Future of EV Batteries Market Size, Share & Analysis

The global future of EV batteries market is projected to grow from 16 million units in 2024 to 62 million units by 2035, at a CAGR of 12.7%. Changes in lithium-ion (Li-ion) battery chemistry are leading to more efficient electric vehicles (EVs) as the industry switches from toxic metals such as nickel-manganese-cobalt (NMC) to lithium-iron-phosphate (LFP). Companies like Tesla, Rivian, and Ford have already changed their standard models from NMC to LFP, while manufacturers like Hyundai, Nissan, and Toyota are developing cheaper LFP variants to make EVs more affordable. Further, research into solid electrolytes is progressing and promising significant advantages over traditional liquid electrolytes, including higher energy density, lighter construction, faster charging, extended range, and longer life cycles. In the past year, researchers have made significant progress in creating solid-state batteries that can charge in minutes and hold a charge for more than 6,000 cycles, using a variety of cheap metals and less lithium. In addition, developing sodium (Na-ion) batteries could provide the best option for shorter-range EVs and plug-in hybrid electric vehicles (PHEVs), as they replace lithium with much cheaper sodium, perform better at low temperatures, and allow for fast charging with a longer lifespan. Thus, the overall future of EV batteries is largely expected to witness newer, cleaner & cheaper battery chemistries and modular designs.

To know about the assumptions considered for the study, Request for Free Sample Report

To know about the assumptions considered for the study, download the pdf brochure

Future of Batteries Market Dynamics:

Driver: Technological advancements in EV battery 

The rapid progress made in EV battery technology has played a huge role in the emergence of this EV battery market. Electric vehicles are still in high demand due to increasing consumer interest in more sustainable and efficient transportation options. Manufacturers and researchers are constantly working to improve battery technology by solving problems related to energy density, charging time, cost, cleaner materials, and safety issues. The development of solid-state batteries is one such milestone that promises to revolutionize the automotive industry. Unlike traditional lithium-ion batteries that use a liquid or gel electrolyte, Solid-state batteries use a solid electrolyte, resulting in increased energy density, faster charging, and better safety. These improvements have the potential to significantly extend EV range and shorten charging times, addressing range anxiety concerns that have hindered widespread adoption. Solid Power Inc. (US) manufactures Solid-state batteries for electric vehicles using sulfide-based semiconductor cells.

Meanwhile, QuantumScape (US) is developing solid-state batteries for Volkswagen. These new batteries will probably be used in electric vehicles by 2026. Such development in battery technology will drive the market growth in the forecast period.

Restraint: Limited supply of Raw materials

The limited supply of raw materials such as lithium, cobalt, and nickel is a major restraining factor for the future EV batteries market. These materials are critical for making batteries that have advanced specifications, but geographic, environmental, and political items typically limit their extraction and processing. Growing sales of EVs put a strain on these resources; this may lead to interruptions in supply chains or higher costs or even both. In addition, the sourcing concerns regarding the negative impacts on the environment caused during the mining process while also touching on issues related to rights abuses usually associated with some minerals such as cobalt. Hence, scarcity and price increases of these critical minerals may delay EV battery production growth, hampering technology advancement and restricting overall development in this sector, thereby investing in alternative materials recycling and sustainable mining approaches.

Opportunity: EV battery recycling provides opportunities to maintain the supply of critical materials

As the demand for electric vehicles grows, so does the need for these scarce and often geopolitically sensitive resources. By extracting these valuable components from batteries nearing the end of their beneficial lives, recycling gives a sustainable alternative to relying on risky mining practices and unstable global supply chains. This helps to maintain material sources and promotes a circular economy by reusing materials continuously, improving resource efficiency, and lowering the carbon impact of producing new batteries.

In addition, recycling approaches emerge as more effective and permit increasing costs of crucial material recuperation as technology advances. This lowers manufacturing charges and promotes the improvement of recent battery technologies. The European Union (EU) has some laws governing EV battery recycling. From 2030, batteries must contain a minimum recycled content of 12% for cobalt, 4% for lithium, 4% for nickel and 85% for lead. By 2035, these thresholds will increase to 20% cobalt, 10% lithium, 12% nickel and 85% lead.

