Electric vehicle demand leads to skyrocketing number of lithium-ion battery factories around the world

Key Points
  • Rising demand for electric vehicles is driving a massive jump in planned lithium-ion battery factories.
  • China is leading the way, with control over the supply chain and high demand for EVs.
An artist's rendering of the Tesla Gigafactory
Source: Tesla

The number of planned lithium-ion battery factories around the world is skyrocketing, according to a report from Benchmark Mineral Intelligence.

There are 26 battery "megafactories" that are either in production and due to expand capacity or new operations due to be in production by 2021, Benchmark said in a blog post on Monday. Benchmark coined the term "megafactory" to describe factories that produce more than 1 gigawatt-hour of total capacity in a single year.

Compare that with just three such plants planned or in production in 2014.

It is important to note that not all of these planned factories could end up opening for production. But all of them have a pretty good chance of being built, Benchmark Mineral Intelligence analyst Caspar Rawles told CNBC on Monday.

"Things change, but the reality is everyone on that list is a very serious player," Rawles said.

The growth will be fueled by rising demand for electric vehicles, Rawls said. Sales of electric vehicles are expected to especially take off around 2022 or 2023. Several manufacturers are planning to release electric vehicle lineups between now and then.

Benchmark expects total global lithium-ion demand of 500 gigawatt-hours by 2025, compared with just 85 GWh in 2016.

Much of that will be in China, where air quality concerns have fueled a big push for electric vehicles. China dominates Benchmark's list, with 49 percent of total planned capacity.

The European Union is in second place with 23 percent of total planned capacity, and the United States is in third with about 15 percent.

However, Benchmark noted Tesla has said it plans to expand its Gigafactory, located in Nevada, eventually achieving a capacity of 150 GWh.

Building the plants is only part of the challenge, though. The larger task may be securing access to the raw materials, the report said.

For example, China controls 80 percent of the market in chemical cobalt, a crucial ingredient in lithium-ion batteries, he said.