Middle East, Southeast Asia, and India Rise: Emerging Alternative Hubs for Electric Vehicle Battery Manufacturing

The global battery energy storage market continues to grow strongly, and battery manufacturers are accelerating capacity expansion to meet demand. For a long time, battery manufacturing has been highly concentrated in China, but in recent years, the layout of overseas facilities has accelerated significantly. According to the battery energy storage technology bank rating report by PV Tech Research, global cell manufacturing capacity will grow by over 25% in 2026, with the largest increase in Europe, mainly driven by factory construction centered on electric vehicle batteries—Hungary is emerging as an important hub. CATL's new factory in Debrecen is expected to start cell production this year, while EVE Energy has also planned a 30 GWh capacity project in the same city.

Southeast Asia has become another hotspot for battery manufacturers to expand production. Companies are diversifying trade and leveraging local manufacturing incentives. EVE Energy has completed capacity expansion in Malaysia, and REPT BATTERO has opened a lithium-ion cell and energy storage system base in Indonesia. Indonesia's abundant mineral resources (especially nickel) have attracted upstream and midstream supply chain investments, and CATL is building a manufacturing hub covering the entire battery value chain locally.

The Middle East and North Africa region is also attracting investment, with over 35 GWh of battery and 45 GWh of cell manufacturing plans announced in recent years. India is accelerating capacity expansion, mainly characterized by dominance of local companies—over 10 GWh of dedicated energy storage battery capacity has been built so far this year. India's operational energy storage capacity is growing exponentially, driven by nearly 60 GWh of standalone battery storage tenders by the end of 2025 and new viability gap funding schemes. Although India still relies on cell imports, the VGF scheme requires at least 20% local content, promoting production localization. Other countries are also prioritizing localization: South Korea adds extra points for domestic industry contributions in energy storage auctions; the US investment tax credit provides a 10% domestic content bonus.

China is expected to maintain its leading position in battery manufacturing for many years to come. As of recently, over 900 GWh of newly announced or approved battery manufacturing capacity has been established in China, with investments exceeding RMB 120 billion.

Battle for Control of Lithium Supply Chain

Although lithium carbonate prices have fallen from their peak in May this year, they remain much higher than the same period last year. This is reflected in battery prices, while large-capacity cells have not yet become mainstream, and their cost advantages have not been fully realized. Suppliers that do not produce cells may be more affected by rising lithium prices, have weaker control over the supply chain, and have reduced pricing power. In addition, fixed contracts signed during low-price periods may impact profit margins in the first half of the year. New entrants tend to prefer purchasing cells (due to high capital expenditure for production), and this low barrier intensifies competition among integrators, possibly forcing companies to maintain low prices to gain market share.

Among major cell manufacturers, except for BYD, revenues and net profits grew strongly in 2025, with CALB, Great Power, and REPT BATTERO seeing net profits more than double. However, performance diverged in the first quarter of 2026: EVE Energy's net profit increased by 31%, but its profit margin fell compared to the first quarter of 2025.

Cell production is highly concentrated, with the top ten suppliers accounting for over 80% of output.Cell production is highly concentrated, with the top ten suppliers accounting for over 80% of output. China not only leads in cell manufacturing but also dominates the midstream segment—refining most of the world's lithium. Lithium prices are heavily influenced by China's processing capacity, and the Guangzhou Futures Exchange's opening of lithium carbonate futures and options to overseas traders will further strengthen China's pricing power.

Southeast Asia is becoming a hotspot for Chinese companies to set up battery material factories, such as BTR's anode material plant in Indonesia and XTC New Energy's cathode material project in Malaysia. Countries are actively reducing their dependence on China: G7 leaders established a critical materials alliance, requiring that reliance on a single external supplier for materials like lithium be reduced to below 60% by 2030; India also plans to launch production-linked incentive schemes for lithium and nickel processing.

The United States has only one operating lithium mine, but new mining projects are underway, such as the Thacker Pass mine under construction (with the U.S. Department of Energy holding a 5% stake). In 2026, three lithium-related projects received federal permits under the FAST-41 program, including the Southwest Arkansas project, which plans to produce 22,500 tons of lithium carbonate annually.

The market for alternative chemistry batteries is growing, with increased investment in sodium-ion battery manufacturing. CATL launched the first utility-scale sodium-ion battery product. Sodium resources are abundant, helping to reduce dependence on a single region. China's newly announced investments in sodium-ion battery production lines this year exceed 20 billion yuan, and the first gigawatt-scale sodium-ion plant in the United States is being built by Peak Energy. However, many alternative chemistry companies are still in early stages and face financial difficulties, making it difficult for lithium-ion to be completely replaced in the short term.

Overall, despite intensified efforts to localize the battery supply chain, it will still take time for the effects to materialize. So far this year, China has announced plans for nearly 20 billion tons/year of cathode materials and 1 million tons/year of anode materials, continuing to dominate the global production ecosystem.

For the electric transportation industry, the rise of emerging manufacturing hubs means: accelerated supply chain diversification, regional differences in battery costs becoming apparent, and reduced risk of relying on a single source in China. Southeast Asia, with its resource endowments and manufacturing cost advantages, is expected to take on more battery material and cell production capacity; the Middle East, relying on energy transition funds and its geographical location, is becoming a battery manufacturing node connecting Europe and Asia; India, driven by domestic demand, is building a local battery ecosystem. This trend will profoundly impact the capacity layout and competitive landscape of global new energy vehicles.