BOSTON, 3 August 2023: The electric ship market has witnessed significant growth, with over 1GWh of batteries deployed globally in 2022, reflecting a 72% industry expansion. However, challenges persist for shipbuilders and maritime battery suppliers. This article explores the potential of hybrid cargo vessels as a key driver of growth and discusses the emerging competition from China. IDTechEx provides valuable insights into this evolving industry.
Historic Focus on Electric Ferries
Electric ship markets have been historically driven by electric ferry orders, accounting for 37% of maritime battery capacity deliveries between 2019 and 2022. Norway leads this trend with approximately 100 electric ferries in operation, but market saturation is expected soon as government targets are set to be met.
Impact of Uncertain Times on New-Build Contracts
The uncertainty and inflation caused by the pandemic and geopolitical events like the Russia-Ukraine war have negatively impacted new-build contracts, including those for electric and hybrid vessels designed for efficiency with electric propulsion.
The Rise of Hybrid Cargo Vessels
IDTechEx predicts that the future of the electric ship industry lies with hybrid cargo vessels. Although this market has not been historically significant, new contracts for container ships are steadily emerging. Zero-emission anchorage requirements, upcoming IMO and EU regulations, and the potential for larger battery systems per vessel will drive battery installations.
Untapped Potential in the Global Merchant Fleet
Currently, less than 1% of the global merchant fleet utilizes alternative fuels, including batteries. Battery systems enhance engine efficiency and accommodate future technologies like hydrogen fuel cells. Increasing system sizes, reaching tens of mega-watt hour per vessel, will also contribute to market growth.
China’s Competitive Edge
China-based battery suppliers are intensifying competition with low-priced, type-approved marine battery systems. High vertical integration and battery chemistries like LFP, primarily manufactured in China, facilitate cost-effectiveness. Major players like Contemporary Amperex Technology (CATL) have already made significant strides in the market.
Short-Term Premium for Non-Chinese Suppliers
In the short term, marine battery suppliers outside China may command a premium due to their extensive experience in the safety-critical sector. However, China’s entry will streamline the value chain and drive the next phase of growth, leading the industry into multi-giga-watt hour territory.
The electric ship market is experiencing remarkable growth, with hybrid cargo vessels poised to become a key driver of this expansion. As battery systems continue to evolve and China intensifies competition, the industry is set to sail into a new era of multi-giga-watt hour installations. IDTechEx’s insights offer valuable guidance to navigate the future of electric ships.