The State of the Lithium-Ion Battery Market During COVID-19

May 22, 2020 by Shannon Cuthrell

The uses of lithium-ion batteries are becoming very apparent during the COVID-19 pandemic.

Lithium batteries and lithium-ion batteries are often the basis of power for many electronic medical devices, including surgical tools, hearing aids, defibrillators, monitors, meters, and ventilators. Lithium-ion batteries can often last longer and recharge faster, saving time and money while reducing risk throughout the lifecycle of uninterruptible power systems. This advantage is especially relevant in the current COVID-19 pandemic, as ICU patients may need to be hooked up to a ventilator for a week or longer

Beyond medical equipment, lithium batteries are also highly used in automotive applications, a burgeoning target segment for battery makers. The electric vehicle market is a predominant driver of Li-ion demand worldwide, but that could soon change as global EV sales are forecasted to drop 43% in 2020 due to the economic fallout of the pandemic. 


Becoming More Medically Necessary Than Ever

With medical necessities on the rise due to COVID-19, but the EV market down due to COVID-19, where do lithium batteries stand? 

In 2019 before the coronavirus crisis, the global lithium-ion market was worth around $36 billion, and the year ended in positive expectations for the next several years. Allied Market Research projected the market would be valued at $129.3 billion by 2027, a Compound Annual Growth Rate of 18%. 

After a strict COVID-19 lockdown imposed in mainland China in January, factory closures significantly impacted the country’s overall production volume in the first quarter. Even though China’s factories opened back up in March, companies are operating at less than 40% capacity due to parts shortages. China’s biggest Li-ion manufacturers, CATL and BYD, both delayed production in the absence of labor and access to raw materials. 


EV Sales

Monthly EV sales in the dominant China market fell by 39% in Q1 2020, leading analysts to predict that lithium-ion demand for plug-in vehicles is expected to fall by more than 25% this year

The state of China’s market may provide some early signs of what’s to come for American lithium-ion companies. China accounts for more than 50% of global electric car sales, and it claims a 73% share of global lithium cell manufacturing capacity. 

The U.S.’s manufacturing base only produces around 10% of lithium-ion batteries worldwide. Over the past decade, the U.S. has incrementally shifted its battery production to China. International trade policies have attempted to entice companies to bring operations back to the U.S. In last year’s trade war, the Trump administration tacked on a 15% tariff for lithium-ion batteries sourced from China, before ultimately reining the rate back to 7.5% in February

Economic uncertainty is high in the COVID-19 pandemic, but early indicators show a slowdown in EV sales and continued supply chain disruption worldwide this year, meaning lithium-ion demand will be curtailed. 

In the immediate future, several lithium-ion manufacturers are shifting production to meet emergency demand for vital ICU equipment such as ventilators. The Lithium Battery Company is supplying battery backup systems for COVID-19 mobile testing centers, BMZ Group is increasing its Li-ion production capacity for medical applications and Tesla recently unveiled the prototype for a ventilator used from EV parts, including lithium-ion batteries.