Research agency Fitch Solutions says global investment of more than $21-billion toward the electric vehicle (EV) battery supply chain shows the urgency of market expansion.
With Western Europe claiming the biggest share of investment, it reflects the focus on producing EVs in the region and the growing role of carmakers in the supply chain.
China, however, is still the biggest target for investment despite the trend for diversification, as the country remains the biggest standalone market for EVs.
In 2020, Fitch tracked 37 manufacturing projects for EV batteries and related components and materials worth $21-billion, for those projects disclosing financial details.
The projects range from the production of battery cells and packs, to anode materials and battery trays, and give an idea of which regions are most active in developing a localised supply chain and which countries are the biggest beneficiaries within those regions.
Western Europe claimed both the biggest number of projects with 17 and the biggest combined value with $9.1-billion. This gave the region a 43.5% share of the total global investment into battery manufacturing projects.
At a country level, Germany led the region with ten of the 17 projects. The biggest project in Germany is SVOLT's $2-billion battery cell plant with a capacity of 24 GWh/y.
This activity in Germany is reflective of the drive by the country's major automakers to invest heavily in manufacturing EVs at their home plants.
Volkswagen, Daimler and BMW are all undertaking their own projects for the production of battery packs, showing the more active role that carmakers are taking in the supply chain.
In emerging Europe, Fitch Solutions says the projects are dominated by Hungary and Poland and are mostly in the battery component segment, supplying existing facilities in these countries.
This speaks to the strength of these two countries as automotive production locations in general, as well as their ability to move up the value chain with high-tech products.
South Korea's SK Innovation, for example, is planning to build its third plant in Hungary, which has become the company's European base.
While much of the investment across the regions is driven by a desire to reduce dependence on a handful of markets, most notably China, for supplies of batteries and related components, the projects for the Asia region show that China is still a target for investment owing to its being the world's biggest standalone market for EVs.
China accounted for three of the eight projects tracked in Asia, worth a combined value of $2.6-billion, the biggest being a $1.2-billion joint venture between Geely and CATL for a new battery plant.
CATL was also behind the biggest investment in the Asia region overall, with $5-billion for a new battery plant in Indonesia.
The company has also agreed that 60% of the nickel used in the production of batteries at the plant will be locally sourced, informing its view that Indonesia has the potential to become a key player in the development of a South East Asian battery supply chain.