The Global Battle for Solid-State Battery Leadership

With the advent of electric vehicles (EVs), lithium-ion batteries demand grew exponentially and is still growing. In fact, the global lithium-ion battery market size may grow from USD 57 billion in 2020 to USD 200 billion by 2027 at an average CAGR of 20 per cent during the same period.

The growth of the market is primarily due to the surging requirement for continuous power supply from critical infrastructures in wake of COVID-19, increasing demand for plug-in vehicles, growing need for battery-operated material-handling equipment in industries due to automation, continued development of smart devices, and also due to the growing adoption of lithium-ion batteries in renewable energy sector.

Presently, the key components for batteries are mainly manufactured in Asia Pacific, especially China. Three of the global leaders locked horns for global hegemony in the sector for long. The three are also the top three from Asia-Pacific region – China, South Korea, and Japan.

Lithium-ion Battery War – Now Settled

In 2012, Chinese companies supplied lithium-ion batteries for just 10 per cent of the EVs sold worldwide. It was by 2019 that the country became undisputed leader with a 50 per cent share in the global production capacity. Fast-forward three years, the war is now settled.

Once a laggard, China now tops the lithium battery producing nations, sharing a global lithium-ion battery production capacity of nearly 80 per cent in 2021. South Korea and Japan are the other two leaders from Asia-Pacific. As it stands, South Korea and Japan have merely 2.5 per cent and 2.4 per cent shares, respectively, in the global lithium-ion battery manufacturing capacities.

Likewise, even the world’s largest  lithium-ion battery producer hails from China. Amongst the companies producing lithium ion batteries, Chinese firm, CATL, is now the global leader with a whopping 32.5 per cent share in 2021. The next two in line are LG Chem and Panasonic from South Korea and Japan, respectively. Moreover, China is not even competed globally. The second in line among the top producers, the US, is also following China from afar, with just about 6 per cent or 44 GWh of global manufacturing capacity.

Clearly, the war to lithium-ion batteries hegemony is now settled. Undoubtedly, clear winner is China and it is there to stay for a very long time. All thanks to the Chinese government, pouring more than $100 billion to the “new energy” vehicle industry  (which includes electric and hydrogen fuel cell vehicles) in the last decade.

That means a desperate search to find an alternative that is as good, if not better , and does not allow Chinese dominance again. Solid-State Battery industry is the new battleground to prove mettle in.

Solid-State Battery: A New Battleground

Range, charging, and safety risks are the biggest challenges of lithium-ion batteries use in EVs. Solid-state batteries technology is here to resolve these issues. These batteries do away with liquid electrolytes used in conventional lithium-ion batteries. Further, a solid-state battery has a larger energy density than a Li-ion battery. They are increasingly receiving attention and considerations for more research for an ultimate breakthrough.

While the battery technology is still in its nascent stage, many firms have already made the moves. As per one study, Toyota Motor is the leading holder of solid-state battery patents holder. So far Japanese companies have dominated the race to developing the next-generation power source for electric vehicles.

As per some forecasts, Solid-state battery market size will reach USD 13.15 Billion by 2030 from USD 805 million in 2021, registering a CAGR of 36.4% in 2022-2030. Like the lithium-ion battery market, Asia-pacific may account for the largest market share over the forecast period, growing at a CAGR of 37.9%.

The rapid growth of the automotive industry in China, Japan, South Korea, and India is will boost the demand for solid-state batteries in the region. As mentioned earlier, the region already leads the globe in existing lithium-ion technology. The regional leaders lock horns again with the emergence of solid state technology.

A Contest in Asia-Pacific

The solid-state battery technology for EVs is still in the prototype stage. Only a handful companies today, like TDK, have put miniature solid-state batteries on the market. While it is too early to comment on the market, solid-state battery patent applications to the World Intellectual Property Organization and other such groups give a vivid idea of the market to be. Firms like Quantumscape face high expectations with their promise to deliver market ready batteries by next year.

Among the frontrunners, Toyota is the leader with 1,331 patents while Panasonic Holdings is a distant second with 445 patents. The top three is completed by another Japanese firm, Idemitsu Kosan, holding 272 patents. Samsung Electronics, of South Korea, is fourth and the only non-Japanese firm in the top five.

Japan seems to be leading the race in the solid state battery. Six out of ten companies with most patent applications for the technology come from the country.

In the near future, many firms may see the launch of EVs with solid-state battery technology. For instance, Toyota plans launching a hybrid vehicle with a solid-state battery during the first half of this decade. Honda Motor plans to do this in the latter half of the 2020s.

However, ruling out the others at this juncture would be too naïve. The South Korean firms in particular have dramatically expanded the patents in their portfolios. What makes South Korean companies more relevant is that they possess numerous patents directly concerning real-world performance, such as the life span of batteries.
Who will lead when the technology breakthroughs the market for EVs is hard to tell. With lithium-ion battery war having recently settled, the rivalry over hegemony of solid-state battery is going to be intense.