The three tiers of battery megafactories

Battery megafactories are coming online and into production at a phenomenal rate. There are now 99 megafactories in the pipeline, with over 2,000 gigawatt hours (GWh) of capacity in the industry’s pipeline for 2028.

But not all batteries are the same – the battery industry can be roughly split into three tiers in a pyramid structure, with the top tier of producers occupied by the behemoths of the industry such as Tesla, Panasonic, Samsung and LG Chem.

The second has major battery companies such as BYD, SK Innovation and CATL. Finally, the third tier has a number of companies such as GEELY and Farasis, with many of the new Chinese producers sitting within tier 3.

Typically, manufacturers in the higher tiers follow a more stringent qualification process for sourcing raw materials. This results in higher quality and specification requirements, large sample sizes, and longer qualification times.

Our definition of each tier used in Benchmark Minerals’ Lithium ion Battery Megafactory Assessment is as follows:

  • Tier 1: Qualified to supply multi-national electric vehicle (EV) producers outside of China
  • Tier 2: Qualified to supply Chinese EV market/non EV applications
  • Tier 3: Unqualified – limited or no track record of cell production

The chart below outlines the tiered structure of the battery industry with examples of some producers, along with the traits exhibited by the higher-tier battery producers (to the right of the tier-pyramid).

The Lithium ion Battery Megafactory Assessment now details capacity expansions using our battery cell tiering system illustrated above. This provides a more detailed picture of how battery megafactory developments are playing out by the quality of battery cell production.

For example, the capacity in the pipeline for 2028 headline figure is over 2GWh but only 29% of this capacity is from tier one producers qualified to supply multi-national EV producers outside of China. While on the other end of the spectrum 30% of capacity is set to come from tier three producers, which have a limited record or no track record of battery cell production.

The chart below is taken from the Lithium ion Battery Megafactory Assessment and shows this breakdown based on pipeline figures for 2018, 2023 and 2028.

Interested in the Lithium ion Battery Megafactory Assessment? Click here to learn more or to subscribe.

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