The lithium-ion battery's electrolyte solvent market is expected to expand at a CAGR of more than 22% during the forecast period. The major factors driving the growth of the market studied are the increasing demand from electric vehicle manufacturers and the growing demand from smartphone manufacturers.
- On the flipside, potential hazards caused by using impure electrolyte solvent and the impact of the COVID-19 outbreak are projected to hinder the growth of the market studied to some extent.
- Emerging technologies in the production of non-flammable solvents and the increasing scope of lithium-ion batteries in aerospace applications are likely to provide numerous opportunities for the manufacturers in the future.
- Asia-Pacific accounted for the largest share across the globe, with China clearly dominating the global demand.
Key Market Trends
Dimethyl Carbonate (DMC) - the Largest and Fastest Growing Segment
- Dimethyl carbonate (DMC) is a most promising electrolyte solvent for lithium-ion battery, owing to its inherent safety and robustness. Commonly used organic solvents, like propylene or ethylene carbonates, have an issue because of their high viscosity, which limits the efficiency of the lithium electrochemical cycle. DMC has good solvation of lithium ions and a low viscosity, which eliminates that issue.
- Commercial processes for producing DMC include the phosgene route, liquid-phase methanol oxycarbonylation (a process developed by Enichem), and methylnitrite carbonylation (developed by UBE).
- Ube Industries Ltd is the largest supplier of diethyl carbonate, with a production capacity of nearly 175,000 metric tons per annum. Kindun Chemical Co. Limited, Shenzhen Capchem, and Dongwha Electrlyte are the other major players involved in the production of this solvent type.
- As Tesla's Shanghai Gigafactory 3 entered its production phase in October 2019, the price of dimethyl carbonate started to rise in China, which is the largest market for lithium-ion battery electrolyte solvent, holding more than 70% of the market share.
- The DMC segment is expected to achieve the highest growth rate over the forecast period.
China, the Global Leader in Li-ion Battery Production
- China is the world's largest economy in terms of PPP(Purchasing Power Parity). However, it is the second-largest economy when calculated in terms of nominal GDP. The country's growth has been slowing in the past few years and is estimated to have recorded a 6% GDP growth in 2019, which is the slowest rate in countries' economic history since 1990. This growth rate is moderating due to the maturing of the Chinese economy combined with tensions over the US-China trade disputes.
- However, the novel coronavirus (COVID-19) outbreak has caused a slowdown of China's economic growth as well as its manufacturing sector. The majority of the factories remain closed or are not able to attain full production capacity due to a shortage of staff and raw materials. This is expected to have a negative impact on the demand for the market studied in the short run.
- Although china is the first country affected by the COVID-19 and its related lockdown, and it is the first country that has come out of the lockdowns and is starting its long journey toward normalcy. However, as a major chunk of the Chinese economy is linked to foreign exports, where demand is still low will negatively affect the Chinese industry in the near future.
- China is the largest car market for electric vehicles in the world. Although, the Chinese car market declined in 2019, the electric vehicle segment witnessed a moderate growth of 4.7% in 2019 with approximately 1.18 million plug-in electric cars were sold in China in 2019, where lithium-ion batteries have a prominent role in the vehicle's body making. COVID-19 has severely impacted the demand for electric vehicles in the initial years of the 2020s. However, we are observing a slight recovery in the May and June figures, where plug sales have shown improvement. However, 2020 is expected to be a disappointment for electric vehicles segment in the country.
- China is the world's largest consumer electronics producer, especially for brown goods product category. It is the world's most extensive electronics manufacturing ecosystem and supply chain, with more than five times the electronics suppliers based in Japan. However, for the first time in the decade, the Chinese smartphone production share has fallen below 70% (68%) globally in 2019 from having around 75% of global production in 2016. Owing to rising labor costs and trade tensions with the United States, smartphone manufacturers are shifting to other Asian countries, such as India and Vietnam. This is expected to negatively affect the demand growth of lithium-ion batteries in the country.
- According to the statistics from the CNESA Global Energy Storage Project Database, by the end of 2019, operational energy storage project capacity in China totaled 32.4GW, accounting for 17.6% of total global capacity, a growth of 3.6%, compared to 2018. Electrochemical energy storage capacity stood at 1709.6MW, a growth of 59.4%, compared to 2018. Among the variety of electrochemical energy storage technologies, lithium-ion batteries made up the largest portion of installed capacity at 1378.3MW.
- In recent years, electrochemical energy storage in the country has maintained a steady upward trend, with a compound annual growth rate of 79.7% from 2015-2019. Looking forward to 2020, the electrochemical energy storage market will continue to develop in the country, and the total operational installed capacity will reach 2726.7MW. According to a conservative estimate from Energy Storage Industry White Paper 2020, the market scale of operational electrochemical energy storage in the country is expected to exceed 15GW by 2024 (while the majority of it is lithium-based).
- China is the single largest producer of lithium-ion batteries in the world. In 2019, the was more than 316 gigawatt-hours (GWh) of global lithium battery manufacturing capacity. China is estimated to hold more than 70% of this capacity indicating the country occupying a significant share of the demand for the global lithium-ion electrolyte solvent market.
- However, owing to COVID-19, the country is now dealing with a slow down. China's major Li-ion manufacturing players, CATL and BYD, are facing a high probability of additional production delays. China's attempt to fight with the coronavirus outbreak has led to delayed production across a number of battery production facilities located in key coronavirus hit provinces. This coronavirus outbreak is expected to cost Chinese battery manufacturers with around 26GWh of output in 2020. However, by June, most of China's battery manufacturers have restarted their production, hinting a partial recovery of demand for the Li-ion electrolyte solvent market in the latter part of the year.
- Going forward, encouraging government policies, huge manufacturing base, protectionist measures, along with rising demand for batteries augur well for the Chinese battery market. As of late 2019, the number of Li-ion battery mega factories that are in the pipeline in the country until 2029 stood at 88 in China. Total China's pipeline stands at 564GWh by 2028. The total Li-ion battery capacity, which is under pipeline, is equivalent to 39 million electric vehicles (EVs) by 2029. These investments are expected to aggressively contribute to the demand growth of the lithium-ion electrolyte solvent market during the forecast period.
The market studied is consolidated in nature. The top companies have been utilizing competitive strategies and investments to retain and expand their shares. The top seven players, namely Ube Industries Ltd, Kindun Chemical Co. Limited, Oriental Union Chemical Corporation (OUCC), Dongwha Electrlyte, Shenzhen Capchem Technology Co. Ltd, Lixing Chemical, and Huntsman International LLC, accounting for almost 78% of the market studied.
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