China Already Entering Battery Oversupply Phase

[Battery, the Trap of Overproduction] (Part 2)
Some Chinese Companies Have More Supply Than Demand

The Chinese battery industry is facing the issue of 'overproduction.' Due to the Chinese government's removal of electric vehicle subsidies, the production and sales volume of electric vehicles in China decreased in the first quarter of this year for the first time in 30 months. Among Chinese companies responsible for about 56% of the global electric vehicle battery supply, some firms have already entered a state of oversupply since October last year, where supply exceeds demand.

Marco Moder, a partner at McKinsey & Company, who attended 'The Battery Conference' held during 'InterBattery 2023' last March, also stated, "Battery supply will exceed the global electric vehicle battery demand forecast of 2300 GWh by 2025."

Earlier, battery information firm Benchmark Mineral Intelligence (BMI) analyzed that China's battery production in 2031 will reach 3733 GWh, which is more than twice the global demand forecast of 1721 GWh. This is largely due to the surge of new battery and battery material companies following the Chinese government's electrification policy initiatives. There are currently 125 battery gigafactories operating across China. This scale is more than ten times larger than the combined number of battery factories in Europe and North America.

There is also analysis that oversupply could occur in the European market, which was the first among major markets to implement electric vehicle transition policies. Korea Ratings stated, "Since 2018, the three domestic battery companies have entered and operated factories in Poland and Hungary, and Chinese companies along with local startups are also entering the European market one after another," adding, "From 2024, supply is expected to exceed demand by about 30%, indicating a trend of oversupply."

[Image source=AP Yonhap News]

As concerns about oversupply grow, raw material prices have also turned downward. The price of lithium carbonate, a key battery mineral, recorded 457,692 yuan on the Shanghai Nonferrous Metals Exchange Market (as of the 5th), falling 61.6% over the past year due to the slowdown in electric vehicle demand. Nickel prices fell 18.5% during the same period, reaching $24,447 on the London Metal Exchange.

This content was produced with the assistance of AI translation services.