Power tool batteries will be worth 58.9 billion RMB in 2025

Lithium Power tool batteries: many categories, high rate requirements, long tail in the market

Cylindrical batteries are low in cost and mature in technology and can be used in Power tool batteries. According to its packaging structure, lithium-ion batteries can be divided into three categories: square shell, cylindrical and soft pack. 1) Compared with square batteries, cylindrical batteries have the advantages of high degree of standardization, easy grouping, good heat dissipation effect of Pack, and high consistency; 2) Compared with soft pack batteries, cylindrical batteries have the advantages of low cost, mature manufacturing process, and high consistency , the lower production cost and excellent consistency make the cylinder suitable for mass production and the field of small power systems (power tools, light electric vehicles) with strong demand.

There are many types of cylindrical batteries, and the applications cover consumption, electric tools and power, etc. Cylindrical batteries have different models, and their numbers have five digits. The first two digits represent the diameter of the cylindrical battery, the middle two digits represent the height of the cylindrical battery, the last digit represents the shape of the battery, and the representative number for a cylindrical battery is 0. The larger the battery specification, the greater the capacity, and the demand for large-scale batteries gradually increases with the performance requirements. The mainstream cylindrical battery models on the market are: 10400, 14500, 18500, 18650, 21700, 26650, 32650, 46800. Among them, 18650 and 21700 batteries are generally used in the field of electric tools. According to the 2020 Tesla Battery Day data, its 46800 capacity is 5 times that of 21700, and it will be used in the field of electric vehicles.

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The Power tool batteries has unique requirements: high-rate and large-capacity batteries. Due to: 1) long working hours: it is necessary to reduce the charging time as far as possible in the cordless state; 2) use environment: natural environment such as field and engineering; quick start and large load, etc., the discharge rate, energy density and environmental adaptation requirements are pretty high. Compared with power batteries, power tools have higher requirements for consistency between batteries due to limited space and no BMS to manage each battery cell.

Lithium batteries have advantages over lead-acid and nickel hydride in terms of light weight, long battery life, and environmental protection. With the cost falling, lithium batteries will be used as substitutes. Compared with lead-acid batteries, lithium batteries have the advantages of high cell density, good cycle performance, long service life, light weight, energy saving and environmental protection. Compared with nickel hydride batteries, lithium batteries have three times the energy density, long service life, and fast charging speed. Although the unit cost of lithium batteries is currently higher than that of lead storage batteries and nickel hydride batteries, with the technological changes in the industry, the upgrading of industrial structure, and the release of scale effects, it is the general trend for lithium batteries to replace the latter two in the long run.

Power tool batteries play an important role in lithium battery applications. According to GGII data, in 2020 China’s power tool lithium battery shipments accounted for about 4% of the market share, and two-wheeled vehicles accounted for about 7%, both of which played an important role; new energy vehicle power lithium batteries accounted for about 56% of the lithium-ion battery market share.

Electric tools, forklifts and two-wheeled vehicles are the main market segments for Power tool batteries shipments in my country, and the long tail effect is significant. According to GGII data, from 2018 to 2019, the shipment growth rate of lithium batteries in my country’s electric tools, forklifts, two-wheeled vehicles and other market segments has exceeded 50%. Other fields also have an annual growth rate of 50%, and the proportion of shipments is relatively high, and the long-tail effect is obvious. Demands such as cleaning and gardening are also growing rapidly.

Market space: The 25-year market space for Power tool batteries is 58.9 billion yuan, including electric tools and gardening, cleaning, electric bicycles and portable energy storage scenarios

Electric tools: Cordless will bring growth in lithium Power tool batteries shipments, with a long-term space of 24.8 billion yuan

There are many types of power tools, divided into industrial grade, professional grade and DIY grade. Electric tools refer to tools that are held and operated by hand, powered by small-power motors or electromagnets, and driven by transmission mechanisms. According to the power source, electric tools can be divided into two categories: traditional electric (corded) and rechargeable (cordless); according to technical requirements, application fields and other characteristics, electric tools include three levels: industrial level, professional level and DIY level.

The downstream market of electric tools is dominated by Europe and the United States, mainly oriented to the needs of the construction industry, renovation, and DIY. Downstream: In 2019, power tools are mainly sold to Europe and North America, accounting for 70%; from the perspective of usage scenarios, they are mainly used in commercial buildings (18%), industrial buildings (14%), renovation (9%), DIY (9%) etc. Upstream: Raw materials, components and electrical accessories are subdivided into multiple categories. Raw materials include enameled wires, steel wires, and insulating materials, etc., components include gears, transmission bodies, etc., and electrical accessories include Power tool batteries, motors, and electronic controls.

