Overheating is a major issue in batteries. The global battery market is evolving fast, and looks to be overheating too:
🔹 Demand is surging, with EV sales up 25% in 2024, pushing battery demand past 1 TWh.
🔹 Prices are dropping, with lithium-ion battery pack costs falling below $100/kWh, a key milestone for EV affordability.
🔹 Manufacturing capacity is exploding, hitting 3 TWh globally - but here’s the catch: only one-third of that capacity is actually being used.
Most of this excess capacity is in China, which dominates battery production. Meanwhile, the US and EU are scrambling to build their own factories, despite shaky demand. And IEA predicts that production capacity could triple in the next five years.
📉 Even if demand also triples, that will just triple the amount of idle capacity. So what happens next?
🚨 Prediction: A Chinese battery bloodbath. Overcapacity in the industry will force bankruptcies and trigger industry consolidation over the next five years. If the US and EU erect more trade barriers, or if China itself restricts technology exports—both of which are already happening—things could get even more brutal.
China might still have the tech and scale advantage, but a lot of companies won’t survive this wave. The real question: Can the US and EU take advantage of the coming shake up in the battery industry?
What do you think? Will China flood the world with cheap batteries, or will geopolitics reshape the industry?
