The automotive market is trading in the internal combustion engine (ICE) for battery-powered electric vehicles. And with it is coming a new league of industry influencers and innovators who will take the lead in the rapidly growing market.
The new demand for high-power, low-cost batteries has sparked interest in the tech sector, causing a dramatic entrance of newcomers to the automotive market. In turn, the new competition is quickly shifting the competitive paradigm and forcing traditional automotive suppliers to shift strategies or risk falling behind.
So, who are the emerging leaders in the lithium battery space? What is driving them to the top? And what should you do about it?
Market Drivers for the Automotive Battery
The reason why the battery electric vehicle (BEV) is so disruptive to the industry is that, aside from the need for completely new technology and vehicle architecture, it requires a business model completely different from the traditional automotive supplier business model.
The BEV business model is mostly being driven by three factors: innovation, scalability, and cost. Those that meet those three critical points first will win themselves a seat at the head of the table, putting them in a very favorable position in a market expected to be worth $115 billion by 2027.
Tesla, who has long been viewed as a leader in EV, made news late last year with its groundbreaking “4680” battery pack. The high-nickel, dry cathode battery cell increased power, range, and energy capacity while dropping prices to a record low of $57 per kW/h, making it drastically more economical than the internal combustion engine. It also streamlined the production process, making it easier to produce at a high scale.
A handful of other companies also stepped in with their own battery breakthrough plans. General Motors partnered with tech giant LG Chem to develop a low-cost, high-scale battery that would have the potential to fit a broader range of vehicle models. Meanwhile, CATL, a China-based battery company, has been behind many of the battery breakthroughs that have helped drop cost and increase scalability. It is also a key player in Tesla’s battery strategy, securing a strong position in the market.
Emerging Automotive Battery Leaders
As the market shifts toward electric, connected vehicles, traditional suppliers simply don’t have the technical background or scalability to meet the changing demands and new market drivers. This gap has created an opportunity for leaders in the consumer and industrial electronics industry to expand their reach and infiltrate the automotive market—pushing traditional automotive players off their thrones.
Innovators from the consumer and industrial electronics market are taking advantage of their tech background and high scale to sweep the lead in the newly emerging (and very lucrative) automotive battery market. As you can see in the report below, companies like CATL, LG Chem, Tesla, and Samsung are rising to the top in the battery space. Except for Tesla and BYD Auto, all the leading companies are coming from the consumer and industrial electronics market, many being well-known household names.
Naturally, this change of leadership is also causing a shift in global economies. For decades, the United States and Germany have served as the hub of innovation for the automotive industry. However, now that vehicle value is being driven mainly from electrical components, the source of innovation is now coming primarily from Asia, with China quickly rising as the new leader in automotive batteries and electric vehicle technology. However, traditional automotive suppliers aren’t left completely irrelevant.
While these emerging battery titans have a clear advantage in technology and scale, many of them lack the knowledge and reach within the automotive company, leaving room for traditional suppliers to provide value and earn a cut of the pie.
Gaining a Competitive Edge
Whether it’s a mild hybrid, full hybrid, or a BEV, there is a new ecosystem evolving around batteries. And with new technology breakthroughs, increasing legislative pressure, and a competitive race amongst automakers to reach the BEV finish line, the BEV is expected to dominate the market by 2030.
Traditional automotive suppliers may be losing their competitive edge in terms of innovation and technology, but they still have a powerful advantage within the market—reach. While big tech has clear advantages in terms of technology and scale, they lack the automotive supply chain maturity needed for global distribution.
Newcomers to the market will need to leverage the established supply chain of experienced automotive players if they want to race to the top of the battery industry. Automotive suppliers with a global footprint and a global mindset are in the best position to fill that gap and should be looking for opportunities to develop strategic partnerships with the winning technology companies.
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