Lux recently updated its Automotive Battery Tracker (client registration required) product to include vehicle sales through 2016 and the data revealed impressive, albeit expected, results – another record-setting year for plug-in vehicles and Li-ion batteries. Passenger plug-in vehicle sales were up 40% globally in 2016 compared to 2015, as sales jumped from 523,000 to 711,000. More notable growth came from overall battery demand, which grew by 72% in 2016 compared to 2015, as demand reached 21.2 GWh globally. Most of this growth came from the strong growth of battery electric vehicles in China, which is now the world’s largest passenger plug-in vehicle market with 49% market share.
Within the Chinese market, a major shift occurred in drivetrain preference within plug-in vehicles that led to these changes. In past years, consumers opted for plug-in hybrids (PHEV) and electric vehicles (EV) in similar numbers, while EV battery demand was larger due to comparatively larger battery packs. In 2016, Chinese consumers broke heavily in favor of EVs, which in Q4 2016 reached an astonishing 87% of all plug-in vehicle sales in China. In previous years, EV sales were primarily “neighborhood electric vehicles” designed for urban use, but not suitable for highways (client registration required). Substantial growth came in 2016 from vehicles using bigger packs that are suitable for use on highways, such as the BYD Qin EV300, BAIC Senova, and Geely Emgrand EV. This has had a large impact on the domestic battery market in China – demand was up 104% in 2016 compared to 2015.
Despite this growth, it is becoming increasingly difficult for foreign manufacturers to compete as companies like LG Chem and Samsung SDI struggle to gain approval for use in subsidy eligible vehicles. This policy move has allowed domestic producers to take over supply contracts in some vehicles previously using Korean-made batteries. Some of the best-positioned companies include CATL, Hefei Guoxuan, and Tianjin Lishen. Readers should expect 2017 to set more records for plug-in vehicle sales and battery demand, as both vehicle sales and pack sizes are increasing in most key markets. China will likely continue to capture a majority of the plug-in market, although this may change toward the end of this decade as China aggressively rolls back subsidies and high-volume models like the Tesla Model 3 and Chevy Bolt start to sell in other markets. Readers invested in the plug-in vehicle supply chain should not overreact to this shift and plan for more even growth globally in plug-in vehicles past 2020.
By: Christopher Robinson