China has overtaken Canada to return as the leading Lithium-Ion (Li-ion) supply-chain country in 2024, according to BloombergNEF’s (BNEF) fifth edition of the Global Lithium-Ion Battery Supply Chain Ranking.

The rankings cover 30 countries’ capability to build a secure, reliable, and sustainable Li-ion supply chain.

The U.S. has moved one spot up to reach joint-second with Canada. India is in 14^th position, progressing from 16^th.

China

China had lost the first spot for the first time in the rankings’ previous edition. While acknowledging China’s supply chain as the strongest, BNEF had said the region must be more proactive in tackling the environmental, social, and governance (ESG) issues to benefit its supply chain in the long term.

This time, low commercial electricity prices and advancing infrastructure primarily drove China’s rise in the rankings. Additionally, the country continues to host the heavily concentrated refined supply of battery raw materials despite diversifying efforts. Capacity additions across the manufacturing value chain are also centered in China.

Canada

In the previous report, Canada had improved its rankings because of its consistent manufacturing and production advances and strong ESG credentials. Close integration with the U.S. automotive sector also helped the country because of the ‘friendshoring’ goals of the Inflation Reduction Act (IRA). Coming second this time, Canada faced slow Li-ion battery manufacturing scaling despite its considerable raw materials availability and stable investment environment.

The country performed well in the rankings’ supply chain categories. It announced additional governmental support for local supply chains. However, many companies, including E-One Moli, Ford, and Umicore, paused their Canada investments due to slower-than-expected demand.

United States

The U.S. climbed a spot to share the second rank with Canada, benefiting from the IRA in 2024. However, President Donald Trump’s tariff policies and rollback of the country’s climate goals risk undoing its advancements. These decisions are expected to reduce domestic demand and increase costs for U.S.-based manufacturers by moving investments to other regions.

Recently, the U.S. House Ways & Means Committee

Japan and South Korea

Established markets such as Japan and South Korea rose in rankings during the year, moving into the top ten. These nations were early movers in the battery supply chain segment, enabling them to maintain and improve their performance and navigate the challenging market conditions.

BNEF said newer players outside the APAC 1 region, which includes China, Japan, and South Korea, often face challenges while scaling up.

Emerging Markets

Some emerging markets improved their performance as well. Ellie Gomes-Callus, Metals and Mining Associate, BloombergNEF, said that countries such as Brazil and Indonesia grew the most in the report’s rankings. Ambitious policy roadmaps and rising demand drove this growth. “However, all eyes will be on the U.S. this year as it awaits the impact of the Trump administration’s trade policies,” added Gomes-Callus.

Europe

Europe’s battery supply chain potential exhibited indicators of decline. The continent’s battery manufacturing growth is not keeping pace with other regions, and its demand scores are weakening. The demand scores suffered due to small market sizes and market saturation, resulting in Eastern European and Nordic countries being overtaken.

Only two European countries featured in the rankings, Türkiye and the Czech Republic, improved their performance. Five nations maintained their positions, while two of the rankings’ largest declines were from European countries — Hungary and Finland. These countries dropped seven and six spots to rank 21^st and 11^th, respectively.

Hungary, the second-last in Europe, experienced declining performance in social and governmental metrics. Finland’s performance declined because of its complicated permitting processes and stagnant cobalt and nickel industries, with permitting-related issues holding up chemical company BASF’s battery component plant in Harjavalta, Finland.

The region risks falling behind some emerging markets without renewed momentum and targeted intervention to address barriers such as high operational costs and permitting issues.

According to a report by SolarPower Europe, the region’s battery energy storage market growth slowed year-over-year in 2024 despite growing 15%.

BNEF’s latest report said the global battery industry experienced oversupply last year, reducing profit margins and stoking trade tensions. The supply of raw materials increased despite such challenges. However, refined battery metal market trends are more mixed than mined metal trends.

In December last year, BNEF reported that Li-ion battery pack prices dropped 20% from 2023 to a record low of $115/kWh, the most significant annual decline since 2017. The price decrease was driven by factors such as overcapacity in cell manufacturing, economies of scale, lower metal and component costs, the adoption of lithium-iron-phosphate batteries, and slower growth in electric vehicle sales.