, railways, power and other industrial applications

Various key players in the Li-ion battery sector in Asia-Pacific region are Panasonic Corp., Samsung, LG, Toshiba and Hitachi to name a few. However, the market is heavily fragmented and more than half of the market share is dominated by a number of emerging companies like Lishen, Rongke Power, Cellennium, BYD, and SK Innovation.

Investments from private organizations, the utility of electric vehicles & rising adoption, booming research & development by the research institutions and initiatives taken by the multinational organizations for developing the solid-state battery technology are predominantly driving the regional market.

Competitive Factors

The Key factors on which companies compete are battery costs, meeting increasing demand from automotive, utilities, industrial sectors, consumer electronics, and wearable segments. Asia-Pacific is the largest market globally for batteries and is also rapidly growing its battery production. Competition is also seen in battery-related investments and for research and development of new and innovative battery technologies

Likewise, the push for green power as a result of national mandates undertaken by governments in Asia-Pacific to reduce carbon emissions has also become a new competitive factor in the development of new battery chemistries and the betterment of existing ones

Also, emerging technologies such as flexible batteries and aluminum-ion batteries, are expected to increase the competition. Companies are competing hard to develop cathode materials in particular because these contribute directly to raising energy density. The competitive environment is severe, and some industry reorganization has taken place during the past year, including Toda Kogyo selling its entire cathode material business and Sumitomo Chemical increasing investment in Tanaka Chemical.

Intense price competition is leading manufacturers to develop new chemistries and improved processes to reduce production costs. The price of lithium-ion batteries in 2016 was $273/kWh – a drop of 73% since 2010. The steep decrease in prices in the past few years is in part due to technology improvements and economies of scale. However, fierce competition between the manufacturers has been instrumental in bringing down prices

Key Market Players

Some emerging battery companies in the Asia-Pacific market are:

CATL: CATL is a Chinese battery manufacturer and technology company founded in 2011 and specialized in the manufacturing of lithium-ion batteries for electric vehicles and energy storage systems, as well as battery management systems (BMS). CATL’s annual sales volume amounted to 11.84 GWh of energy storage capacity in 2017. The company aims to have a global lithium-ion production capacity of 50 GWh by 2020

Enax: Based in Tokyo, Enax was founded twelve years ago and is an independent think tank that has been working on Li-ion automotive batteries for over ten years. It researches, develops, manufactures, and distributes lithium-ion rechargeable batteries. It also manufactures and distributes battery packs, electrodes etc.

BYD: BYD is principally engaged in the IT industry and is mainly related to the rechargeable battery business, handset, and computer components and assembly services, as well as the automobile business, including traditional fuel-powered vehicles and new energy vehicles. It is also actively developing other new energy products such as rail transit, solar farms, energy storage stations, electric vehicles, LEDs, electric forklifts, etc. BYD has successfully built a unique technology R&D platform that matches international standards.

Lishen: Lishen is controlled by state-owned companies along with private shareholders of China. The company has maintained its prominence in the production of lithium-ion batteries over the years. It contributes to the consumer electronics segment, power batteries for electric vehicles, energy storage systems, and new energy transportation.

SK INNOVATION: SK Energy was Korea’s first oil refinery. In January 2011, SK Energy transformed into SK Innovation with three subsidiaries of SK Energy, SK Global Chemical and SK Lubricants. The independent management structure separating petroleum and chemical business allows each company to focus on competing in their respective area and enables SK Innovation to pursue emerging growth opportunities in Green and Renewable Energy.

Now, SK Innovation is poised to be a technology-driven company with R&D capabilities beyond the core refining and petrochemical business. SK Innovation aspires to be a leader in green energy solutions, focusing on lithium-ion batteries for electric vehicles, the separator for lithium-ion batteries and thin film solar cells.

Strategic Conclusion

Asia Pacific region is expected to be an opportunistic market, and the region is expected to be the top revenue generating region among others. Advancements in energy storage, distributed generation, electric vehicles, and consumer electronics are driving the growth of the battery market.

Another factor boosting the battery market growth is the several initiatives taken by the various governments of APAC countries for the adoption of sustainable transportation. The battery market is fragmented with the presence of leading and well-established players as well as emerging companies across the APAC.

The companies in the market are continuously investing and innovating in order to introduce economical and energy-efficient battery technology in the market.

As the world becomes ever more dependent on batteries to power modern life, challenges are aplenty and it becomes critical to adopt increasingly diverse approaches to develop batteries for different segments. This is where emerging battery companies can pitch in.

References

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Appendix

Acronym

CAGR: Compound Annual Growth Rate
Li-ion: Lithium Ion
Na-ion: Sodium Ion
US$: US Dollar