Electric vehicle batteries are crucial in shaping the future of sustainable transportation, and one country is central to this change. A new study by Fraunhofer FFB and the University of Münster reveals how China controls the global supply chain of EV batteries, and its implications. This blog post discusses this analysis of the study, which examines the specific nature of Chinese control over raw materials and battery manufacturing, as well as the challenges and strategic options for Europe and the United States.
Analyzing China’s Position in the Global EV Battery Supply Chain
The recent Fraunhofer study also reveals that China has a strong grip on the battery supply chain, from the supply of raw materials to the production of batteries for export. Here’s what the study says:
1. Power in Raw Materials
Three of the four pivotal raw materials needed for the production of lithium-ion batteries are controlled by China:
- Lithium: Despite the fact that 74% of the world’s lithium is found in Australia and Chile, Chinese companies supply most of the production due to the global demand for batteries.
- Nickel: China has a strong control over the global nickel production and Chinese firms own 86% of Indonesia’s nickel extraction.
- Cobalt: Although most cobalt is mined in the Democratic Republic of Congo, Chinese companies own most of the battery mineral resources in that area.
Manganese is the only exception where other nations, such as Australia, are more active in the battery materials supply.
2. Manufacturing Monopoly on Batteries
Big Chinese battery manufacturers like CATL and BYD have seized 55 per cent of the market share in electric car battery installations. The lithium iron phosphate (LFP) battery sector is even more concentrated as China produces more than 98 per cent of the world’s LFP active materials, while focusing on battery sustainability.
Geographical distribution and b) Distribution of ownership in the lithium-ion battery supply chain – Fraunhofer FFB
Effects on Geopolitics and the Economy
Vulnerability of Europe
Professor Simon Lux of Fraunhofer FFB points out that Europe is fundamentally exposed to the import of raw materials for the production of batteries. This means that any geopolitical risk or export restriction will have a severe impact on the economic and supply chain emissions of the continent.
The Race for Raw Material Control
Companies from China, the United States and Europe are fighting to secure company takeovers in countries like Australia, Indonesia and the Democratic Republic of Congo. As the study shows, China currently has the most position, but both Europe and the US are increasing their efforts to decrease dependency by forming strategic partnerships, tackling midstream supply issues and improving infrastructure.
Strategies and Recommendations
Increasing the Production Capacity
As for the West, and especially Europe, it is crucial to increase the capacity of refineries to stabilize the upstream battery market. Setting up facilities for raw material processing within the country will reduce the country’s dependence and increase its strategic autonomy, particularly with respect to the life cycle of batteries.
Encouraging Strategic Alliances
It is important to establish strong ties with countries that supply the key raw materials. These relationships can be developed to guarantee stable supply and effectively manage the downstream battery logistics.
Focusing on the Circular Economy
Enhancing recycling programs and implementing the circular economy approach can strengthen the domestic supply chain and address the graphite supply risk. In this case, countries can reduce their dependence on raw materials and promote sustainable development of batteries through the recycling of materials.
The Fraunhofer study identifies several problems associated with the battery supply chain dominated by China. Nevertheless, Europe and the US have started to work towards reducing this dependence, but transforming into a self-sufficient battery production power is not easy. However, with the right investments and cooperation, these regions can strengthen their position and move up the value chain of electric vehicles.
Wow, this article is really eye-opening! I had no idea China was so dominant in the EV battery market. It’s great to see Europe and the US trying to reduce their reliance on China. We need more sustainable solutions!
Totally agree! It’s about time other countries step up and take charge of their own resources. We can’t let one country control everything, especially when it comes to something as important as electric vehicles!
Yes! The future looks bright if we can all collaborate for sustainability instead of relying on one superpower.
This post just points out the obvious, China’s in control and everyone else is struggling to catch up. The West has been slow to react, it’s like watching a train wreck in slow motion.
Exactly! The West needs to wake up before it’s too late! They’re lagging behind while China keeps tightening its grip.
‘Strategic partnerships’? More like desperate attempts to catch up! It’s sad how unprepared they seem.
‘Encouraging Strategic Alliances’ sounds nice, but what does that even mean? If they can’t secure resources, how are they going to make batteries? This feels like wishful thinking rather than real solutions.
‘Wishful thinking’ is right! They need real actions, not just fancy words thrown around at meetings.
How ironic that the world needs electric vehicles but depends on a single country for their batteries. It’s like putting all eggs in one basket, isn’t it? What if China decides not to share?
Exactly! And here we are pretending we have a sustainable future while being dependent on one nation’s whims.
Right? This dependence could backfire massively if geopolitical tensions rise!