2025 secondary battery forecast

[2025 secondary battery forecast]

2024 was a year that confirmed China as an overwhelming powerhouse in electric vehicles, ESS, and secondary batteries. Will China continue to be strong in 2025?

1. China-centered EV-ESS-Secondary Battery Ecosystem Formation Deepens and Survival Competition

More than half of the new cars sold in China are expected to be electric this year. Since it is a market of 32 million units per year, 16 million electric vehicles are sold. There are three main reasons why electric cars are sold so much. First, license plate and parking lot costs were reduced, charging infrastructure was rapidly distributed to third-tier cities, and third, even without subsidies, electric cars are less expensive than equivalent gas cars.

In other words, electric cars are sold a lot in China because it is profitable to buy electric cars, and electric cars are not sold in China for purposes that do not meet these conditions (ex. long-distance large trucks that have to run 500 kilometers every day). Few countries other than China have met these conditions, and the U.S. automobile market, which is as huge as China, still has a long way to go. In the U.S., sales of pure electric vehicles are expected to stagnate or reverse this year, with high prices and insufficient infrastructure.

In Europe, European automakers are struggling with the rapid penetration of Chinese electric vehicles as cost-effectiveness weapons, and they are using various policy tools to block Chinese electric vehicles. As a result, China’s electric vehicle and secondary battery companies are in a tight situation where the market size and sales increase, but the recovery of investment costs cannot be guaranteed, and this is reflected in the sideways stock price.

China as a whole has become a powerhouse in this field, but from the perspective of companies, the cash flow is terrible. No company can guarantee survival if it fails to attract additional investment or to extend or increase existing loans. So, even if the substance is unclear, it should be seen that the news of the development of new technologies/new vehicles is released day after day and great goals are announced. It will be reorganized into no more than five large companies that survived fierce competition, and vertical integration of supply chains is expected to intensify in the process.

Murderful competition and cost declines in the electric vehicle market continue in the ESS market, and the global market share of Chinese ESS is expected to exceed 80% in 2025. Chinese companies are increasing their mileage by improving LFP technology in electric vehicles, and in the case of ESS, weight is not a big problem, so China’s strength in LFP is more prominent. In the case of long-cycle BESSs of more than 5 hours and less than 0.2C, there are no products in the market that can cope with this, so until the next generation of sodium batteries, fierce price competition is expected to continue mainly with Chinese-made LFP ESS.

2. 3 South Korean Batteries Need Strategic Decisions

It has been three years since the publication of technologies and papers suggesting that LFP square-shaped batteries can achieve energy capacity close to that of ternary batteries by forming them into Cell to Pack or Cell to Body. Based on this strategy, Chinese companies such as CATL and BYD have made all-out efforts to supply LFP-based electric vehicles with 300 to 400 kilometers of mileage at a low price, and have paid off. However, the three Korean companies are still passive in responding to form factors.

Japan created the secondary battery market with cylindrical cells, and LG Ensol developed the market with pouch cells. SDI has a square and a cylindrical shape, and SK-on only makes pouch cells. Physically, when the square is concentrated, the dead space is reduced and it is easy to secure structural rigidity, which is advantageous for CTP or CTB. In addition, since it is easy to discharge hydrogen gas through the vent, the square has an advantage in safety compared to the pouch in which the lib must burst. SDI has been developing pouch cells for quite a long time, but it has not mass-produced them, and is the most conservative position to LFP, and is also withdrawing from the competition to expand Capa. Paradoxically, SDI is the best place in Korea for a long time, but it is also the most conservative company in applying and investing in new technologies.

American automakers are now looking for square form factors, with the three Korean companies betting their fate on. They have confirmed that using non-standardized pouch cells designed in various ways for each vehicle and vehicle type is subordinate to the battery company, so they are converting to square cells with a somewhat standardized standard. Tesla maintains cost competitiveness because it standardizes batteries with 2170 cylindrical, 4680 cylindrical, and LFP square cells. Automotive makers are aware that lowering costs by making the specifications of the battery used as much as possible is a way to lower the price of electric vehicles, grow the market, and not subordinate to battery companies. Since last spring, Europe has experienced a lot of square-shaped new car designs.

This is the dilemma for the three Korean companies. Many technologies and patents have already been accumulated in pouch cells, and most of the production facilities being built are pouch cell lines. Furthermore, over the past decade, I have published and argued countless times about the shortcomings of Chinese square LFP cells, but it is not easy to take that path now. Furthermore, there is no supply chain for square LFP cells in Korea, and China is already far ahead of the core technologies in the cathode, cathode, and electrolyte fields. In China, LFP materials are evolving every six months because of the fierce competition. The three Korean companies will not lag behind in the development of these materials at the R&D level, but mass-producing them and matching the cost are homework on a different level. After all, it will be difficult unless China makes LFP square cells.

According to recent articles, the three Korean companies still seem to believe in the final victory of the three-way system. When self-driving becomes more common, electric cars’ power consumption increases, so LFP is a transitional technology, and the three-way system is a high value-added technology. It is nothing new. The same repertoire has been repeated since five years ago.

The ESS of the three Korean companies is also not competitive because they insist on using the ternary pouch cell as their main product. We are targeting expensive electric cars that can travel more than 600 kilometers with 911 or higher high-nickel products, but expensive electric cars cannot be sold without subsidies. Furthermore, high-nickel is inherently less safe in fire, and the use of pouch cells complicates product design and increases cost