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Global battery industry enters new phase, says IEA
- The global battery industry is set to reach the 1 TWh demand milestone by 2024, with China leading in production and cost reduction, especially with the focus on LFP batteries.
- China accounts for over 75% of global battery production, with prices falling significantly and EVs becoming cost-competitive with traditional vehicles in the country.
- The success in the Chinese market is attributed to high production volume, centralized expertise, an integrated supply chain, and focus on LFP batteries, which are cheaper than NMC batteries.
- Despite price declines, competition in China may lead to a reduction in the number of battery producers and consolidation in the market, but China is expected to remain a key player.
- Korea and Japan, known for NMC batteries, are expanding overseas manufacturing capacity while considering the adoption of LFP designs to compete in the market.
- The United States has seen a significant increase in battery manufacturing capacity, with tax credits boosting growth, although component manufacturing lags behind.
- Southeast Asia and Morocco are emerging as potential battery production hubs, with significant investments in battery manufacturing and components.
- Efforts to develop new production capacity involve collaborations with established battery producers, international partnerships, and sustained demand from electric vehicle sales.
- The IEA emphasizes the need for strategic collaboration and diversification in battery production to mitigate security concerns and reduce the cost gap with Chinese manufacturers.
- Electric vehicle sales remain crucial in driving battery demand, with collaborations and investments necessary to enhance domestic supply chains and support new markets.
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