Li On

China introduced most generous subsidies in China's 2 five-year plans 2016-20
Political and 2021-2025, encouraging investments in LIB plants. The investment saw a rise
in 2019 as subsidies were extended to foreign companies too
Declining support for free trade and growing economic nationalism encouraged
govt’s such as European Unions and US to launch programs focused on
establishing entire LIB supply chain within their countries.
The business segments which consume LIB’s – Electric vehicle, stationary
Economic storage, and consumer electronics (as per Table 2) are hyper competition
business segment also facing a threat of substitutes, as per figure one we see the
drastic reduction of LIB packs and Technology section shows the innovation in
progress which clearly shows a potential high demand from all segments of
consumers. This would increase in higher employment of skilled labor and
greater expenditure in R&D
Between 2021 -23 the rate of displacement of petroleum fueled vehicles to EV
Sociocultural was accelerated as 14 major countries announced targets for banning or phasing
out sales of new gasoline and petroleum vehicles. Here the govt. acts as a
compliment, by rising concerns over population and climate change leading to
greater market acceptance, negotiating with EV companies to produce highly
efficient cars with reduced time to market.
Major EV vehicles are facing two challenges. One to increase range by having
Technological smaller sizes and increase life of batteries, second is altering its internal
components to reduce the dependence expensive materials required to create
the battery itself. Numerous patents are filed but unfortunately many of it have
not reached commercialization.
The main component in production of LIB is cobalt, its limited in supply and
Environmental more than 60% is sourced from Congo republic. The purchasers of these LIB are
one the automaker brands which care beyond profit: values and corporate
responsibility as there are claims about child labor and corruption in the mining
region there is high risk of this allegation being transferred to the brand and they
may brand equity in the market.
As we observe from the artifacts that only a few set of countries especially China
Legal trying to establish Duopoly or oligopoly in this business segment by having
control over raw material, processing it and packaging it. This industry structure
creates significant barriers in entry and exit and imperfect availability of
information. For Eg. Not complying with child labor policy or not adhering to the
climate protection policies. This would cause legal barriers and largely impact
the supply chain.
Industry Analysis
Industry Definition:
The Initiative largely driven by clean energy to reduce climate change has taken center
stage driving demand for energy storage equipment to power the cities, automobiles and
transmissions. Aligning to this need batteries, which were once underestimated with
amount of energy it can store, has now gained popularity as a potential source of energy
storage which is able to generate and store higher capacities of energy. With innovation
around electronics and EV automobiles the demand for these batteries has seen an uptick
and observed to go strong up in the coming years.
Grouping Analysis
Based on the production capacity and sales in 2020 I have grouped the competitor
landscape to get a holistic view
High
Tesla CATL
Panasonic LG Chem
BYD
Market Segmentation
Geographic Segmentation
As per the case study population from 14 countries who have announced targets for
banning or phasing out sales of new gasoline and diesel passenger vehicles will be the
biggest customers, both govt and commercial buyers will be seen as potential customers as
they highly rely upon source of transportation
Demographic Segmentation
There is an upward trend observed in consumption of consumer electronics (Consumer Electronics
Market by Product Type | Forecast [2030], n.d.) and EVs, these products more they innovate more the battery
power is required to operate. The potential and larger segment of these customer will be
from genZ , anyhow there would small amounts of millennials and baby boomers for smart
home appliances.
Psychographic Segmentation
Customers who consider about climate impact and reduction of carbon footprint would
readily switch over to buying EVs and solar powers as gives them the satisfaction of giving
back to the nature in a good and efficient way. Customers who are considered elite and live
in richer segment of society would be the potential customers.
Behavioral Segmentation
After the push by govt. and also the EV vehicles (both personal and commercial) are shown
to have greater range for single charge and also promise for better rechargeable capacity for
longer period. As we see the prices of batteries go down in future. Customers who decide
upon dollar spent per km on a longer run would prefer these vehicles. Commercial
operation managers , driver who drive within cities , taxi fleet services would be the
potential customers.
Bargaining power of Suppliers

- Companies would setup assembly optimization for cylindrical cells
as they can negotiate deal with Tesla, currently holding large market
share in EV sales
- Companies can look to reduce use of cobalt and reduce overall cost
and improve performance, and manufacture more to get biggest
deals
Threat of New entrants

Threat of Substitutes
- Research for alternatives to LIB are Competitive rivalry
under progress, any of which can be - Chinese dominance is seen as a threat due to - Countries should get into Trade agreement
disruptive. Increase in patents filed. geo political reasons, alternative factories & talk and create a consensus on sharing
supply chains are set up in EU’s technology and make the supply chain better
- Anyhow there is low risk even if it’s
a breakthrough they would struggle - Many start-ups are identified with good order - By Setting up best post sales services,
to meet the rapid growing demand books. Anyhow, they are yet to reach recycling, and creating battery value chain
economies of scale. from linear to circular (Battery 2030: Resilient,
Sustainable, and Circular, 2023)
Bargaining power of buyers

- Companies who target all three major customer segments such as
Citations
Battery 2030: Resilient, sustainable, and circular. (2023, January 16). McKinsey & Company.
https://www.mckinsey.com/industries/automotive-and-assembly/our-insights/battery-2030-resilient-
sustainable-and-circular

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China introduced most generous subsidies in China's 2 five-year plans 2016-20

Bargaining power of Suppliers

Threat of New entrants

Bargaining power of buyers

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