Global Investments In Battery To Decline In 2024: Rystad Report

Global Investments In Battery To Decline In 2024: Rystad Report

Following four consecutive years of significant growth, this year is set to see a sizeable decline in global battery investments for the first time since 2020, according to Rystad Energy research. The researchers attributed this trend owing to a slump in battery infrastructure investments in mainland China for the global slowdown, as the Asian economic powerhouse navigates phases of growth driven by policy change, increased electric vehicle (EV) adoption, supply shortages, rising raw material costs and rapid capacity expansion.

A global leader in battery dynamics, China has maintained its position in lithium-ion battery (LIB) development, largely attributed to its early adoption of industrial-scale projects and rapid production growth to match its ambitious EV expansion plans. As a result, production surged more than 40% in both 2021 and 2022. “Despite the pace of annual growth slowing from 2022 onwards, we understand this to be a consequence of maturity and sustained capacity expansion. With the nation achieving self-sufficiency in battery supply, China’s attention has turned strategically towards Europe and the US, where major manufacturers are progressing from planning to production, albeit still at a nascent stage of development,” the researchers from Rystad Energy Research said.

In Europe, the interdependency of EVs on LIB production underscores the concern raised by investment declines this year. “This downturn is primarily driven by diminishing EV market demand, which in turn poses risks of project delays and cancellations in EV infrastructure. These challenges highlight broader issues in the EV sector, evident in the financial reports and stock prices of original equipment manufacturers (OEM) globally, including Chinese manufacturers that are facing profitability issues. Furthermore, subsidies incentivize sector growth, yet high energy costs, labor expenses and bureaucratic hurdles impede progress for the industry at large,” the think tank said in a statement.

Lithium demand

In contrast, the US has seen exponential growth in lithium demand amid increasing concerns over secure supply chains. Rystad Energy Research said that despite efforts to ramp up LIB production, both Europe and the US struggle with nascent industrial infrastructure. To mitigate reliance on Chinese supply chains for critical minerals, both Europe and the US are implementing policies to bolster energy security. Looking ahead, China’s stronghold in global battery investment and lithium trade appears secure due to its primary access to essential resources, it said. 

“China’s dominance in battery investment and lithium trade seems unshakeable for the foreseeable future, given their control over key resources. However, building a battery factory from scratch takes years and navigating local regulations adds even more time. This means the market two years from now remains unpredictable. Collaboration across the entire supply chain is crucial for the industry’s health.” says Duo Fu, Vice President, Battery Market Research, at Rystad Energy.

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