全球电池市场分析与展望：先行者可能会保持领先地位-2024-10-新能源

GlobalBatteryMarket

Firstmoverswilllikelykeeptheirleads

StephenChan

AssociateDirector

JeremyKim

AssociateDirector

Oct.10,2024

Thisreportdoesnotconstitutearatingaction

2

KeyTakeaways

•Whatdoweexpectoverthenext12-24months?

•Weanticipateslowinggrowthinelectricvehicle(EV)salesinEuropeandU.S.;theongoingelectrificationtrendwillstillsupportlongtermgrowthinglobalEVbatteries.

•ChineseandKoreanbatteryplayerswillremainintheleadintheglobalbatterymarketontheirtechnologyadvantagesandstrongtieswithautomakersinthenextfewyearsatleast.

•WewilllikelyseemarketconsolidationinChina'sbatterymarketunderthenewguidancebytheChinesegovernmenttoimproveovercapacityissues.

•Creditimplications:

•Economiesofscaleandrolloutsofnew,better-pricedproductswilllikelyimproveprofitabilityforContemporaryAmperexTechnology(CATL)(A-/Stable/--).Weanticipateitsfreeoperatingcashflow(FOCF)willfurtherincreaseoverthenexttwoyears,deepeningitsnetcashposition;

•InvestmentburdensremainhighforLGEnergySolutionLtd.(LGEnSol)(BBB+/Negative/--),givenitsaggressivecapacityexpansionamidslowingEVgrowthinitskeymarkets.Thiswilllikelyelevateitsdebt-to-EBITDAto2.5x-2.6xin2024-2025from1.5xin2023.

•Ratingtrends:

•SolidifiedbusinessstrengthandsustainednetcashpositionsupportsthestableratingoutlookonCATL.

•ThenegativeoutlookonLGEnSolreflectsourviewthatthehighcapitalexpenditure(capex)needsfortheEVbatterydivisioncouldpressurethefinancialmetricsofitsparentLGChem.WeequalizeourratingonLGEnSoltothatonitsparent,givenitscoresubsidiarystatus.

Ratings

3

GlobalBatteryDemandWillFurtherGrowIn2024-2025,DrivenByChina

•Weestimatetheglobalbatterymarketwillsee30%-40%annualgrowthin2024-2025,mainlysupportedbyouranticipatedsalesgrowthofelectricvehicles(EVs)inChina.FadingEVsubsidiesinEuropeandlessaggressiveemissionstandardtargetsinU.S.couldmoderateEVsalesandbatterydemandgrowthintheseregionsduringtheperiod.

•Thatsaid,meaningfullaunchesofEVsatmoreaffordablepricesandnet-zeroemissiontargetsbydifferentcarmakersandcountrieswillstillsupportsustainableEVdemandgrowthoverthelongterm.

•BatteriesarethecorecomponentofEVsandcontributeto30%-50%ofEVs'productioncost.Webelievebatterieswillmaintainasolidlong-termgrowthtrajectory.

Batterydemandgrowthremainssolid

mnBatterydemandinEU27Batterydemandinothers

BatterydemandinChinaBatterydemandinUS

——Globaldemandgrowth(rightscale)

(Gigawatthours)

2,500

2,000

1,500

1,000

500

0

(Year-on-year)

50%

40%

30%

20%

10%

0%

20232024e2025e2026e2027e2028e

DataasofSept24,2024.e--Estimate.Sources:S&PGlobalRatings,S&PGlobalMarketIntelligence,S&PGlobalMobility.

S&PGlobal

EVpenetrationwillcontinuetogrow

Region/Countries

2023

2024e

2025e

2026e

2030e*

Europe10

22.2%

<20%

20%-25%

20%-25%

55-60%

China(Mainland)

32.9%

Approx.40%

44%-48%

48%-52%

70%-75%

U.S.

9.2%

10%-11%

13%-16%

16%-22%

30%-35%

Global

16.5%

18%-19%

19%-20%

20%-22%

45%-50%

Europe10--Germany,France,U.K.,Italy,Spain,Belgium,Austria,Netherlands,Sweden,andNorway.e--Estimate.BEVs--Batteryelectricvehicles.PHEVs--Plug-inhybridelectricvehicles.*2030productionprojectionsbyS&PGlobalMobility.

Source:2019-2023EVVolumes;2025estimatesbyS&PGlobalRatings.

Ratings

4

TheMarketLeadersWillStayInFront

•Webelievetheglobaltopplayerswillcontinuetoleadthemarketoverthenextfewyears.Theiredgeonbatterytechnologyandmeaningfulcapacityavailablewillsupportbusinessgrowthandsustainstrongtieswithautomakers.