Asia-Pacific region is an emerging market. With the upgrading of consumption in emerging markets, the increase in per capita housing area, the increase in car ownership, and the rise in labor costs, both the construction industry and household DIY have demanded power tools, and their consumption attributes will increase.

Since the outbreak of the epidemic, affected by stimulus policies, the U.S. real estate market, construction industry, and European construction industry have been at a high level, driving the power tool market to boom. Thanks to the fiscal stimulus bill + monetary easing, the data of existing home sales and new home sales in the United States have moved up significantly after the epidemic, and the PPI of the construction industry has also shown a rapid upward trend, with an increase of 18% in March 2022 compared to January 2020 ; In Europe, the PMI index of the EU construction industry has also started to rise continuously since year 2021.

Cordless has brought about an increase in demand for power tool batteries. Power tool batteries mainly provide power systems for various subdivided products. The main feature is to meet the needs of cordless and electrification. Power tool batteries are expected to be one of the driving forces for the continuous growth of the lithium battery market. In 2020, the global cordless power tool market will reach US$10.3 billion, and the corded power tool market will reach US$11.6 billion. Benefiting from the industry’s cordless trend, the compound annual growth rate of the cordless power tool market is expected to be 9.9%, which is higher than 2.1% of the corded power tool market, The “White Paper on the Development of China’s Power Tool Industry (2021)” pointed out that the penetration rate of cordless power tools has increased from 30% in 2011 to about 64% in 2020, of which lithium-ion tools accounted for as high as 90%.

Space: The power tool market is expanding steadily, with a CAGR of 5.5% in 20-24. According to GGII data, the global power tool market will reach US$30.7 billion in 2020. Based on a compound annual growth rate of 5.5%, the global power tool market will reach US$38 billion by 2024. In 2020, the size of China’s electric tool market is about 80.9 billion yuan, and it is expected to reach 91 billion yuan in 2024. EVTank shows that in 2020, global shipments of electric tools will reach 490 million units, a year-on-year increase of 5.3%, and global shipments of lithium Power tool batteries will reach 2.02 billion units, a year-on-year increase of 19.2%. It is predicted that the scale of the electric tool market will expand steadily and the demand will continue to grow, which will drive the growth rate of upstream lithium battery shipments to increase.

Global Power tool batteries Demand Forecast:

It is estimated that the market space of lithium Power tool batteries will be 24.8 billion yuan in 2025, with a CAGR of 11.5%. We expect that in 2025, the shipment of electric tools will reach 659 million, the penetration rate of cordless electric tools will reach 82.5%, the total demand for lithium batteries for electric tools will reach 3.62 billion, and the corresponding space will be 24.8 billion yuan, the annualized growth rate of 21-25 years was 11.5%.

Horizontal expansion: the market space of Power tool batteries will be 58.9 billion yuan by 2025, and there is a strong demand for Power tool batteries in gardens, cleaning appliances, electric bicycles, and portable energy storage.

Global demand forecast for Power tool batteries:

It is estimated that in 2025, the global Power tool batteries market space will be 58.95 billion yuan, with a CAGR of 12.4%. We estimate that in 2025, the shipments of lithium Power tool batteries for garden tools will be 1.78 billion, for electric bicycles will be 1.15 billion, for vacuum cleaners will be 1.39 billion, and the shipments of portable energy storage lithium batteries will be 1.47 billion. The total shipments of lithium batteries in the four tracks is 5.77 billion. Combined with the forecast above, the shipments of lithium batteries for electric tools are 3.62 billion. In 2025, the shipments of Power tool batteries are expected to total 8.61 billion, with a market space of 58.95 billion yuan , 2021-2025 annualized growth rate of 14.35%.

The demand for gardening tools in Europe and the United States is strong

In developed countries such as the United Kingdom, the United States, Germany, Europe and the United States, abundant land resources and relatively high living standards have influenced local residents’ preference for garden maintenance. According to data from the European Horticultural Equipment Manufacturers Association, more than 43% of households in Germany and 87% of the UK have private lawns, and German gardening enthusiasts exceed 60% of their own population, and American gardening enthusiasts exceed 40% of their own population. According to Frost & Sullivan analysis, the CAGR of the global OPE (outdoor power tool) market is 5.6% from 2016 to 2020, and the CARG is expected to be 5.3% from 2020 to 2025. According to Statista data, the annual expenditure on lawn maintenance and garden tools per capita in the United States continued to rise from 2015 to 2020, with a year-on-year growth rate of 8% in 2020.

