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Energy Shift

Battery Megafactory Forecast: 400% Increase in Capacity to 1 TWh by 2028

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Battery Megafactory Forecast: 400% Increase in Capacity to 1 TWh by 2028

Battery Megafactory Forecast

The Chart of the Week is a weekly Visual Capitalist feature on Fridays.

When ground broke on the massive Tesla Gigafactory in Nevada in 2014, the world marveled at the project’s audacity, size, and scope.

At the time, it was touted that the cutting-edge facility would be the largest building in the world by footprint, and that the Gigafactory would single-handedly be capable of doubling the world’s lithium-ion battery production capacity.

What many did not realize, however, is that although as ambitious and as forward-looking as the project sounded, the Gigafactory was just the start of a trend towards scale in the battery making space. While Tesla’s facility was the most publicized, it would ultimately be one of many massive factories in the global pipeline.

Mastering Scale

Today’s data comes to us from Benchmark Mineral Intelligence, and it forecasts that we will see a 399% increase in lithium-ion battery production capacity over the next decade – enough to pass the impressive 1 TWh milestone.

Here is a more detailed projection of how things will shape up in the coming decade:

RegionCapacity (GWh, 2018)Capacity (GWh, 2023)Capacity (GWh, 2028)
China134.5405631
Europe19.693.5207
North America20.981148
Other005
Asia (excl China)45.578.5111.5
Grand Total220.56581,102.5

In just a decade, lithium-ion battery megafactories around the world will have a combined production capacity equivalent to 22 Tesla Gigafactories!

The majority of this capacity will be located in China, which is projected to have 57% of the global total.

The Top Plants Globally

According to Benchmark, the top 10 megafactories will be combining for 299 GWh of capacity in 2023, which will be equal to almost half of the global production total.

Here are the top 10 plants, sorted by projected capacity:

RankMegafactoryOwnerCountryForecasted capacity by 2023 (GWh)
#1CATLContemporary Amperex Technology Co LtdChina50
#2Tesla Gigafactory 1Tesla Inc / Panasonic Corp (25%)US50
#3Nanjing LG Chem New Energy Battery Co., Ltd.LG ChemChina35
#4Nanjing LG Chem New Energy Battery Co., Ltd. Plant 2LG ChemChina28
#5Samsung SDI XianSamsung SDIChina25
#6Funeng TechnologyFuneng Technology (Ganzhou)China25
#7BYD , QinghaiBYD Co LtdChina24
#8LG Chem Wroclaw Energy Sp. z o.o.LG ChemPoland22
#9Samsung SDI KoreaSamsung SDIKorea20
#10LishenTianJin Lishen Battery Joint-Stock CO.,LTDChina20

Of the top 10 megafactory plants in 2023, the majority will be located in China – meanwhile, the U.S. (Tesla Gigafactory), South Korea (Samsung), and Poland (LG Chem) will be home to the rest.

Reaching economies of scale in lithium-ion battery production will be a significant step in decreasing the overall cost of electric vehicles, which are expected to surpass traditional vehicles in market share by 2038.

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Electrification

Where are Clean Energy Technologies Manufactured?

As the market for low-emission solutions expands, China dominates the production of clean energy technologies and their components.

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Visualizing Where Clean Energy Technologies Are Manufactured

When looking at where clean energy technologies and their components are made, one thing is very clear: China dominates the industry.

The country, along with the rest of the Asia Pacific region, accounts for approximately 75% of global manufacturing capacity across seven clean energy technologies.

Based on the IEA’s 2023 Energy Technology Perspectives report, the visualization above breaks down global manufacturing capacity by region for mass-manufactured clean energy technologies, including onshore and offshore wind, solar photovoltaic (PV) systems, electric vehicles (EVs), fuel cell trucks, heat pumps, and electrolyzers.

The State of Global Manufacturing Capacity

Manufacturing capacity refers to the maximum amount of goods or products a facility can produce within a specific period. It is determined by several factors, including:

  • The size of the manufacturing facility
  • The number of machines or production lines available
  • The skill level of the workforce
  • The availability of raw materials

According to the IEA, the global manufacturing capacity for clean energy technologies may periodically exceed short-term production needs. Currently this is true especially for EV batteries, fuel cell trucks, and electrolyzers. For example, while only 900 fuel cell trucks were sold globally in 2021, the aggregate self-reported capacity by manufacturers was 14,000 trucks.

With that said, there still needs to be a significant increase in manufacturing capacity in the coming decades if demand aligns with the IEA’s 2050 net-zero emissions scenario. Such developments require investments in new equipment and technology, developing the clean energy workforce, access to raw and refined materials, and optimizing production processes to improve efficiency.

What Gives China the Advantage?

Of the above clean energy technologies and their components, China averages 65% of global manufacturing capacity. For certain components, like solar PV wafers, this percentage is as high as 96%.

Here’s a breakdown of China’s manufacturing capacity per clean energy technology.