•Nevertheless,theirstrengthswillkeeptoageographicalfocus.ChineseplayerswilldominatetheChinesemarket.Meanwhile,theywillgraduallyexpandinEuropeandtakeEuropeansharefromKoreanplayers.KoreanplayerswillfocustheirgrowthstrategyintheU.S.

•Localizationpolicesforbatterysupplychainswillsupportmarketshareexpansionofemergingplayers(e.g.Northvolt,PowerCo).Buttheirshareswilllikelyremainlimitedgivenleadingplayershavepricingadvantagesfromeconomiesofscale.

AsiaplayerswillremaindominantinglobalbatterymarketTopthreeplayershaveedgeinspecificareas

CATLBYDOtherChineseplayersLGEnsolPanasonicSKOnSamsungOthers

(Marketshare)

100%

80%

60%

40%

20%

0%

20232024e2025e2026e2027e2028e

Marketshareintermsofestimateddemand.e--Estimate.Sources:S&PGlobalRatings,S&PGlobalMobility.

S&PGlobal

Companyname

CATL*

BYD*

LGEnSol*

Rating

A-/Stable/--

Non-rated

BBB+/Negative/--

Batteryform

Prismatic,cylindrical

Prismatic

Pouch,cylindrical

Est.chemistrymixofsalesvolumein2023§

60%NCM;40%LFP

100%LFP

60%NCM;40%NCMA

Majorbatterytechnology

(1)FastchargingLFP:ShenxingPlus;

(2)Cell-to-Pack:QilinBattery

(3)Cell-to-Chassis

(1)BladeBatteryLFPtechnology

(2)Cell-to-Pack

(3)Cell-to-Body

(1)High-nickelNCMAbatteries

(2)NCMbatteries

(3)Pouch-typecell-to-packLFP

*CATL--ContemporaryAmperexTechnologyCo.,Ltd.BYD--BYDCo.Ltd.,LGEnSol--LGEnergySolution,Ltd.,§NCM--Nickel-Cobalt-Manganese,LFP--Lithiumironphosphate,NCMA--NickelCobaltManganeseAluminum.

Sources:S&PGlobalRatings,S&PMobility.

Ratings

5

MarketConsolidationInChinaBenefitsDominantLocalPlayers….

•ChinesebatteryplayershavebeenexpandingquicklytomeetdemandfromChina’sfast-growingEVmarket,especiallyinprioryears.EmergingorforeignplayersareunlikelytomeaningfullyscaleupinChinaduetofirst-moveradvantagesofincumbentlocalplayers.

•NewbatteryguidanceinChinawilllikelyencouragemarketconsolidationandbenefitleadingplayers.TheChinesegovernmenthasraisedindustrytechnologystandardsandminimumutilizationtargetsforindustryplayersasofJune20,2024.

•Weakerplayerswilllikelybesqueezedoutandthiswillgraduallyimprovethecountry’sovercapacityissueoverthenextfewyears.

ChineseplayerswillremaindominantinChina

CATLBYDCALBEVEEnergyGotionSunwodaGuangzhouGreatPowerFarasisEnergyOthers

(Marketshare)

100%

80%

60%

40%

20%

0%

202320242025e2026e2027e2028eMarketshareintermsofestimateddemand.e--Estimate.Sources:S&PGlobalRatings,S&PGlobalMobility.

Chinesegovernmentistryingtoimprovesupplyissue

Requirements

DetailsonEVbatteries

Industrystatus

Energydensity

•NCMbatterycell:≥230Wh/kg;NCMbatterypack≥165Wh/kg;

•Batterycellwithothermaterials(e.g.LFP):≥165Wh/kg;batterypackwithothermaterials:≥120Wh/kg.

2024first7months:82%ofbatterypackwith

energydensityof

125wh/kg–160wh/kg

Lifecycle

•Batterycell:cyclelife≥1500times;capacityretentionrate≥80%

•Batterypack:cyclelife≥1000times;capacityretentionrate≥80%

N.A.

R&Dexpenses

Batterymanufacturersneedstoinvestatleast3%oftheir

mainbusinessrevenueannuallyonresearchanddevelopmentofbatterytechnology

N.A.

Utilization

Actualproductionvolumeoftheyear≥50%ofproductioncapacities

Somelowertierplayershave<30%utilization

Sources:TheMinistryofIndustryandInformationTechnology,ChinaAutomotiveBatteryInnovationAlliance,GaogongIndustryResearchInstitute,S&PGlobalRatings.

