[Insights] Significant Impact of Chinese Export Restrictions, Material Alternatives Yet to Yield Immediate Results

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With China intensifying export controls, Japanese companies relying on crucial battery and semiconductor materials manufactured in China are contemplating alternative solutions. They are actively seeking materials sources to achieve supply diversification.

TrendForce’s insight:

1. Alternative Solution Cannot be Translated into Immediate Success

While countries like Japan and South Korea have swiftly initiated strategies to find alternative solutions, the majority are still in the evaluation, research, or testing stages, unable to provide immediate assistance.

Even if alternative graphite production sources outside of China, such as in North America or Australia, are identified, it is likely to increase manufacturing costs, thereby impacting the selling price or profit performance of electric vehicles.

2. Back to Negotiation with Chinese Manufacturers

The post-export control scenario may accentuate the cost advantage of Chinese battery manufacturers, influencing the effectiveness of various protective measures taken by Europe and the United States to counter Chinese electric vehicles.

Consequently, countries may ultimately realize that returning to the negotiation table with China is more practical than going through a prolonged process, aligning with China’s primary objective.

3. Material Edge Won’t Last Forever

The continuous export restrictions on critical materials by China may encourage countries to persist in developing alternative solutions. For instance, OEMs like Tesla, GM, and Stellantis are actively investing in research on rare-earth-free motors to reduce dependency on Chinese rare earths.

While currently constrained by battery material technology, graphite remains the highest-value anode material. Yet, numerous companies are also exploring anodes with higher energy density, such as silicon oxide (SiO) and lithium metal (Li Metal).

Therefore, China must recognize that material advantages may not be permanent, and the core lies in the ability for technological iteration.

Read more

• [News] Japanese Companies Seek Battery and Chip Materials Outside China

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