Asia's top battery players have taken a lot of risks to be global leaders in the EV supply chain. They've built up capacity for a market that has not yet fully arrived. To keep their lead, they now need to shift more investments abroad, even with oversupply in some home markets.
S&P Global Ratings sees Asian EV battery manufacturers boosting their investments in factories abroad to keep their global lead.
Asian companies have invested heavily to gain global dominance in electric vehicle (EV) supply chains. To keep their lead, many EV battery suppliers are increasingly investing abroad. Leading players with strong global partnerships will stay on top amid this industry shift. Some weaker ones in China may not survive.
Global and Southeast Asia battery demand for battery manufacturing output from Southeast Asia is expected to be led by exports to other regions (e.g., US, Europe), despite growing regional demand. Based on the current trajectory of demand, global demand for batteries is projected to increase by approximately 25% per year to 4.5 TWh by 2030.
By our estimates, utilization at battery factories in China languished at under 50% over the first eight months of 2023. Exports are helping to offset some of the pain, with China's share of the global battery market on the rise. We believe battery makers with stronger export channels and global alliances will outperform in the coming years.
Southeast Asia has significant potential to establish an end-to-end battery value chain, given its rich critical mineral resources and strong interest from global industry players to establish a domestic manufacturing footprint.