China has become a global leader in the development of vehicle-mounted lithium-ion batteries, which are essential components of electric vehicles (EVs). Over the past few years, the Chinese new energy vehicle (NEV) industry has experienced rapid and transformative growth. Following the 2016 NEV fraud scandal, the sector entered an accelerated phase in March 2017, with global expansion becoming a key focus. Major automotive companies worldwide are now investing heavily in new energy technology, while China's progress in both transportation and EV adoption has exceeded expectations. As a result, the target of doubling the total EV market size by 2020 appears increasingly achievable.
The rise of China's electric vehicle industry has significantly challenged Japanese companies that once held a first-mover advantage in battery technology. The Chinese government has provided strong support for the EV sector, and with massive domestic demand, Chinese enterprises have captured over 60% of the global vehicle-mounted lithium-ion battery market. This dominance is expected to grow as major Chinese firms continue to invest heavily in research and production. In contrast, Japanese companies, which were pioneers in lithium-ion battery technology, are struggling to maintain their position. Panasonic remains the primary player, but other Japanese firms have seen their influence decline.
According to a recent survey by the Japan Institute of Economic Research, Chinese manufacturers accounted for more than 60% of the global vehicle-mounted lithium-ion battery market as of 2016. This highlights their critical role in the EV industry, as these batteries are at the heart of electric vehicles. Meanwhile, in Japan—where lithium-ion batteries were originally developed—many companies have lost their competitive edge. Fujita Mitsuo of TechnoSystemsResearch noted that Chinese manufacturers dominated the top five battery producers in terms of capacity shipped in 2016.
China’s national strategy to boost the electric vehicle industry has enabled companies to pursue aggressive expansion plans. The country aims to reach a production capacity of 2 million pure electric and plug-in hybrid vehicles by 2020, with cumulative sales exceeding 5 million units. Strict fuel consumption standards for passenger vehicles and increased limits for commercial vehicles are also being implemented. Additionally, new carbon emission regulations are under consideration. Similar to Britain and France, China is exploring future bans on gasoline vehicles, further driving the EV market.
Japanese media highlight that lithium-ion batteries were first developed in Japan, with Sony pioneering their use in 1991. However, the U.S. and European markets remain key battlegrounds for advanced battery technology, where Japanese and South Korean companies have traditionally dominated. China is now actively challenging this dominance. For example, German automaker BMW recently announced it will use batteries from Chinese company CATL, signaling a potential breakthrough in penetrating traditional Japanese and Korean markets.
While Japanese automakers have led in the practical application of EVs and plug-in hybrids, Chinese companies are rapidly catching up. With a growing market share, cost advantages, and increasing technological capabilities, China is reshaping the automotive battery industry. As the era where battery performance determines vehicle competitiveness approaches, Japanese firms risk falling behind if they fail to keep pace with China's scale and innovation.
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