China to Extend Battery-Metal Lead as Electric Cars Fuel Demand

(Bloomberg) -- Electric cars will drive a sevenfold surge in lithium-ion battery demand in the next nine years, fueling more appetite for battery metals from an industry overwhelmingly dominated by China, according to BloombergNEF.

Lithium-ion battery demand by 2030 will surpass 2.8 terawatt-hours per year -- that's equal to the annual output of 80 Tesla Inc. gigafactories -- and passenger electric vehicles will account for 72% of that market, BloombergNEF said in a report published Wednesday. The thirst for those rechargeable batteries will contribute to a fivefold increase in demand for battery metals in the period, led by copper and aluminum, the energy data and analysis firm said.

Total annual battery demand in 2030 is 35% higher than last year's outlook, largely due to the higher demand from passenger EVs.

That heightened demand will help China extend its lead in the battery chemical industry, with the nation holding the biggest market share for all the the five main battery metals: lithium, nickel, cobalt, manganese and graphite. China's dominance is boosting its economy and elevate competition between the Asian nation and the U.S. as countries worldwide push for greater electrification to lessen dependence on fossil fuels.

China accounts for almost half of new lithium hydroxide projects coming online this year and has 55% of the world's nickel sulfate market and 80% of the global market for cobalt sulfate, according to the report. The Asian nation also accounts for 95% of the world's manganese sulfate production and almost all of the graphite used in producing materials for anodes.

“Diversifying the global supply chain would require significant investment from regions such as Europe and North America,” BNEF said in its report.

Electric cars are set to increase to 14 million by 2025 from 3.1 million last year, according BloombergNEF's Long-Term Electric Vehicle Outlook, thanks to rising policy support, improvements in battery density and cost, an increase in charging infrastructure and more commitments for automakers. Although China dominates the market share for battery metals, the Asian nation isn't leading in EV adoption: Germany is expected to represent 40% of total sales by 2025, compared to 25% for China.