The sales of EV lithium-ion battery in China have grown rapidly from 4.4 GWh in 2014 to 80 GWh in 2020. Now, more than 2/3 of the global total EV lithium-ion battery production capacity is located in China. A few leading Chinese battery firms have developed price advantage based on mass production and economy of scale.
In the 1990s, China had its first breakthrough with its state enterprise China Electronics Corporation successfully developing its own Model 18650 lithium battery which was ready for mass production.
From 2001 to 2008, early players like BYD, Shenzhen Bike Battery, and Tianjin Lishen Battery have grown their investments in battery research and brought growth to the Chinese lithium battery industry. However, there were moments of stagnation during this period with issues of scaling and meaning the demands from across the world.
China produced more than 15 billion units of lithium-ion batteries in 2019, which accounts for 73% of the world's 316 gigawatt-hours capacity. China is a significant producer of lithium batteries and electric vehicles, supported by government policies.
The success of China has shown that active participation and specialised vertical integration by firms along the lithium-ion battery value chain have contributed to strong local dynamics, forming an unparalleled comparative advantage.
China is the leading producer of lithium-ion batteries. Chinese companies supply 80 percent of the world's battery cells and account for nearly 60 percent of the EV battery market. Even some US companies that produce batteries rely on lithium-ion cell components produced by Chinese manufacturers.