The conclusion of 2024 marks a significant turning point in the dynamic landscape of the power battery industryA surge in expansion projects led by top-tier enterprises is unfolding on one side, while on the other, innovative battery projects—most notably solid-state batteries—are rapidly gaining traction and scaleThis converging momentum comes as new application scenarios emerge, further fueling the demand in the sector.

The unprecedented growth in the penetration rate of new energy vehicles has prompted the power battery industry to seek further market incrementIndustry experts have noted that the phase of widespread capacity expansion is transitioning into a more concentrated stage dominated by leading companiesCurrently, although low-end capacity still exceeds demand, the utilization rates of high-end capacities are expected to gradually recover and riseAs the industry sees enhanced concentration in production capacity, the linkage between power batteries and market demands is bound to tighten, fostering fertile ground for new technologies aiming to meet diverse market needs.

Accelerated Expansion Among Leading Enterprises

Expansion remains a key theme for the power battery industry as it heads into the latter half of the year, but this time, the focus is notably on fewer key players.

On the night of December 10, CATL announced a partnership with Stellantis to construct a battery factory in Zaragoza, located in the Aragon region of Spain

This factory, projected to involve a total investment of €4.038 billion, aims to produce 50 GWh of power batteries annually, targeting Stellantis as its primary customerThis facility will mark CATL's third manufacturing base in Europe.

Earlier, on November 26, CATL began shipping its first battery cells from its Luoyang facility, marking the official commencement of production at the facility's initial cell production lineFurthermore, a separate project partnership with Times Geely for a battery production base in Sichuan was reported to have completed its capacity expansion plans as of October this year.

Meanwhile, BYD announced on July 8 that it had signed a contract for the third phase of its automobile industrial park with the Shenzhen-Shanwei Special Cooperation Zone, involving an investment of 6.5 billion yuan to establish a battery pack line along with a factory for core components of new energy vehicles

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Additionally, Ganfeng Lithium has also signed new projects with Zhongchuang Innovation in the third quarter of this year.

According to incomplete statistics from gaotong.com, the third quarter of this year witnessed the establishment of 25 new projects by power battery enterprises, both domestically and internationally, involving total investments exceeding 99.1 billion yuan and targeting over 281 GWh of planned battery production capacityEighteen of these projects are currently in the preparatory stages, including signing, public announcements, or planning.

“In recent years, the context of capacity expansion has shifted significantlyWhile earlier, expansion efforts were prolific and somewhat haphazard, this year the barriers to entry for expansion have risen, leading to greater industry consolidation,” said Zhang Xiang, a researcher at the Automotive Industry Innovation Research Center of Beihua University, in an interview

Previously, some companies pursued expansion primarily as a means to attract financingIn contrast, current expansion endeavors are more substantial, as companies pursue actual increases in production capacity, including overseas investments, with much more defined objectives and clearer industrialization plans.

Ongoing Challenges and Sustainable Growth

Contrasting the land-grabbing strategies of previous years, this current wave of expansion highlights noticeable industry fragmentationHigh-Tech Industry Research Institute observes that the principal drivers of lithium battery investment and expansion in 2023 have been mid-tier and smaller enterprisesAs we enter 2024, leading companies such as CATL are accelerating their expansion activities, spurred by the ongoing "price wars" and the increasing performance dichotomy between major companies and smaller playersThese leading enterprises remain well-funded, giving them the confidence to expand capacity.

Changes are also evident when assessing the investment scale of new projects

Data from High-Tech Industry Research indicates that from January to October 2024, only three projects at the billion-yuan level were announced, with the proportion of investments ranging from 1 billion to 4.9 billion yuan considerably higher, exceeding one-thirdIn light of the industry's adjustment cycle, investment decisions are becoming increasingly cautious, resulting in diminished motives for expanding capacity.

Whether industry expansion can be sustained remains contentious“Given the backdrop of overall oversupply, I don't believe that leading enterprises will continue to accelerate capacity expansion,” remarked Mo Ke, founder of Truth Research Institute, to reportersHe suggested that eliminating outdated capacity and reallocating capacity corresponding to shifts in market focal points are indeed possible.”

Mo posited two primary strategies for addressing the issue of oversupply: first, broadening market horizons and expanding into international territories; and second, enhancing technological capabilities, either by lowering costs or improving battery performance

This dual approach could deepen domestic market development while expanding market presence.