From the power supply of garden tools, electric is the trend. Existing power is divided into fuel engine, alternating current and electric tools. 1) Fuel engine garden tools are easy to use and they are powerful, but they are not environmentally friendly and unsafe. It is difficult to find substitutes for current fuel engine tools in the professional field, but it will be more and more limited in the household field. 2) AC garden tools are cheap, powerful enough, and have no pollution emission, but they are inconvenient to use outdoors and have a high risk of electric shock. 3) The price of lithium Power tool batteries of garden tools is relatively high and the power is weak, but they are convenient to use outdoors; they are clean and environmentally friendly, and have low risk of electric shock. With the improvement of energy density and power of lithium battery, the decrease of cost, and the advancement of motor technology, the price disadvantage of electric garden tools will gradually weaken.

The CAGR of lithium Power tool batteries of garden tools has reached 6.6%, and the current penetration rate is only 15%. According to Daye, the total global market demand in 2018 was 23.2 billion dollars, and the market demand excluding accessories was 19.380 billion dollars, of which the demand for gasoline engine-powered garden machinery was 15.385 billion dollars, accounting for 79.39% of the global market demand excluding accessories. The demand for similar garden machinery is US$2.89 billion, accounting for 14.91% of the global market demand for accessories. It is estimated that by 2023, the global market demand for garden machinery products will reach US$26.4 billion, with a compound annual growth rate of 2.62%, of which the compound growth rate of lithium-electric garden machinery will reach 6.61%.

Larger garden tool products bring more demand for lithium Power tool batteries. Traditional power tools use 4-5 cells per piece, while garden tools, especially large-scale garden tools, are expected to use about 20 cells.

Clean electrical appliance market + cordless trend drives demand growth

The working environment of cleaning appliances has similar requirements for battery continuity and power as electric tools. The CAGR of China’s cleaning appliance market in 2016-2021 is 25.06%, and the market size has rapidly expanded from 10.1 billion yuan in 2016 to 30.9 billion yuan in 2021 , which is expected to continue to grow in the future. In addition, the cordless trend is obvious, and cordless cleaning machines such as cordless vacuum cleaners, sweeping robots, and floor scrubbers have the characteristics of fast expansion and great market potential. In terms of sales structure, sweeping robots are the largest sub-category in my country’s cleaning appliance industry, accounting for 38.8% of sales in 2021, followed by wireless vacuum cleaners, accounting for 26%.

The increase in the scale of each sub-category will bring about an increase in the demand for lithium batteries. According to EVTank, the demand of lithium-ion batteries for cordless vacuum cleaners in China has reached 430 million in 2020, a year-on-year increase of 40.24%. The rapid growth in the consumption of lithium-ion batteries for E vacuum cleaners is closely related to the increase in shipments of vacuum cleaners, the increase in the penetration rate of cordless vacuum cleaners and lithium batteries. Lithium batteries will soon 100% replace NiMH batteries, and are widely used in vacuum cleaners. According to AVC’s prediction, the scale of domestic cleaning appliances in 2022 will reach 37.4 billion yuan, an increase of 21% year-on-year; the scale of sweeping robots will reach 13.8 billion yuan, a year-on-year increase of 15%; the scale of wireless vacuum cleaners will reach 8.2 billion yuan, a year-on-year increase of 3%; The scale of washing machines will reach 10.3 billion yuan, a year-on-year increase of 79%.

The market for electric bicycles is vast

As the origin of electric power bicycles, Japan is well developed in this field; the European market maintains rapid growth; the US market is in the growth stage. In Japan, the penetration rate of electric bicycles was 42% in 2018, with annual sales of about 700,000, maintaining a steady growth rate of 8%-10%. In Europe, the penetration rates of electric bicycles in the Netherlands, Belgium, Austria were 40%, 35%, and 33% respectively in 2018. The compound growth rate of electric bicycles in Europe from 2009 to 2019 was greater than 30%. Statista predicts that the compound growth rate from 2020 to 2025 is greater than 20%, and the sales volume in the European market is expected to reach 10 million in 2025. The U.S. market is in the growth stage with a low penetration rate and a fast growth rate. At present, the penetration rate of electric bicycles in the US market is about 2%, and the sales volume will increase by about 100% in 2019-2020. The main reason for the low penetration is that some state legislation is not clear. With the normalization of the epidemic and the improvement of policies, the US market will usher in a stage of high growth, and the penetration rate will also increase rapidly.

