EV supply chains to go global, says battery boss, but fears remain over China’s dominance

SINGAPORE - The green energy transition is here, it is inevitable and it is growing.

But it is also complicated, not least because it will involve trillions of dollars to rewire the global energy system and needs an enormous amount of critical minerals, from lithium to nickel to copper.

These messages from panellists at the World Economic Forum (WEF) 2025 in Davos, held from Jan 20 to 24, were clear.

China’s dominance of the US$2 trillion (S$2.72 trillion) green technology sector is a blessing, because it has driven down clean energy costs.

But it is also a growing trade concern that has triggered tariffs against Chinese products.

At WEF, China’s dominance came under the microscope, with supply chain issues at the front and centre of concerns.

Take, for example, electric vehicles (EVs). Overall EV sales globally have continued to reach new annual highs, though the pace of growth has eased.

BloombergNEF estimates China accounted for almost two-thirds of the 17.2 million EVs sold worldwide in 2024. And Chinese EV makers, especially BYD, are on the march to expand their presence.

US and EU carmakers feel threatened.

At a panel discussion on Jan 21, China’s dominance of the EV market, and especially in battery manufacturing, raised concerns that one nation was controlling too much.

Chinese company Contemporary Amperex Technology (CATL) is the largest battery maker in the world, with a market share of about 38 per cent and supplying global brands such as Tesla and BMW.

Mr Pan Jian, CATL co-chairman, said China might be dominating the global production of EVs and batteries now because of huge domestic demand. But the picture will change as EV sales pick up globally.

“It’s not going to be a one-country effort in terms of EVs in the world. It’s going to be a global effort,” he said.

“People have this impression that China is dominating the whole supply chain, and a lot of narratives are being spread about the threat posed by China. It’s not true.”

Some may disagree with that view, given Chinese investments to secure supplies of nickel in Indonesia, cobalt in Africa and lithium in Australia. China also dominates the refining of lithium, a key component of batteries.

“With the spread of EVs in different markets in the world, we believe the production or the supply chain will also spread along that in different parts of the world,” Mr Pan added.

He pointed to CATL’s own diversification by setting up battery production ventures in Germany, Hungary, Spain and Indonesia. CATL might be announcing more of such ventures in 2025, he added.

“It’s not healthy to concentrate too much production capacity in one place,” said Mr Pan, in remarks that were met with agreement by panellists from Indonesia, a top nickel producer, and South Africa, which has a large car assembly industry. The South-east Asian and African nations want a piece of the EV pie.

Still, China’s huge demand for critical materials to make EV batteries and other green energy goods, such as solar panels and wind turbines, remains a top trade and energy security concern.

A growing number of nations are trying to build alternative supply chains.

The US has clamped down on Chinese EV makers, saying the technology they use is a security risk. The US Defence Department said on Jan 7 it had

added CATL to a list of companies that it says work with China’s military,

something the firm has denied.

While China has huge domestic demand for EVs, batteries and other green technologies, it also dominates global processing of critical minerals, noted Dr Fatih Birol, executive director of the International Energy Agency.

Diversification of sourcing and processing of the minerals is key, he said.

“We shouldn’t only look at where the mining is, but where the processing and refining is,” he told a panel on the geoeconomics of energy and materials. “Eighty per cent of the critical minerals today are processed in one country.”

Copper, in particular, is a key material because it is crucial to supporting the rapid growth of electrification, Dr Birol said.

Electricity demand is set to rise six times faster than global energy demand overall in the years up to 2035, he added.

Mr Jonathan Price, chief executive of Canadian resources firm Teck, said about 50 per cent of refined copper in the world is processed in China.

The highly conductive material is found in most electrical and electronic components, and in cars, planes and electricity grids.

There is about 29kg of it in an average car and more than 180kg in a typical home, according to Bloomberg.

Governments in the West have begun to feel very uncomfortable about China’s key role in copper processing, said Mr Price, triggering discussions about not only economic, energy and national security, but also resource security.

Another problem: a looming copper supply crunch.

“Electricity demand means copper. Yet when we look at the investments and the demand, we see a big deficit,” said Dr Birol.

Ramping up production of copper is tough because of declining production from older mines, and the development of new ones is costly and requires time to get permissions, Mr Price said.

Still, there is huge demand going forward, and that is enticing to mining companies that want to supply materials to drive the green transition away from fossil fuels.

Mr Jakob Stausholm, chief executive of major copper producer Rio Tinto, also sees long-term demand for lithium.

“We can see that the lithium demand will probably go up by another five times over the next 15 years,” he said, despite current low prices. After recent acquisitions, his company is now one of the biggest resource holders of lithium.

Such bold views as Mr Stausholm’s are a reflection of the growing momentum of the green transition, panellists said at the WEF.

“The world is undergoing an energy transition that is unstoppable,” said UN climate chief Simon Stiell on Jan 21, in a discussion looking ahead to the COP30 climate conference in Brazil at the end of 2025.

“Last year alone, more than US$2 trillion was invested in the transition, and that compares with US$1 trillion in fossil fuels. So the signal is absolutely clear that the transition has gathered significant momentum.”

For Dr Birol, a successful clean energy transition is one that makes energy systems much more secure and resilient, and energy prices affordable.

“And it reduces reliance on other countries that have the reputation of being not a reliable partner,” he said.

For all of the concerns and trade tensions, Chinese EV makers look set to continue their drive for global domination, even as the production supply chain diversifies.

So what is the secret of their success?

Price, constant improvements to the battery chemistry, but also the software, said Mr Pan.

“In China, we no longer call them EVs – we call them EIVs, where the ‘I’ stands for intelligent,” he said.

“The ‘I’ is what truly makes the difference. The integration of software into vehicles has unlocked a whole suite of features that traditional combustion engine cars simply can’t match.”

He said China had the benefit of tapping a large software engineering talent pool cultivated by internet consumer business as well as smartphone developers.

“I think for the US market, as well as the European market today, the bottleneck really lies in the software development capability with the traditional auto companies,” he said.