“From the perspective of some new energy vehicle manufacturers, to maintain product competitiveness, they will prioritize partnerships with leading battery suppliers,” noted one lithium battery industry expertWhile the overall industry is experiencing an oversupply situation, much of the excess capacity can be deemed “ineffective capacity”, as market share held by leading enterprises far exceeds that of smaller entitiesUtilization rates of production capacity will increasingly focus on downstream automotive companies and relevant vehicle models, while outdated capacities will be phased out organicallyConsequently, this expert contends that expansion among leading firms will become a prevailing trend in the industry's evolution.

Emerging Battery Projects Gain Momentum

As the structure of power battery production capacity undergoes significant adjustments, the robust development of solid-state batteries, cylindrical batteries, and fast-charging technology is also gaining steam as companies strive to compete in a challenging market.

At present, solid-state batteries have resurfaced as a hot topic within the market

Battery manufacturers and automotive companies are speeding up research and development efforts related to solid-state batteries, accelerating the pace of industrializationNumerous automotive manufacturers and battery firms have made announcements regarding advancements in solid-state batteriesNissan plans to initiate a pilot factory in 2024, while Toyota and BMW aim for mass production by 2030. CATL has increased its investment in solid-state battery R&D this year, and its sulfide-based program has recently entered the sample testing stage at 20AhMeanwhile, Xinwanda has completed laboratory validation of its third-generation polymer composite solid-state battery and expects to finalize product development by 2025.

Industry insiders interviewed widely believe that while the industrialization pace and technical maturity of solid-state batteries are expected to evolve, the technological direction represented by solid-state batteries seems clear

“The solid-state battery industry is consistently catalyzing industrialization, setting the stage for significant applications in electric vehicles and energy storage across various sectors,” stated one East China battery industry expertHe highlighted that solid-state batteries are likely to emerge as key focuses for both manufacturers and battery companies moving forward.

Additionally, advancements in sodium batteries and cylindrical batteries are also generating news regarding industrializationRecently, numerous companies have announced the mass production of sodium-ion batteries“Much of the industry’s enthusiasm for new technologies is fueled by existing pain points with lithium batteries, such as rapid charging, long range, safety, low-temperature performance, and cost efficiencyThese challenges are pushing the industry towards breakthroughs and innovations in the pursuit of better solutions,” observed one interviewee

As application scenarios continue to expand, different products will find unique nichesFor instance, sodium batteries boast considerable potential for cost-sensitive markets such as energy storage and two-wheeled electric vehicles, while the continuous advancement of solid-state battery industrialization is gradually unlocking more opportunities in the power battery market.

Regarding the relationship between new battery technologies and existing production lines, Mo indicated in an interview that many so-called solid-state batteries are, in fact, semi-solid-state batteriesThere’s no need for entirely new production lines; existing lines can be adapted accordinglySimilarly, the cylindrical battery technology currently available lacks groundbreaking innovations, making significant changes unnecessary.

“The technological advancements in battery production lines are substantial, with ongoing improvements made to sections of lines that have sustained value for enhancement

Usually, modest upgrades happen annuallyHowever, if no continuous improvement value exists, complete reconstruction is indeed necessaryIn such scenarios, enterprises typically consider a combination of capacity transfer and reconstruction, but this area usually constitutes a minor percentage,” Mo added.

Opening Up New Application Scenarios

As competition intensifies surrounding prices, performance, and technology, power battery companies are also seeking new applications.

For instance, CATL has announced an electric passenger aircraft collaboration project, which is expected to support ranges between 2000 to 3000 kilometers by 2027 or 2028. Additionally, in August, CATL entered a strategic investment and collaboration agreement with FeiFeng Aviation, committing to invest several hundred million dollars and becoming a strategic stakeholderDuring a report on its performance, CATL noted that the company has been closely tracking and investing in new application fields, including construction machinery, marine vehicles, and aviation.

Furthermore, recent findings from TrendForce suggest that as flying cars and electric vertical takeoff and landing vehicles (eVTOL) evolve, solid-state batteries are likely to become a mainstream technology for low-altitude airborne vehicles

It is projected that with supportive government policies, the global demand for solid-state batteries in the low-altitude flying market will reach 86GWh by 2030, further rising to 302GWh by 2035.

Emerging markets are anticipated to serve as the key end-users of solid-state batteriesThese markets encompass battery swapping, specialized power applications, eVTOL, robotics, and moreAnalysts have identified a continuous elevation in the relevance between power batteries and application scenariosIn November, Hunan hosted a conference releasing new scenarios for energy storage battery applications and facilitating supplier-demand interactions, engaging over 70 local new energy companies in discussions on innovative applications and market opportunities in power batteriesThe boundaries for power batteries in application scenarios are constantly evolving, necessitating new markets and growth in capacity.

Experts who were interviewed noted that, looking forward, the power battery industry is set to witness a further consolidation of market concentration, while the connection to market applications will strengthen