S&PGlobal

Ratings

6

…ButSlowingMarketGrowthWillFurtherIntensifyCompetitionInChina

•WeanticipateEVmarketgrowthinChinawilldeceleratetoabout30%in2024fromhigherdoubledigitsinprioryears.

•TheEVbatteryinstallation-to-productionratiodeclinedto47%in2024firsthalf,comparedwith70%in2021,asEVdemandgrowthslowedandbatteryproductionrose.

•China'scrowdedmarkethasweakenedpricingpowerintheindustry.Weakerplayershavelesscompetitiveproductofferingsandcouldlosevolumeandfaceweakerprofitabilityoverthenextonetotwoyears.

•Excessbatterysupplyandfurtherfreeoperatingcashoutflowsformanyplayerswillelevatetheirdebtleverage.

Somelower-tierplayersarestruggling……Andmanyarehighlyleveragedfromcapacityexpansion

20212022202320241H

(Est.EBITDAmargin)

25%

15%

5%

-5%

-15%

-25%

-35%

-45%

CATLEVEEnergyGotionCALBSunwodaGuangzhouFarasisREPT

GreatPowerEnergyBATTERO

Energy

OnlyCATLisrated.Dataofotherentitiesareourestimatesbasedontheirannualandinterimreports.Source:S&PGlobalRatings.

EBITDAFOCFNetdebtDebt-to-EBITDA(rightscale)

(Bil.RMB)

50

40

30

20

10

0

-10

-20

FarasisREPT

EVEGotionCALBSunwodaGuangzhou

greatpower

(x)

20

15

10

5

0

-5

-10

-15

Dataofaboveentitiesareourestimatesbasedontheir2023annualreports.FarasisandREPT’sdebt-to-EBITDAratiosarenegativeduetotheirnegativeEBITDA.FOCF—freeoperatingcashflow.Source:S&PGlobalRatings.

S&PGlobal

Ratings

7

KoreanProducers'InvestmentBurdensRemainSignificantInU.S.Market

•KoreanbatteryplayerswilllikelycontinuetoprioritizeexpansionintheU.S.,supportedbyAdvancedManufacturingProductCredit(AMPC)availableundertheInflationReductionAct.

•WeakeningEVdemandgrowthinU.S.coulddelaycapacityexpansion.Also,subjecttothepresidentialelectionresults,theremaybe

changestotheproductionincentiveprograms.Yet,investmentsbyKoreanbatterymakersremainsubstantialforcapturingshareintheregion.

•WebelievethemajorityofChineseplayerswillrefrainfrommeaningfuldirectinvestmentsduetointensifyingtensionbetweenChinaandtheU.S.GiventheU.S.’s“foreignentityofconcern”clause,Chinesebatteryplayerswon’teasilygettax-incentiveentitlementssowouldn’tbeascostcompetitiveintheU.S.

KoreanfirmswilldominateNorthAmericamarketCapacityadditionsintheU.S.beingdelayedorcancelled

CATLOtherChineseplayersLGEnsolSamsungSDISKOnTeslaPanasonicOthers

(Marketshare)

100%

80%

60%

40%

20%

0%

20232024e2025e2026e2027e2028e

Marketshareintermsofestimateddemand.e--Estimate.Sources:S&PGlobalRatings,S&PGlobalMobility.

Batteryproducers

OEMpartner

Batteryplant

Plannedcapacity

Status

LGEnSol

GeneralMotors

Michiganplant

45Gwh

Strategicallyreviewing

LGEnSol

N.A.

Arizonaenergystorageplant

17Gwh

Heldoff

SKOn

FordMotor

BlueOvalSKBatteryPark

80+Gwh

Postponedtostartafter2026

Panasonic

Tesla

ThirdplantinU.S.

N.A.

Announcementdateisdelayed

Microvast

N.A.

Kentucky

19Gwh

Cancelled

Gwh--Gigawatthour.Theabovelistisnon-exhaustive.Sources:Companies’announcements,S&PGlobalRatings.

S&PGlobal

Ratings

8

TheCompetitiveLandscapeInEuropeIsStillEvolving

•ChineseandEuropeanplayersaregraduallyrampingupbatterycapacityinEuropeandwill,inourview,takesharefromKoreans,thetraditionalleadersinEurope,overthenextfewyears.

•Thatsaid,likelyslowingEVgrowthintheregioncouldhinderprogress.Anumberofbatteryproducershaveannouncedcancellationsordelaysoftheirexpansionplans,mainlyoninsufficientsecuredorders.

