The battery megafactories are coming

Global battery production is expected to receive a turbo boost in the next three years as some of the world’s biggest corporations and disruptive technology companies prepare major entries into the market.

Tesla Motors, LG Chem and Foxconn Technology Group are all constructing what can be described as battery super-plants for the electric vehicle (EV) market.

On all three sites – which range from US to China – ground has been broken and investment has been made for launch as early as 2015.

Total investment from all three companies is expected to top $5bn and could reach as high as $7bn as they vie for a leading position in a major new global industry.

LG Chem is anticipated to be the first onto the market towards the end of next year with its 7GWh plant in Nanjing, China at a cost of $500m, Benchmark Mineral Intelligence estimates.

In November Benchmark  revealed that Tesla Motors is ahead of schedule on its $4-5bn Gigafactory now expected at the end of 2016. Foxconn, the producer of Apple iPhones and iPads and owned by Hon Hai Precision Industry in Taiwan, has also revealed its ambition to enter the EV market with a 15GWh*, $810m* plant in Anhui, China.

The battery industry is presently dominated by companies such as Samsung SDI, Panasonic, and Johnson Matthey, but these majors have held back from any significant investment into the EV sector to date.

Instead they have decided to focus on smaller scale production and joint-ventures rather than huge new megafactories.

These plans will have a significant impact on the raw materials fuelling the three megafactories, graphite, lithium and cobalt especially, as will the additional growth in the EV battery market which is expected to range, in Benchmark’s conservative estimates, from 10-15% a year.

The industry will need to be prepared for a raw material surge in 2016 as buying starts for these three plants in what could be a significantly disruptive event.