Amid a global push for electric vehicles, China is further tightening its grip on the value chains of electric vehicles (EV) batteries, a recent report by Rystad Energy reveals.

While China already governs 74.3% of the global production capacity of cathodes — an essential component of EV batteries — Rystad reports that the country is on track to quadruple its own manufacturing volume by the end of 2025, positioning itself to increase its share to 83.8% of global cathode production over the next four years. 


According to the report, which was published in July, China’s increasing market control comes at the expense of other major Asian economies. Capacity in South Korea is estimated to fall from 18.9% to 11.8% by 2025, while Japan is set to see its share fall from 5.5% to 1.9% over the same period. 

Europe, on the other hand, is set to emerge comparatively unscathed. On track to experience the largest cathode market growth by 2025, with a forecasted 53% compound annual growth rate, the continent’s share of global cathode capacity will increase to 1.4%, Rystad estimates.

Most of the European market’s capacity will be down to chemicals company Johnson Matthey, which is currently testing a pilot cathode plant in Billingham, in the UK, and is expected to launch two major cathodes lines in Finland and Poland. Similarly, North America’s global share is expected to remain stable at 1%.

“Major EV producers plan to build car manufacturing facilities in Europe and North America, which has encouraged plans to invest and increase the local capacity of cathode production,” Edison Luo, analyst at Rystad Energy’s battery materials team, said in a statement.

Contentious cobalt

But despite the projected stability of their markets, Europe and North America’s share of global capacity still pales in comparison to that of China. The reasons for this are manifold, but can largely be attributed to the precarious sourcing of cobalt, a main ingredient of the nickel, cobalt, manganese/aluminium (NCM/NCA) battery cathodes manufactured by European and North American markets. 

“The battery industry is working to reduce the use of cobalt because of several issues related to its production, including ethically complex supply chains, the limited quantity that can be mined and the high price of the raw material,” the report reads. 

EV battery cathodes come in two predominant forms: NCM/NCA and lithium iron phosphate (LFP). With the onset of a “cobalt-free trend” in the industry, North American and European markets have had to curb their cobalt usage in their NCM/NCA cathodes. Their alternative strategy is to instead increase the cathodes’ nickel content. 

This counter-approach still poses limitations, however, as the report explains that “high nickel content leads to reduced heat resistance and fire hazard,” thus continuing the bottleneck experienced by North American and European cathode markets.

Perfect storm

While European and North American markets have scrambled to successfully adapt their cathode production to omit the use of cobalt, China has bypassed these issues by channeling its efforts into becoming the largest market for LFP cathodes. 

These cathodes are cheaper to manufacture, reduce China’s dependence on foreign imports as it has its own upstream lithium mines, and, most importantly, require neither cobalt nor nickel for their production. This combination of factors has concocted somewhat of a perfect storm for China to take the reins.

“The supply and sourcing of key raw materials remains a bottleneck for the industry despite investments outside Asia, and China will capitalise on the growing market demand,” said Mr Luo.