•Chineseplayershavepriceadvantagesthatwillsupportfurtherpenetrationviabatteryexportsover2024-2025.WeestimatebatterycostinChinawillremainatleast30%lowerthanlocallyproducedbatteriesinEuropeduringtheperiod.Thisismainlyduetocheapermaterialprocessing/refiningcostsandlowerlaborandmanufacturingcostsinChina.

CompetitivelandscapeinEuropeisstillevolvingRecentannouncementsofcapacitydelaysinEurope

players

LGEnsolNorthvoltOthers

OtherChineseSamsungSDIVolkswagen

CATLSKOn

EnvisionGroup

(Marketshare)

100%

80%

60%

40%

20%

0%

20232024e2025e2026e2027e2028e

Marketshareintermsofestimateddemand.e--Estimate.Sources:S&PGlobalRatings,S&PGlobalMobility.

Batteryproducers

OEMpartner

Batteryplant

Plannedcapacity

Status

Northvolt

BMW

Swedenplant

60Gwh

Strategicallyreviewing

ACC

StellantisandMercedes

ItalyandGermanyplant

40Gwheach

Paused

SVOLTEnergy

N.A.

Germany

16Gwh

Cancelled

PowerCo

Volkswagen

FourthplantinEurope

N.A

Delayed

Theabovelistisnon-exhaustive.Sources:Companies’announcements,S&PGlobalRatings.

S&PGlobal

Ratings

9

NewTechnologyCouldbeAGameChangerButItWillTakeTime

•Weexpectsolidstatebattery(SSB)willbearevolutionarytechnology.ThisisbecauseSSBhashighenergydensity,lowerpackcomponentcosts,andreducedflammability.

•SomebatteryplayersaretargetingtomassproduceSSBasearlyas2026.Thatsaid,weanticipatethemarketshareofSSBwillremainlessthan2%until2030.ThisisbecauseinitiallythepriceofSSBwillbeatapremiumtoliquidstatebatteries,partlybecauseoflow

availablecapacityforproduction.Thecapacitybuild-outwilltaketime,giventhemanufacturingprocessofSSBisdifferent.

•Meanwhile,LFP-andNCM-relatedcathodechemistrywillcontinuetobewidelyadoptedbyautomakersoverthelongterm.Othercathodechemistrycouldbehardtoscaleupduetoinstabilityofbatteryperformance,lowenergydensityoraffordability.

(Marketshare)

LFPNCANCMNCMAOthers

100%

80%

60%

40%

20%

0%

202220232024e2025e2026e2027e2028e

Marketshareintermsofestimateddemand.LFP--Lithiumironphosphate,NCMA--NickelCobaltManganeseAluminum,NCM--Nickel-Cobalt-Manganese,NCMA--NickelCobaltAluminum.e--Estimate.Sources:S&PGlobalRatings,S&PGlobal

LFP-andNCM-relatedtechnologywillremaindominantManyplayershavenospecificcapacitytargetonSSB

Batteryproducers

Technologypartner

Plannedcapacity

Targeted

productionyear

CATL

N.A.

Smallbatches

2027

BYD

N.A.

Smallbatches

2027

LGEnSol

N.A.

N.A.

2030

SamsungSDI

N.A.

N.A.

2027

SKOn

SolidPower

N.A.

2027

Toyota

N.A.

N.A.

2027

Panasonic

N.A.

Onsmalldrones

2029

PowerCo

QuantumScape

40Gwh

2026

Mobility.Theabovelistisnon-exhaustive.Sources:Companies’announcements,S&PGlobalRatings.

S&PGlobal

Ratings

10

CATLWillSeeHigherGrowthThanLGEnSolOverOurForecastPeriod

•CATLwilllikelyexpandannualsalesvolumeby10%-21%over2024-2025.DriversincludethegrowingEVmarketinChina,withsomeproductiongraduallyexpandingtoEurope.Thiswillmitigatetheimpactoflowerbatterypricesandsupport3%-7%annualrevenuegrowthoverthisyearandthenext.

•CATLwillalsotestalicensing,royalty,andservicesmodeltocooperatewithU.S.automakers.Thisapproach,ifimplementedsmoothly,willlikelyhelpthecompanytomitigategeopoliticalrisks.

•Meanwhile,weexpectLGEnSol’sEVbatterydemandgrowthwillslowinkeymarketsover2024-2025,includingtheU.S.andEurope.Thecompany’ssalesvolumewilllikelydeclineslightlyin2024,beforeresuminggrowthin2025.

RevenueandvolumegrowthofCATLandLGEnSol

CATL'srevenue

LGEnsol'srevenue

LGEnsol'ssalesvolume(rightscale)

CATL'ssalesvolume(rightscale)

80

800

(Gigawatthours)

700

(Bil.US$)

60

600

500

40

400

300

20

200

100

0

0

2022

2023

2025e

2024e

2026e

e--Estimate.Sources:Companies’announcements,S&PGlobalRatings.

