LONDON, 12th June, 2024 (WAM) -- The wave of battery factories under construction around the world will be able to produce far more cells than the global economy needs, BloombergNEF warns in a new report.
BloombergNEF (BNEF) is a strategic research provider covering global commodity markets and disruptive technologies driving the transition to a low-carbon economy.
Bloomberg quoted the BNEF report as saying on Wednesday that demand for lithium-ion cells is growing fast, as automakers electrify their fleets and utilities install big batteries to stabilise the power grid. But manufacturers have announced so many new factories that capacity will outstrip demand for the rest of the decade.
Good news for automakers
By the end of 2025, the global battery industry will be able to produce more than five times as many cells as the world will need that year, BNEF forecasts in its latest Electric Vehicle Outlook.
“This is good news for automakers and EV buyers but marks a challenging time ahead for new entrants to the battery industry,” the report said.
Oversupply is most acute in China, where manufacturing capacity will exceed annual battery demand by at least 400 percent for the rest of the decade. It is also an issue in the US, where President Joe Biden has made building a domestic battery supply chain one of his top climate and industrial priorities. Among efforts to woo battery makers, the administration offered a conditional US$9.2 billion loan to Ford Motor Co. last year to construct three battery factories.
Problem everywhere
Europe also faces a glut of battery capacity, yet governments are pushing for more. Swedish battery maker Nortvolt AB has a plant under construction in Germany, but the country’s Economy Minister Robert Habeck is already lobbying the company to build another.
Some planned factories around the world may be delayed or cancelled due to the industry’s overcapacity, according to Yayoi Sekine, head of energy storage research at BNEF. Ford, for example, has ratcheted back its plans for ramping up electric vehicle production citing a price war for battery-powered cars and trucks.
“This will be a problem everywhere, including the US,” she said.