Low-Cost Chinese Batteries Wave... Concerns Over Overproduction and Dumping

CRU Group Analysis
"China's Production This Year, Double Domestic Demand"
US-China Tensions Expected to Rise Amid Dumping Concerns

China's battery production capacity this year is estimated to be twice its domestic demand. It is expected that Chinese battery manufacturers, who have expanded production capacity based on government subsidies, will strengthen their market dominance through a 'dumping' offensive in the global market.

[Image source=Reuters Yonhap News]

On the 3rd (local time), major foreign media outlets, citing market research firm CRU Group, forecast that China's battery factory production capacity will reach 1,500 gigawatt-hours (GWh) annually this year. This amount is sufficient to supply batteries for 22 million electric vehicles, exceeding twice the domestic demand of 636 GWh.

Sam Adam, Senior Battery Materials Analyst at CRU Group, analyzed, "Many manufacturers are overproducing batteries and continuously increasing their inventory."

This appears to be the result of Chinese battery manufacturers anticipating a surge in future demand and rushing to increase battery production using government subsidies. Such overproduction leads to expanded exports, and ultimately, Chinese companies benefiting from subsidies are likely to increase their market share in the global battery market through low-price volume offensives. China has previously expanded its market influence in the steel, aluminum, and solar panel markets using similar methods.

Olivier Dupont, founder of the French battery startup Vercor, said, "It is worrisome," adding, "We are seeing something very similar in the battery market to what we saw in the aluminum market. This is more than just a preemptive move."

China's battery production is expected to expand further. According to already announced battery factory construction plans, China's battery production in 2027 is projected to be four times its demand. By 2030, it is estimated to produce twice the amount of batteries needed to fully convert the Chinese automobile market to electric vehicles. Some in the market predict that while Europe will face a battery supply shortage of about 500 GWh in 2030, China's oversupply will offset this. An executive from a Western automobile company predicted, "There is definitely a possibility that China will dump batteries in other markets."

China's domestic industry development through battery subsidies raises concerns about escalating tensions with the West. The United States and the European Union (EU) each provide incentives for electric vehicles equipped with batteries produced in North America and within their regions, respectively. One foreign media outlet warned, "If China's overproduction problem worsens, companies may turn to exports as in the solar industry," adding, "This will heighten geopolitical tensions between China and the West."

Patrick Andersson, Vice President of Strategy and Sustainability at Swedish battery manufacturer Northvolt, analyzed, "Large-scale imports of low-budget Chinese batteries are likely to undermine Europe's aspirations for sustainability and make those aspirations appear to be a strategic mistake."

However, some speculate that as China accelerates its renewable energy transition, it will absorb all battery production domestically. This is because batteries are needed to store electricity to compensate for the intermittency (fluctuations in power generation due to weather conditions) of renewable energy. Goldman Sachs forecasts that China's battery energy storage demand will increase 70-fold by 2030.

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