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Driven by the global net zero emission target, the transformation of road transportation towards electrification is accelerating and the global new energy vehicle (NEV) industry is in a period of rapid growth, driving a surge in power battery demand. By 2024, the installed capacity of the global power battery market is expected to increase from a GWh-scale to TWh, exceeding 3TWh by 2030, of which China's installed capacity of power batteries is expected to account for approximately 45% of the world total.
Large-scale utilization of renewable energy is the fundamental path to achieving a comprehensive decarbonization of the power grid. During this process, new energy storage technology represented by electrochemical energy storage has become an important cornerstone for the sustained growth in the proportion of installed renewable energy. According to TrendForce statistics, global installed capacity of electrochemical energy storage is expected to reach approximately 65GWh in 2022 and 1,160Gwh by 2030, of which 70% of storage demand originates from the power generation side, which is the primary source of momentum supporting the installed capacity of electrochemical energy storage.
Constrained by carbon neutrality and carbon peaking targets and enveloped by a bullish backdrop of declining system costs, the global installed capacity of wind and solar energy has shown a steady growth trend over the past five years. According to TrendForce statistics, the cumulative installed capacity of global renewable energy in 2021 was approximately 3,064GW (gigawatts), with an average annual growth rate of approximately 8-10% and 88% as the highest application of wind and solar energy in any area.
As a consequence of rising power battery raw material prices, a number of global new energy vehicle (NEV) brands including Tesla, BYD, NIO, Li Auto, and Volkswagen, have successively raised the sales prices of electric vehicles (EV) in 1Q22. TrendForce believes that power batteries are the core component that account for the greatest portion of an EV’s overall cost and reducing the cost of power batteries will be an important strategy for companies to remain competitive in the future. As technology continues to innovate, lithium iron phosphate batteries are expected to account for more than 60% of installed capacity in the global power battery market by 2024.
The conflict between Russia and Ukraine has escalated in recent days. In addition to the surge in natural gas and crude oil prices, the conflict may also impact the supply of non-ferrous metals including aluminum, nickel, and copper. According to TrendForce, nickel is a key upstream raw material for the manufacture of electric vehicle power batteries and mainly used in the production of ternary cathode materials. In 2021, global nickel mine production was approximately 2.7 million tons, originating primarily from Indonesia, the Philippines, and Russia. Russian nickel production accounts for approximately 9% of the world's total (including low, medium, and high-grade nickel), ranking third globally. At present, the market penetration rate of new energy vehicles is accelerating and ternary power batteries account for nearly half of power battery market share, which signals strengthening demand for upstream raw material nickel for automotive power batteries. Although Russian nickel exports remain unaffected for the time being, if the situation on the ground between Russia and Ukraine continues to deteriorate, global nickel supply may be impacted in the short term, pushing up nickel prices, and further increase cost pressures on end product markets such as the electric vehicle industry.