The penetration rate of lithium batteries is expected to reach 80% in 25 years, achieving a rapid increase. From 2013-2020  China’s electric bicycle battery material type market share and forecast situation, at present, lead battery is still the mainstream in China’s electric bicycle market, but its market share is declining year by year from 93.3% in 2013 to 80% in 2020; Lithium battery market share increased steadily, from 6.7% in 2013 to 20% in 2020. On the whole, with the maturity of lithium battery technology and the decline in cost in the future, the replacement process of lithium batteries for lead-acid batteries in the field of electric bicycles will be further accelerated, and the market share of lithium batteries in the field of electric bicycles will gradually increase. According to the forecast, in 2025, the proportion of lithium batteries is expected to surpass that of lead batteries, and the market share will reach 80%.

In terms of sales volume, in 2019, the sales volume of lithium battery electric bicycles in China was 6.8 million, a year-on-year increase of 65.6%, and the penetration rate reached 20.9%. In 2020, it reached 10.25 million units, a year-on-year increase of 50.7%. According to the forecast of GGII, the sales volume in 2025 is expected to reach 22.15 million units; in terms of shipments, in 2020, the lithium battery market for lithium-ion bicycles would ship 9.7GWh, a year-on-year increase of 78%. GGII predicts that by 2025, the shipment of lithium batteries for light vehicles will reach 35GWh, and the CAGR of the vehicle power battery market will reach 29.3% in the next five years.

The portable energy storage market drives the demand for lithium batteries

Portable energy storage is expected to be one of the important applications of cylindrical batteries. The portable energy storage product is a built-in high energy density lithium-ion battery system, which has the characteristics of large capacity, high power, safety and portability. The battery capacity is 100Wh-3000Wh, which is a substitute for traditional small fuel generators. Portable energy storage products have special requirements for safety and portability, using cylindrical batteries with high product consistency. The mature 18650 cylindrical lithium battery is the main choice for many customers, and a small number of customers who have requirements for capacity choose 21700 cylindrical lithium batteries. In 2021, due to the epidemic and the tight supply of battery capacity in Japan and South Korea, the supply chain of foreign batteries was impacted. It was expected that the domestic substitution process of portable energy storage batteries will accelerate in the future.

The compound growth rate of the global portable energy storage market in 2016-2021 reached 148%, and the market size in 2021 years reached 11.13 billion. The development history of the portable energy storage industry was relatively short. In 2016, the global shipments were only 52,000 units, and the market size was 60 million yuan. The volume has increased in 2018. According to data from the China Chemical and Physical Power Industry Association, shipments were expected to reach 4.838 million units in 2021, a year-on-year increase of 131.7%, and a compound annual growth rate of 148%. The market size in 2021 was expected to be 11.13 billion yuan, a year-on-year increase of 161.3%.

China is the main manufacturer, and the United States and Japan are the main markets. From the perspective of production, the world’s portable factories are mainly located in China, and more than 90% of the production and volume came from China in 2020. From the perspective of sales, 1) The United States is the world’s largest application market for portable energy storage, accounting for 47.3% of the global application in 2020. 2) Japan accounts for 29.6% of the application in the global emergency field, mainly because of the frequent occurrence of disasters and accidents such as earthquakes in Japan, and the high demand for emergency power equipment. 3) The main demand in Europe and Canada is still based on outdoor activities and emergency response. However, European regions mostly choose bicycles and other light travel tools, there is less demand for portable energy storage. 4) Currently, China’s outdoor market is still in its infancy. With the continuous development of China’s economy, the degree of urbanization and per capita consumption capacity are further improved, and outdoor consumption habits are becoming more and more mature. The market potential of portable energy storage is huge.

The replacement ratio of portable energy storage to small fuel generators is expected to reach 18.6%, and the penetration rate is expected to reach 14.5%. As a substitute for traditional fuel generators, portable energy storage has the characteristics of easy portability, low periodic cost, and comfortable use. At the same time, it has the advantage of cleanliness, which is inevitable for small fuel generators. According to the forecast of the China Chemical and Physical Power Industry Association, the replacement ratio will reach 18.6% in 2026, and the penetration rate in the overall market will reach 14.3%, since portable energy storage is only suitable for backup power and short-term applications,In 2025, the global portable energy storage shipments are expected to be 22.42 million units, the demand for lithium batteries will be 15.2GWh, and the CAGR will reach 61.87%. With the development of economy, the transformation of energy structure, and the increasing popularity of smart terminals in the era of Internet of Everything, electricity has become the core of the modern economy. According to the data of Lithium Battery and the prediction of China Chemical and Physical Power Industry Association, the global portable energy storage shipments will reach 22.42 million units/31 million units in 2025/2026, and the shipments of China’s portable energy storage devices will reach 20.86/28.67 million units. The annual global demand for portable energy storage lithium batteries will reach 15.2GWh, and the CAGR will reach 61.87% in the next four years.