In the global trend of new energy vehicle development, electric vehicles (EVs) have become dominant. Although there are multiple types of new energy vehicles and EVs are not necessarily the optimal ones in their entire lifecycle, the market penetration of EVs is quite high, making them undoubtedly the mainstream in the new energy vehicle market.
Taking the Chinese automotive market as an example, according to data from the China Passenger Car Association (CPCA), looking at wholesale figures, in December 2023, the wholesale penetration rate of Chinese new energy vehicle manufacturers was 40.8%, a 7 percentage point increase from the 33.8% penetration rate in December 2022. In the wholesale structure of new energy vehicles in December, pure EVs accounted for 68%, plug-in hybrids for 22%, and extended-range EVs for 10%. The cumulative wholesale penetration rate for 2023 was 34.7%, a 6.6 percentage point increase from 28.1% in 2022. The annual wholesale structure of new energy vehicles in 2023 was 69% pure EVs, 23% plug-in hybrid, and 8% extended-range EVs. Looking at retail, in December 2023, the domestic retail penetration rate of new energy vehicles was 40.2%, a 10.6 percentage point increase from the 29.6% penetration rate in the same period last year. The annual penetration rate was 35.7%, an 8.1 percentage point increase.
Power batteries are the most crucial core components of EVs. The most common types of power batteries include ternary lithium batteries, lithium iron phosphate batteries, sodium-ion batteries, etc. The widely used lithium-ion batteries and lithium polymer batteries currently use traditional liquid electrolytes. As lithium-ion batteries are believed to have reached their limits, solid-state batteries have been considered in recent years as batteries that can inherit the status of lithium-ion batteries. Unlike lithium-ion batteries, solid-state batteries use solid electrodes and solid electrolytes, replacing traditional liquid electrolytes, offering stability, safety, and environmental advantages. Solid-state batteries generally have lower power density but higher energy density. Due to the high power-to-weight ratio of solid-state batteries, they are considered ideal for EVs. Currently, solid-state batteries have attracted widespread attention in the usage of EVs, energy storage batteries, and wearable electronic devices, with industry and financial capital perceiving them as one of the investment hotspots.
In the current solid-state battery industry, the mainstream technologies are sulfides, oxides, and polymers. Many companies in the industry have released roadmaps for the full solid-state battery, with industrialization concentrated between 2027 and 2030. According to the plans, SK On in South Korea is developing polymer oxide composites and sulfide solid-state batteries, intending to produce prototype products by 2026 and achieve commercialization by 2028. Samsung SDI is developing a solid-state battery without a negative electrode, with mass production expected in 2027.
Comparatively, Chinese companies mainly come out with semi-solid-state batteries. Ouyang Minggao, an academician of the Chinese Academy of Sciences and professor at Tsinghua University, once remarked that “the electrochemical principles of solid-liquid hybrid batteries are the same as those of liquid lithium-ion batteries. It is not a disruptive technology but one that enhances safety. Semi-solid-state batteries are undergoing trial installations, but issues such as product yield, battery costs, charging rates, and cycle life still need to be addressed. Moreover, their charging rates generally decrease, and cycle life will be challenging to compare with liquid-state batteries. These are issues that need to be resolved".
On China’s side, the industry is highly enthusiastic about solid-state batteries. In December 2023, 27 Chinese entities, including FAW Group, Dongfeng Motor, and Changan Automobile, established the Solid-State Battery Industry Innovation Alliance in Shenzhen. This innovation platform covers various aspects such as basic research, material development and production, cell design and manufacturing, system integration, and whole vehicle applications, involving several domestic automotive companies, material companies, universities, and research institutions. In 2023, numerous international and Chinese new energy vehicle companies announced plans for semi-solid-state battery-equipped vehicles. Dongfeng, NIO, and Seres have announced the deployment of semi-solid-state batteries in 2023, while Changan Deep Blue, IM Motors, Aion, and HiPhi, among others, generally plan to deploy semi-solid-state batteries by 2025. Overseas giants like BMW, Mercedes-Benz, Volkswagen, and Toyota plan to introduce electric vehicles equipped with solid-state batteries around 2025.
The development of solid-state batteries poses challenges for the Chinese industry in terms of choosing the right technological path and managing the pace of advancement. According to insiders from CATL, their full solid-state battery is still in the development phase, and although samples have been produced, it is unlikely to achieve commercialization before 2030. Honda, on the other hand, has stated that it plans to deploy full solid-state batteries around 2030. In contrast, semi-solid-state batteries can be compatible with existing liquid battery process equipment and materials, enabling low-cost mass production, making them a transitional solution expected to gain an advantage within 1 to 2 years. Ouyang Minggao believes that "from the perspective of the entire industry, China needs to develop this progressive semi-solid-state technology while guarding against the disruptive risks brought by aggressive full solid-state technology." Industry experts estimate that the application cycle for liquid batteries is at least another 20 years. For solid-state batteries to replace 50% of the market share held by liquid lithium-ion batteries, it will take at least 20 to 30 years.
Despite the high-profile industrialization efforts in the field of solid-state batteries in China, there is still a significant technological gap compared to developed countries. Publicly available data reveals a substantial disparity in the number of patents related to solid-state battery technology between China and other countries. Toyota, for instance, has obtained over 1,300 patents in solid-state batteries. Although China has accelerated its works in the past five years, as of October 2023, the total number of patents related to solid-state batteries held by Chinese battery companies is less than 100, not even 1/13th of Toyota's patents in the same domain. This suggests that if solid-state battery technology gains further traction, the industry in China may face international patent barriers. However, some statistics indicate that the country has made rapid progress in critical technological patents related to solid-state batteries. As of May 2023, the global application volume for key patents in solid-state batteries was 20,798, with China contributing 7,640 patents, accounting for 36.7%. Over the past five years, China's annual growth rate in global patent applications for solid-state batteries averaged 20.8%, ranking first globally in terms of growth rate.
The maturity of the solid-state battery market does not appear as optimistic as some investors have estimated. According to an estimation by the market research firm SNE Research, global demand for solid-state batteries is expected to approach 500 gigawatt-hours by 2030. By 2025, the global market space for solid-state batteries is expected to reach RMB 6 billion, with China's market space expected to reach RMB 3 billion. By 2030, it is projected to reach RMB 20 billion.
Final analysis conclusion:
The progress and application of solid-state battery technology are becoming one of the focuses for industrial and financial capital. This is a sub-track in the global competition for new energy vehicles, attracting an increasing influx of capital, research institutions, and corporate entities. Being a new favorite of capital certainly contributes to developing a new track and the growth of innovative companies. However, in this track, the industry may need to take a rational view of when it will mature in terms of technology, industry, and commercialization. It is important to approach with caution when considering when solid-state batteries or semi-solid-state batteries can achieve iteration over existing technologies. All in all, for solid-state batteries or semi-solid-state batteries to achieve iteration over existing technologies, this still needs to be approached with caution.