Technology China’s share of global manufacturing capacity, 2021
Wind (Offshore)70%
Wind (Onshore) 59%
Solar PV Systems85%
Electric Vehicles71%
Fuel Cell Trucks 47%
Heat Pumps39%
Electrolyzers41%

So, what gives China this advantage in the clean energy technology sector? According to the IEA report, the answer lies in a combination of factors:

The mixture of these factors has allowed China to capture a significant share of the global market for clean technologies while driving down the cost of clean energy worldwide.

As the market for low-emission solutions expands, China’s dominance in the sector will likely continue in the coming years and have notable implications for the global energy and emission landscape.

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Energy Shift

The ESG Challenges for Transition Metals

Can energy transition metals markets ramp up production to satisfy demand while meeting ever-more stringent ESG requirements?

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The ESG Challenges for Transition Metals

An accelerated energy transition is needed to respond to climate change.

According to the Paris Agreement, 196 countries have already committed to limiting global warming to below 2°C, preferably 1.5°C. However, changing the energy system after over a century of burning fossil fuels comes with challenges.

In the above graphic from our sponsor Wood Mackenzie, we discuss the challenges that come with the increasing demand for transition metals.

Building Blocks of a Decarbonized World

Mined commodities like lithium, cobalt, graphite and rare earths are critical to producing electric vehicles (EVs), wind turbines, and other technologies necessary to burn fewer fossil fuels and reduce overall carbon emissions.

EVs, for example, can have up to six times more minerals than a combustion vehicle.

As a result, the extraction and refining of these metals will need to be expedited to limit the rise of global temperatures.

Here’s the outlook for different metals under Wood Mackenzie’s Accelerated Energy Transition (AET) scenario, in which the world is on course to limit the rise in global temperatures since pre-industrial times to 1.5°C by the end of this century.

MetalDemand Outlook (%) 2025203020352040
Lithium +260%+520%+780%+940%
Cobalt +170%+210%+240%+270%
Graphite+320%+660%+940%+1100%
Neodymium+170%+210%+240%+260%
Dysprosium+120%+160%+180%+200%

Graphite demand is expected to soar 1,100% by 2040, as demand for lithium is expected to jump 940% over this time.

A Challenge to Satisfy the Demand for Lithium

Lithium-ion batteries are indispensable for transport electrification and are also commonly used in cell phones, laptop computers, cordless power tools, and other devices.

Lithium demand in an AET scenario is estimated to reach 6.7 million tons by 2050, nine times more than 2022 levels.

In the same scenario, EV sales will double by 2030, making the demand for Li-ion batteries quadruple by 2050.

The ESG Challenge with Cobalt

Another metal in high demand is cobalt, used in rechargeable batteries in smartphones and laptops and also in lithium-ion batteries for vehicles.

Increasing production comes with significant environmental and social risks, as cobalt reserves and mine production are concentrated in regions and countries with substantial ESG problems.

Currently, 70% of mined cobalt comes from the Democratic Republic of Congo, where nearly three-quarters of the population lives in extreme poverty.

Country2021 Production (Tonnes)
🇨🇩 Democratic Republic of the Congo120,000
🇦🇺 Australia5,600
🇵🇭 Philippines4,500
🇨🇦 Canada4,300
🇵🇬 Papua New Guinea3,000
🇲🇬 Madagascar2,500
🇲🇦 Morocco2,300
🇨🇳 China2,200
🇨🇺 Cuba2,200
🇷🇺 Russia2,200
🇮🇩 Indonesia 2,100
🇺🇸 U.S.700

Around one-fifth of cobalt mined in the DRC comes from small-scale artisanal mines, many of which rely on child labor.

Considering other obstacles like rising costs due to reserve depletion and surging resource nationalism, a shortfall in the cobalt market can emerge as early as 2024, according to Wood Mackenzie. Battery recycling, if fully utilised, can ease the upcoming supply shortage, but it cannot fill the entire gap.


Rare Earths: Winners and Losers

Rare earths are used in EVs and wind turbines but also in petroleum refining and gas vehicles. Therefore, an accelerated energy transition presents a mixed bag.

Using permanent magnets in applications like electric motors, sensors, and magnetic recording and storage media is expected to boost demand for materials like neodymium (Nd) and praseodymium (Pr) oxide.

On the contrary, as the world shifts from gas vehicles to EVs, declining demand from catalytic converters in fossil fuel-powered vehicles will impact lanthanum (La) and cerium (Ce).

Taking all into consideration, the demand for rare earths in an accelerated energy transition is forecasted to increase by 233% between 2020 and 2050. In this scenario, existing producers would be impacted by a short- to medium-term supply deficit.


The ESG dilemma

There is a clear dilemma for energy transition metals in an era of unprecedented demand. Can vital energy transition metals markets ramp up production fast enough to satisfy demand, while also revolutionising supply chains to meet ever-more stringent ESG requirements?

Understanding the challenges and how to capitalise on this investment opportunity has become more important than ever.

Sign up to Wood Mackenzie’s Inside Track to learn more about the impact of an accelerated energy transition on mining and metals.

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