CATLwillgraduallyexpandtoEuropefromChina

Estimatedproductioncapacityexposurein2023

Region/CountryCATLLGEnSol

GreaterChina

98%

40%

Europe

2%

30%~35%

Japan/Korea

N.A.

10%

NorthAmerica

N.A.

15%~20%

Totalproductioncapacity(gigawatthour)

552

280

Sources:Companies’announcements,S&PGlobalMobility.S&PGlobalRatings.

S&PGlobal

Ratings

11

RatingBufferTrendsAreDivergingForCATLAndLGEnSol

•WeanticipateamodestEBITDAmarginexpansionforCATLover2024-2026.Thisissupportedbyimprovingeconomiesofscaleandtherolloutofnewproductswithbettermargins.ForLGEnSol,weforecastitsoperatingmargin,excludingAMPCbenefits,willcomeunderpressurefromlowerutilization.Theblendedmargin,includingAMPC,couldimprove,butwithsomedownsiderisks.

•HigheroperatingcashflowandslowingcapexamidmoderatingEVgrowthwillexpandCATL’sFOCFanddeepenitsnetcashpositionin2024-2026.Thecompanywillalsoinvestmorethan4%ofannualrevenueintotechnologydevelopment.

•WerevisedtheoutlookonLGEnSoltonegativeinMay2024onexpectationsthatitsdebtleveragewilldeterioratein2024,andremainelevatedin2025.Thisisduetoslowingdemandgrowthandintensifyingcompetition,amidanongoinghighcapexcycle.

(Debt-to-EBITDAratio)

3.02.52.01.51.00.50.0-0.5-1.0-1.5-2.0

LGEnSol’smargincouldimproveontaxincentiveinU.S.……Butitsleveragewillelevateoncapacityexpansion

(EBITDAmargin)

25%

20%

15%

10%

5%

0%

CATL'sEBITDAmargin

OCATL'sR&Dratio(rightscale)

LGEnsol'sEBITDAmargin

OLGEnsol'sR&Dratio(rightscale)

202220232024e2025e2026e

(R&Das%ofrevenue)

5%

4%

3%

2%

1%

0%

(FOCFbil.US$)

14

12

10

8

6

4

2

0

-2

-4

-6

-8

CATL'sFOCF

OCATL'sleverage(rightscale)

LGEnsol'sFOCF

oLGEnsol'sleverage(rightscale)

202220232024e2025e2026e

R&D—Researchanddevelopment.e--Estimate.Source:S&PGlobalRatings.FOCF—freeoperatingcashflow.e--Estimate.Source:S&PGlobalRatings.

S&PGlobal

RelatedResearch

Commentary

•GlobalAutoOutlook:MorePlayers,LessProfit

,Oct.09,2024

•Chinaaheadindeliveringaffordableelectricmobility

,May.29,2024

•ChinaEVStartupsStrugglingToStayAfloat

,May.28,2024

•AsianBatteryMakersAreShiftingStrategiesToHoldOntoGlobalLead

,Oct05,2023

•KoreaIsOnTheBrinkOfABatteryBoom

,Dec.06,2022

•BatterySuppliers,AutomakersToTakeChargeAsPricesRise

,May.18,2022

•High-FlyingBatteryMakersHaveMuchToWinAndLose

,Jun.21,2021

ResearchUpdates

•ContemporaryAmperexTechnologyUpgradedTo'A-'OnSustainedBusinessGrowth,LowLeverage;OutlookStable

,May.07,2024

•ResearchUpdate:LGChem,LGEnergySolutionOutlookRevisedToNegativeOnAggressiveExpansionInvestments;'BBB+'RatingsAffirmed

,May.28,2024

S&PGlobal

Ratings12

S&PGlobal

Ratings

Ratings

14

AnalyticalContacts

StephenChan

AssociateDirector+8522532-8088

stephen.chan@

VittoriaFerraris

ManagingDirector+390272111207

vittoria.ferraris@

JeremyKim

AssociateDirector+8522532-8096

jeremy.kim@

NishitKMadlani

ManagingDirector+1(212)4384070

nishit.madlani@

ClaireYuan

Director

+8522533-3542

claire.yuan@

DannyHuang

ManagingDirector+8522532-8078

danny.huang@

JunHongPark

Director

+85225333538

junghong.park@

CrystalLing

SeniorAnalyst

+8522533-3586

crystal.ling@

S&PGlobal

Ratings15

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