Global EV Battery Supply Reaches 3.4 Times Demand... China Soars Alone

Shock from Changes in US EV Subsidy Policies
Oversupply to Persist Through 2030
Korean and Japanese Firms Struggle as Chinese Companies Expand Investments

Reuters Yonhap News

The global production capacity for electric vehicle (EV) batteries has reached a level that is 3.4 times greater than demand, indicating a severe oversupply. As American EV manufacturers struggle and battery prices plummet, Korean and Japanese companies are also facing difficulties. Concerns are growing that the market dominance of Chinese companies, which compete for the top two positions, will become entrenched.

Nikkei, citing data from S&P Global Mobility on August 21, reported that this year, the total production capacity of global EV battery factories is 3,930 GWh, about 3.4 times the demand, which stands at around 1,161 GWh. The gap is even larger in North America, where production capacity is 4.8 times higher than demand.

This trend is expected to continue for the time being. A similar situation is anticipated next year, with production capacity projected to exceed demand by more than threefold. Even in 2030, five years from now, the gap is expected to remain at 2.4 times.

The previous Biden administration in the United States promoted EV subsidy policies through the Inflation Reduction Act (IRA), but the repeal of these policies by President Donald Trump, who took office in January this year, is believed to have triggered the oversupply. Nikkei explained, "The governments of the United States and Japan have supported domestic battery production to avoid dependence on China from an economic security perspective, but the slowdown in EV demand has upended their expectations."

The value of EV batteries has also plummeted. According to global investment bank Goldman Sachs, last year the price of EV batteries fell by 26% compared to 2023, reaching $111 per GWh (about 155,000 KRW). There are projections that by the end of next year, prices could drop to around $80 (about 111,000 KRW) per GWh.

Given these circumstances, Panasonic HD in Japan has changed the official launch date of its new US factory, which began operations last month, from the originally planned end of 2026 to "undecided." Considering the struggles of its major customer Tesla and the slump in the EV market, the company determined that an early launch could lead to inventory risk. Major Korean battery companies that had planned large-scale investments are also reportedly readjusting their plans.

In contrast, Chinese companies are expanding their investments, supported by demand from domestic and European automakers. China's CATL is increasing its investments in Europe, while BYD is reportedly strengthening its production of low-cost batteries.

This backdrop has fueled concerns that the market dominance of Chinese battery companies will intensify. According to Korea's SNE Research, in the first half of 2025, China's CATL ranked first in market share, followed by BYD in second. Among the Korean and Japanese companies that once led the market, LG Energy Solution ranked third and Panasonic Holdings sixth, but their market shares have continued to decline.

Nikkei Asia pointed out, "This trend could further widen the gap in production capacity and technology between China and other competitors," adding, "When EV adoption becomes widespread, automakers may be forced to rely on China for batteries, which are a core component."

Meanwhile, the overall slowdown in investment in the EV battery industry is expected to have ripple effects upstream in the supply chain. The International Energy Agency (IEA) has warned that if investment in lithium and nickel development shrinks, there is a high possibility of resource shortages, such as lithium, by 2030.

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