How to compete in EV automotive market, if you are not the owner of the RAW material

China controls 80% of lithium battery materials market, Japanesefirms seek opportunities

China’s growing market share in electric vehicles (EVs) and automotive lithium-ion batteries has propelled its dominance in lithium-ion battery materials.

A Yano Research Institute report reveals that Chinese manufacturers now control over 80% of the global market in the key components: cathode, anode, electrolyte, and separator materials. This increase highlights China’s expanding influence and competitive edge in the global EV supply chain.

Chinese manufacturers controlled 83.1% of the global cathode materials market in 2021, with projections indicating this will rise to 89.4% by 2023. In the anode materials market, their share was 88.3% in 2021 and is expected to reach 93.5% in 2023. In contrast, Japanese and South Korean manufacturers have seen their market shares decline, highlighting China’s increasing dominance in the lithium-ion battery supply chain, according to Nikkei and SNE Research.

Chinese manufacturers captured 81.5% of the global electrolyte market in 2021, with their share expected to increase to 85% by 2023. Meanwhile, Japanese manufacturers’ market share declined from over 10% to 7.2%, while South Korean companies saw an increase from 6.4% to 7.8%, as reported by Coherent Market Insights and 24 Chemical Research.

Chinese manufacturers held a 74.3% share in the global separator market in 2021, with projections showing an increase to 87.4% by 2023. In the same period, Japanese and South Korean companies faced significant market share declines. The global battery materials market expanded from US$87.9 billion in 2022 to US$88.6 billion in 2023, with further growth anticipated. As this market expands, Chinese manufacturers, having consistently grown their share, are expected to gain even greater competitive advantages.

Nikkei reports that Chinese manufacturers have grown their market share in battery materials, driven by the surging demand for EVs in China. In 2023, more than 30% of new car sales in China were EVs and plug-in hybrid vehicles (PHEVs). As a result, China now accounts for two-thirds of global automotive battery demand, with Chinese battery companies collectively holding over half of the worldwide market share.

Chinese battery giants like CATL are expanding investments abroad, leveraging their strong domestic market as a foundation. Battery material suppliers are also following this trend. For instance, BTR New Material Group is building cathode and anode material plants in Morocco, with production slated to begin in 2026. These facilities will produce enough materials for 500,000 EVs annually, mainly supplying Chinese battery companies operating in Europe and North America.

Shenzhen Senior Technology Material, a separator manufacturer, invested in establishing a plant in Malaysia in 2023. By 2024, the company secured a 30-year supply agreement with South Korea’s battery manufacturer, Samsung SDI.

With global EV growth decelerating and the US distancing itself from the Chinese EV supply chain, Japanese battery material producers are seeking new opportunities in collaboration with automakers. For example, separator manufacturer Asahi Kasei partnered with Honda to build a plant in Canada for its EV production. The investment totals JPY200 billion (around US$1.4 billion), with production expected by 2027. Japanese cathode material producer Sumitomo Metal Mining is set to use its Vietnam facility for lithium iron phosphate (LFP) cathode production. While Chinese companies dominate the LFP market, automakers in Europe and the US are exploring alternative sources to reduce dependence on Chinese supply chains.