The Semiconductor industry started in the 1970s and 1980s with all major players having vertical integration and operating their own semiconductor fabs. Semiconductor fabs have become more expensive. The newest fab factories will each cost $12 billion to 17 billion. The quarterly spending on semiconductor fab equipment is $15-20 billion. A dominant chip company with 20% of the market would need to spend $14 billion per year on semiconductor equipment.
The cost of EV battery plants is also large.
CATL was spending 72 billion yuan (USD$11 billion) to add 120-140 GWh/year of batteries over the next 2-4 years. CATL is planning to reach 1200 GWH/year in battery capacity by 2025. This will take about $130 billion in investment if it is at the same cost as this recent buildout. CATL wants to get to 40-50% market share up from about 20-25% share now. 2025 should see about 2400-3000 GWH/year in battery production. This will require an investment of about $300-350 billion.
By 2023, LG Energy Solution is planning to triple production capacity of cylindrical battery cells to 60 GWh a year. Tesla is currently the only major EV company using cylindrical battery cells. LG Chem is planning billions to build out new battery factories.
Tesla stated that they would scale to over 3000 GWh/year in battery production by 2030. Volkswagen announced a plan yesterday to build by itself or with partners six battery factories totaling 240 GWh/year in battery production by 2030. GM has partnered with LG Chem and is completing a 30 GWh/year battery factory that will be producing in 2023. GM and LG are spending about $2.3 billion to build the factory. GM is in talks for a second battery factory by 2025. GM is on track to 120 GWh/year in batteries.
Tesla has stated that their EV expansion is battery constrained. Tesla has 70-80% US EV Market share and will have 20-30% global EV market share. There are several Chinese EV car companies with a combined EV market share of about 30%. Chinese EV ca companies are pushing to compete in the global EV market.
Semiconductor fab companies like TSMC have usually been supplying abundant supply. Nvidia and other fabless companies are able to add value with their chip designs.
From 2021-2030, the best batteries at any point in time could 20-50% better than so-so batteries. Battery cost can also vary by 20-50%.
A competitive EV company will need to have access to the best batteries at very good prices. EV’s are in a growth phase with 40-60% annual growth.
The world EV battery supply will be constrained relative to the demand and EV companies will have to contribute to the research and development and the factory construction to ensure access to better batteries.
An EV company could work with partners to supply 30-70% of their battery needs. These could be for a commodity battery like the LFP (lithium iron phosphate) battery.
Battery Factories Predicting EV Market Share in 2030
Having your own battery factories (or partnering on battery factories) seems roughly predictive of who will be the major EV companies in 2030 and their relative market share.
Tesla would have 50% of the EV market in 2030. Tesla would have its own 3000 GWh/year and 2000 GWh/year from suppliers.
CATL, other China battery makers and China carmakers would have 2500 GWh/year would have 30% of the EV market in 2030.
South Korea, Japan, Europe and US makers would have 20% of the EV market in 2030.
SOURCES- CATL, LG, Tesla
Written By Brian Wang, Nextbigfuture.com (Brian owns shares of Tesla)
Brian Wang is a Futurist Thought Leader and a popular Science blogger with 1 million readers per month. His blog Nextbigfuture.com is ranked #1 Science News Blog. It covers many disruptive technology and trends including Space, Robotics, Artificial Intelligence, Medicine, Anti-aging Biotechnology, and Nanotechnology.
Known for identifying cutting edge technologies, he is currently a Co-Founder of a startup and fundraiser for high potential early-stage companies. He is the Head of Research for Allocations for deep technology investments and an Angel Investor at Space Angels.
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