Cell Production

Hundreds of cell factories, so-called gigafactories, are being built worldwide. These are necessary to meet the increasing demand for lithium-Ion batteries. Currently, a large part of cell production takes place in Asia, more precisely in China, Korea and Japan. In the next few years, however, the global market shares will shift. Due to demand from European and American automakers, for example, there will be more and more cell factories outside Asia by the end of the decade. Many OEMs either enter into cooperation with established cell manufacturers or try to establish their own cell production.

The tool visualises the production capacities that are theoretically available at the built or already announced production sites. The maximum scenario includes all the announcements, regardless of their likelihood of realisation. Furthermore, the figures only take into account schedules and capacities that have been communicated to date. Due to the amount of overcapacity that has been announced, not all the plans will be realised.

The largest cell manufacturer in 2024 was China with a 79 percent market share. The country had a production capacity of approximately 2.5 TWh at that time. By 2030, the global market share will drop to less than 50 percent due to the diversifying market, but the production capacity still increases to 3.8 TWh. Korea (2024: 2.5 percent market share) and Japan (also 2.5 percent market share in 2024) were the largest cell manufacturers after China, but will continue to lose their market share over the next few years. Nevertheless, they have each expanding production capacities from 70 to 130 GWh and 70 to 150 GWh per year, respectively.

Europe and North America are also experiencing extreme growth in the market for cell production. In North America, there will be a massive increase in capacity from 150 GWh in 2024 to over 1,600 GWh in 2030, partly driven by the Inflation Reduction Act (IRA). In Europe, manufacturing capacities could increase by a total of 1,500 GWh by 2030.

There are now almost 600 different production sites worldwide with major production facilities. However, the announcements must be critically analyzed. Depending on the source, but also the actor, the chances that the announcements will be implemented vary. Through an expert assessment of the individual announcements, different scenarios of future cell production sites can be created (minimum and base scenario).

Currently, the production capacity exceeds the current demand for batteries. However, it is repeatedly discussed whether the construction and expansion of the production facilities can grow with the rapidly growing demand market. A slow production ramp-up, delayed construction projects or even completely abandoned projects often leave the actual production capacity significantly below the announced production capacity.

Since 2023, there have been a large number of construction projects, particularly in Europe, which have been delayed or cancelled. The total affected capacity is around 700 GWh. The main reasons for this are weakening market demand and high price pressure. Among other things, overcapacity caused cell prices to fall rapidly. In addition, construction projects outside of Asia are more expensive. In addition, there are challenges in ramping up new production facilities, especially when there is insufficient experience in battery production. So far, the IRA has only had an impact on delays or cancellations of construction projects in Europe in a few isolated cases.

The investment costs for cell production vary and are strongly dependent on the total production capacity of the production facility. There are many scaling effects for the factories. Primarily with the required building infrastructure, for example, a lot of costs can be saved. A smaller production facility with less than 20 GWh production capacity per year causes on average approximate investments of 80 million USD per GWh. In comparison, the average investment for production facilities of more than 20 GWh is reduced to 65 million USD per GWh.

In the individual production facilities, different cell formats can be manufactured. A distinction is made between pouch, cylindrical and prismatic cells. On the one hand, the cells are manufactured differently in sub-steps, and on the other hand, they differ in the energy densities achieved or have different cell properties (e.g. with regard to safety). It is difficult to predict how the proportions of cell formats will develop. Whereas in 3C applications (see application tool window) primarily round cells were used in the past and today primarily pouch cells, there is no clear trend towards a specific cell format in the automotive sector. Different manufacturers rely on completely different cell formats and their integration into the vehicles.