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Battery Chemicals Market Value

Powering Industries of India The Crucial Role of Battery Chemicals in Modern Manufacturing

Vinodhini Harish

12 Aug 2024

Introduction:

The battery chemicals market is driven by the acceleration of this global transition from ICE vehicles to EVs. The global economy and major industries increasingly rely on the battery chemicals market. Considering the impact created by the battery chemicals in varied industrial sectors, it is important to consider various factors like product pricing, market dynamics, application industries and consumer preferences. Therefore in this article, we have explored different takes and facets of the battery chemicals market and let’s begin.
 

Battery chemicals industry outlook:

Battery chemicals market value was at USD 77 billion in 2022 and is expected to surpass the market value of USD 170 billion by 2032 with a growth rate of 8.3%. Although the East Asian market and China have shown a significant growth rate in recent years, India is emerging as a significant player in the battery chemicals market with a substantial growth rate. The growing CAGR reflects the increasing investments in electric vehicles, renewable energy storage and local manufacturing capabilities.

The demand for battery chemicals is driven by the increasing use of consumer electronics and electronic devices such as smartphones, tablets, laptops and gaming consoles. In India, the collaboration between the miners and battery makers is rapidly evolving as the country is pushing towards growth and becoming a significant player in the global battery supply chain. The collaboration has led to securing raw materials, sourcing them from foreign suppliers, utilizing and investing in advanced battery technologies and catering to the growing demand for electric vehicles.

Some of the key initiatives and collaborations:
 

• National Mission on Transformative Mobility and Battery Storage Initiative:
  
  Governmental initiatives are promoting and supporting the development of battery storage and EVs. The governmental initiatives encourage partnerships between the mining companies and battery makers, for instance, the National Mission on Transformative Mobility and Battery Storage initiative has objectives of promoting clean and sustainable mobility solutions. This has encouraged the adoption of electric vehicles to reduce carbon emissions and dependency on fossil fuels. The initiative also helps in the development of advanced battery technologies for EVs and renewable energy storage. They also develop a stable and efficient supply chain for battery materials and components.
  
  The policies are boosting the demand for EVs in the country and renewable energy solutions and thereby they are increasing the overall market for batteries. The subsidies and incentives for consumers are stimulating the purchases of EVs and they are indirectly benefiting battery manufacturers.
  
  Meanwhile, the country is also promoting the local manufacturing industries, and they leverage their mission and regulations to reduce the dependencies on imported batteries and raw materials thereby enhancing energy security. The global advancements of the industry are further encouraging the Indian industries to invest and work to accentuate the global advancements in battery technologies.
  
  On the other hand, the economic growth of the country is reinforcing the manufacturing sector and contributing to the overall economic development thereby focusing on the advancements of the battery industry.
  
  Likewise, the conscious efforts of consumers and increasing consumer base are leading the transition to cleaner energy solutions reducing carbon emissions and promoting environmental sustainability.
   

• PLI scheme for ACC battery storage:
  
  The Production Linked Incentive PLI scheme incentivizes domestic manufacturing of ACC batteries and fostering collaborations between the miners and battery manufacturers. This has created a robust local supply chain. Companies like National Aluminium Company Limited (NALCO) and Hindustan Copper Limited are looking for growth opportunities and partners for sourcing the required raw materials such as aluminum and copper for battery manufacturers.

• Rising renewable energy demand: India’s ambitious renewable energy goals are considered the primary drivers of advanced energy storage solutions. Lithium-ion batteries play an important role in balancing supply and demand and they carry out the seamless integration of solar and wind power into the grid.
   
• A growing number of industrial applications:
  
  An increasing number of industrial applications keep EVs and renewable energy storage solutions aside and project itself as a major driver for the battery chemicals market. Telecommunications, healthcare, grid stability and power backup systems are driving the battery market and powering diverse applications.
   
• Increasing consumption of consumer electronics:
  
  The industrial sectors are working towards automation and are heavily relying on electronics like computers, TVs, phones and other devices. The consumer electronics market is projecting the technological advancement and gaming industry. These factors are pushing the need for batteries, meanwhile, companies are devoting efforts to creating innovative battery technologies.
  
  Likewise, the demand for lithium-ion technologies is bolstering innovation concerning portable power supplies and mobile phones. These are some of the significant factors that are stimulating the overall growth of the battery chemicals market.

• Impact due to raw material supply and respective prices:
  
  The impact on raw material supply has created a cascading effect on other industries that use these raw materials. The growing demand for EV batteries has increased the pressure on the supply chain for battery chemicals thereby causing a continuous fluctuation in the prices of these raw materials like lithium and cobalt.
  
  The reduction in the price of electric vehicles is not as easy as it may sound, as it requires careful planning by manufacturers. In addition to that, they have to manage the supply chains and long-term contracts. The difficulty lies in when their production costs match what the market expects.
  
  The regional battery price dynamics are an important factor in the coming years. In China, the prices of battery chemicals are pretty low which is about USD 126/kWh. Whereas in the United States, and Europe the costs are 11% to 20% more comparatively. Therefore, the geographical location of the manufacturing influences the prices and thereby the overall Battery chemicals market outlook.
  
  The demand shift from ICE vehicles to EVs has spurred investments in R&D for better battery technologies. This has led to the development of batteries with high energy densities, longer lifespans, and reduced dependency on scarce or expensive materials. These factors are creating better growth opportunities for the industries that exist in the battery chemicals market in India.
  
  Meanwhile, the battery chemicals industry is focusing on sustainability which starts from recycling the used batteries. The recycling process encourages recovering valuable materials that mitigate the environmental impact thereby reducing the waste of virgin resources.
  
  In future, the battery chemicals market is more likely to experience slight volatility due to supply chain adjustments due to new demand levels and the influence of geopolitical factors over the availability of raw materials.
   
• Impact due to change in the behaviour of prominent industry – automotive industry:
  
  The battery manufacturers and OEMs are closing their long-term supply contracts and the majority of them were signed in 2021 and 2022. The majority of the contracts are set to start supplying in 2026 and the timing has pushed the prices up and it reinforces the fact that the industry is expecting supply to become harder to secure in the long term as the demand grows.
  
  For instance, in October 2022, Mercedes- Benz has announced their supply agreement with “Rock Tech Lithium” which agreed to supply an average of  10,000 tonnes of lithium hydroxide per year. Post this announcement, Benz announced their agreement with five other companies to ensure stability in the supply of raw materials.
  
  The goal of the company is to position itself competitively in the EV market and thereby avoid potential disruptions that impact production timelines and product availability. These decisions give the company an edge over competitors that supply chain challenges.
  
  The company is also aligning itself with global sustainability trends and reducing carbon footprints. Overall, these strategies are gearing the companies towards promoting the EV market and thereby creating a huge impact on the battery chemicals market.
   

• Automotive industry investing directly in mining projects:
  
  One of the changes in the automotive industry is their direct investments in mining projects. Now, OEMs are changing their purchasing strategies by buying them directly from the suppliers. These factors have changed their purchasing behaviour from short-term spot market supply to long-term contracts.
  
  Let’s consider another automotive industry, Ford. Ford has recently invested in a nickel mining project and processing plant project that is located in Indonesia which gives it direct control over the procurement of the nickel it needs. This production facility is expected to begin its operations in 2026.
  
  Therefore, the trend of OEMs like Ford investing directly in mining projects is expected to transform the battery chemicals industry by stabilizing the supply chains. Shifting market dynamics, driving innovations in refining, cost structures and acceleration to the transition to electric vehicles.