China to dominate electric vehicle parts market

It supplies 40-70% of all global EV components.

China is expected to dominate the electric vehicle (EV) parts market, as it already supplies between 40% and 70% of all global EV components depending on the product category, HSBC said.

This is in line with the growth of EV volumes, as penetration rate is expected to rise from 2% in 2018 to 14% in 2025e.

“The transition to EVs appears to be inevitable, driven by policy support and improving battery technology,” said Corey Chan, head of A-share Infrastructure & Renewables Research at HSBC.

However, Chan said that it is still uncertain which battery technology will prevail. “The phasing out of EV subsidies in China could reduce the competitiveness of the more expensive ternary cathode batteries relative to lithium iron phosphate (LFP) technology,” he said.

Meanwhile, capacitors and heat management systems will likely maintain their pricing power given their low share in the total cost of an EV and the relatively high market concentration.

Photo courtesy of Pexels.com.

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