30/01/2021

21700/18650 Cylindrical Li-Ion cells market trends 2021 - Shmuel De-

Leon Energy.

During 2020 Tesla invested at LG Chem and as part of that deal LG Chem
start supplying Tesla with cylindrical cells mainly for their ESS batteries –
That will free more Panasonic cylindrical cells for Tesla Automotive demand.

The Covid19 cause cell manufacturers to slow production of cylindrical cells

mainly at Q1-Q3/2020 - We see that in production capacity numbers of
almost all manufacturers.

As a reaction to the Covid19 many stayed home and we see growing

demand for power and garden tools, E-Bikes and electric mobility (Tesla
mainly but also LEV) - All are the main segment to use cylindrical cells.

These 3 trends surprised the cell makers who were not ready for that
change and generate severe market shortage from Q4/2020 and may
continue to 2021-2022 until production capacity will grow as well market
demand for PT,GT,E-Bike will reduce as part of Covid19 recovery.

Panasonic – fully dedicated to Tesla for several years and not accepting any
new customers.

LG Chem updated many customers that they will not be able to deliver cells
as promised during 2021.

Samsung and Murata face reduction in cylindrical cells manufacturing

during 2020 due to Covid19 and move some resources to large automotive
and ESS cells production – We expect their cylindrical cells production to
grow up in 2021-2022 due to high demand. Both companies don’t accept
new customers or new orders – reduce allocation for existing customers.

As a result, we face market shortage – allocation problems – and cells cost

will increase by up to 50% until market will be balance.
Moli Energy from Taiwan manufacture cylindrical cells introduce to the
market new 18650 and 21700 high energy cells – They are potential good
alternative for the 4 market leaders.

In china we also face high demand for cylindrical cells – Main makers,
Lishen, BYD, EVE, Cham, BAK are almost sold out but still accept orders
from key customers – other companies are still able to deliver but their
performance and quality/reputation are lower – It is also difficult for new
customers to audit them due to Covid19 travel ban – However we see
Chinese companies are working hard to increase production capacity as a
reaction to market trends and they have the capabilities doing it in
relatively short time in compare to Korean and Japanese market leaders.

New manufacturers like Northvolt are still building up production capacity

and can’t affect the market in the short term.

It also clear that European and USA battery pack makers may need to
increase purchasing of Chinese cells in the coming years as there are no
other choices in the market - In case of new tax policy in the USA regarding
China may also support during 2021.

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LIB 21700 Cells Market Review 2021

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Shmuel De-Leon, www.sdle.co.il. shmuel@sdle.co.il, Cell:+972528601517