The global xEVs (x-electric vehicles) market has performed impressively this year mainly because of the Chinese market, which has expanded due to strong government support. EnergyTrend, a division of TrendForce, estimates that xEV sales in China will grow 20% year on year to 130,000 units in 2015; and the share of BEVs (battery electric vehicles) in China’s xEV sales this year will also reach 64%.

EnergyTrend analyst Duff Lu said the steady growth in the Chinese xEV market has taken the development of lithium batteries to a new height. Up to now, lithium cells used in xEVs are either cylindrical (small) or prismatic (large) types as there is no consensus. Going into next year, however, different vehicle models will be assigned with only one of these two types.

“In 2016, brisk sales of xEVs will cause supply shortage of lithium cells in this particular application,” said Lu. “The general market for xEV batteries may see unusual price surges because of rising demand in either cylindrical or prismatic cells. The Chinese lithium battery industry will also develop more concrete strategies next year, when the government starts to scale back subsidy programs and technologies related to xEVs make further progress.”

Below is TrendForce’s forecast of trends in Chinese lithium battery industry for 2016, with regard to the development in the local xEV market:

Chinese xEV industry to restructure next year as China cuts back its subsidy program

With the gradual maturation of the country’s xEV industry, the Chinese government has decided to phase out price subsidy for vehicle purchase. Instead, there will be new policies that would promote developments in related technologies, products and services. Government support will cover different levels: R&D and manufacturing of vehicles, purchase incentives and charging infrastructure.

“The government will actually implement a series of measures that aim to eliminate companies offering non-mainstream vehicles and new market entrants from the competition,” Lu pointed out. “China’s xEV industry will therefore go through a sorting process – the pool of participants will shrink and dominant players will be bolstered.”

China’s xEV passenger and microcar markets offer opportunities for cylindrical battery suppliers

The demand of the cylindrical cells has shifted from the slowing notebook market to the Chinese xEV market. Currently, Tesla is the main user of cylindrical cells. However, Chinese xEV developers will also be needing a steady supply of cylindrical cells as they take advantage of the rising popularity of microcar. With cylindrical cells becoming a hot commodity, production capacity of major Chinese cylindrical cell suppliers (e.g. BAK, Lishen and BYD) are expected stay fully loaded next year.

Light shuttle buses in China will be powered by prismatic batteries

Another segment in the Chinese xEV market that is getting a lot attention is the light shuttle bus (a shuttle bus of 6~8m in length). Generous subsidies from the central and local governments have made the cost of xEV light shuttle bus much lower than its fossil fuel counterpart. In response to the rising demand for this type of shuttle buses, numerous Chinese prismatic cell suppliers (e.g. Hefei Guoxuan and ATL) are ramping up their production. Growth in this xEV application has also resulted in a general price uptrend in the Chinese prismatic cell market, with the increase during the second half of this year being around 5% year on year, according to EnergyTrend’s estimation. Prices of prismatic cells in China are also expected to rise another 5% year on year in 2016.

3Q15 Lithium Battery Silver Member Report

Consumer Applications

• Changes in battery cell supply and demand
• Battery capacity updates in China and the world
• Cylindrical, prismatic, and polymer battery price and supply/demand
• Future trends of the three types of battery cells

Power Applications

• New subsidy plans for new energy vehicles
• The rise of low-speed electric vehicles (EV) (mini cars), passenger cars, and light-commercial vehicles