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Global demand for electric vehicles in 2018 is expected to grow to 2.5 billion battery units, the supply of cobalt to be solved Views [0] Published: 2018-02-28 11:54:47

According to the energy trend division of TrendForce, a market research firm, demand for electric vehicle batteries in China will increase significantly in 2017 as automobile manufacturers accelerate the production of electric vehicles. Global demand for electric vehicle batteries is expected to grow steadily from 2 billion in 2017 to 2.5 billion in 2018, an increase of 24%.

The rapidly expanding new energy market in China has prompted battery makers to focus primarily on EV batteries, though their products were once the main market for battery supply. As a result, cobalt prices have been thriving over the past year. Cobalt is the key raw material for battery cells. As costs rise and government subsidies decline, the Chinese market for new energy vehicles (NEVs) may face the potential for future growth.

Duff Lu, EnergyTrend's research manager, said cobalt prices will rise in 2017 due to the rapid growth of batteries. Lu does not want cobalt prices to continue rising in 2018, but it remains a key issue in the supply chain. In the long run, battery manufacturers and car makers will seek solutions such as vertical integration to ensure a safe supply to prevent further sharp price swings, hindering the growth of the industry.

Enhancing energy density has boosted the NMC battery market

Prior to 2017, the demand for EV batteries in China mainly came from buses with fixed lines and large sizes, and energy density was not a top priority. Therefore, LFP batteries are mainly used for the balance between cost and battery life.

In contrast, most logistics vehicles and passenger cars use NMC batteries. With the introduction of supportive policies by the Chinese government, market penetration of new energy passenger vehicles is expected to increase significantly in 2018, resulting in a growing demand for NMC batteries. At present, the penetration of NMC batteries in passenger cars has increased from 50% in 2016 to 70% in 2017, indicating that its market share in the passenger car market is higher than that of LFP batteries.

Duff Lu said that with the increase in battery energy density, EV unit prices will continue to decline. Therefore, the improvement of cost performance will further promote the development of NMC battery market.

The penetration of new energy passenger and logistics vehicles has increased, making it a key player in the Chinese market by 2018

Given the convenience of setting up charging stations and maximizing vehicle use in the early stages of development of the NEV market in China, the introduction of NEVs started with large buses and then extended to smaller cars. At present, the penetration rate of small size buses (6-8 meters in length) and medium buses (8-10 meters) is 27%, while the penetration rate of large buses (> 10 meters) is 20%.

In contrast, the development of electric passenger cars is still in its infancy, and its penetration rate is only about 3%, mainly due to the high price of batteries and the initial development of charging facilities. In 2018, as expected, logistics vehicles and passenger cars will be the main drivers of China's electric vehicle market, while the growth of new energy buses will stabilize.