Challenge: Performance declination of lithium-ion batteries over time

Performance degradation in lithium-ion batteries drastically influences the EV batteries market place by influencing patron self-assurance, car range, and ordinary market dynamics. As batteries age, their capability diminishes due to reduced riding range and increased charging frequency, which could deter potential EV customers involved in long-term performance and resale price. This degradation also pressures producers to manufacture extra durable batteries with longer lifespans, doubtlessly increasing research and manufacturing costs. Additionally, the secondary market for degraded batteries, such as power storage or recycling, becomes extra vital, influencing supply chain dynamics and the overall economics of battery production and disposal. Consequently, managing and mitigating overall performance degradation is pivotal for the growth and sustainability of the EV market.

Future of Batteries Market Ecosystem

The ecosystem analysis highlights various players in the future of the EV battery market ecosystem, primarily represented by OEMs, battery pack/cell suppliers, raw material suppliers, etc. Prominent companies in this future of the EV battery market include CATL (China), LG Energy Solution Ltd. (South Korea), BYD Company Ltd. (China), Panasonic Holdings Corporation (Japan), and SK Innovation Co., Ltd. (South Korea) and among others.

Lithium-ion battery holds the largest share.

Lithium-ion batteries offer good energy density, longer cycles, and a relatively low self-discharge rate compared to other battery technologies. These characteristics make Li-ion batteries properly desirable for the needs of electric vehicles, where power storage, range, and performance are critical. Over the years, various variants of Li-ion chemistries have been developed, like Lithium Iron Phosphate (LFP) and Nickel Manganese Cobalt (NMC). The outcome was that each of these chemistries had a set of advantages; in general, LFP batteries exhibit a longer cycle life than NMC batteries, making them suitable for extensive and prolonged applications. While NMC batteries offer a higher energy density, allowing them to store more energy. Further, OEMs are developing batteries with advanced technology; for instance, in June 2023, Toyota announced that it aims to launch next-generation lithium-ion batteries in 2026, offering longer ranges and quicker charging. In May 2024, SAIC Motor announced that its all-solid-state battery will be mass-produced in 2026, with an energy density of more than 400Wh/kg.

The passenger car segment will continue dominating the future of EV batteries market during the forecast period.

The global shift towards electric-powered mobility, pushed by environmental concerns and stringent emissions guidelines, has substantially boosted the demand for electric cars, driving the growth of the EV batteries market. Additionally, improvements in battery technology, consisting of developing high-power-density lithium-ion batteries, have made EVs extra realistic and less costly for the common purchaser. In addition, the availability of incentives and subsidies for EV purchases encourages the adoption of electric passenger vehicles. In addition, the significant charging infrastructure being advanced globally mainly helps passenger cars, making them more convenient for daily use. As a result, the passenger segment dominates the future of EV batteries marketplace, with their growing popularity expected to continue driving demand in the forecast period.

During the forecast period, Europe holds the 2nd largest share of the future EV batteries market.

Various European countries have set a bold goal of reducing 80% of CO2 emissions by 2030-2035 and have created a roadmap. The governments of numerous European countries are also subsidizing EV infrastructure, thereby boosting EV sales and batteries. The increasingly more stringent guidelines related to environmental troubles are propelling key players to test and develop advanced automobiles, intending to further strengthen the market for advanced battery technologies.

European countries also invest heavily in charging infrastructure, easing range issues, and encouraging consumers to adopt electric vehicles. This infrastructure development enhances the future boom of the EV battery market. For instance, in March 2024, Northvolt AB (Sweden) started constructing a battery plant in northern Germany to supply electric cars, capping an intense lobbying effort under newly relaxed European Union state aid rules. Further, in September 2023, Gotion, Inc. (China) announced to build 20 GWh battery plant in Europe by 2026. In addition, Europe has a well-established automotive industry with corporations, including Volkswagen, BMW, and Renault, investing heavily in electric automobile generation.

Key Market Players

The future of EV batteries market is dominated by established players such as CATL (China), LG Energy Solution Ltd. (South Korea), BYD Company Ltd. (China), Panasonic Holdings Corporation (Japan), and SK Innovation Co., Ltd. (South Korea). These companies manufacture battery and develop new technologies. These companies have set up R&D facilities and offer best-in-class products to their customers.

Want to explore hidden markets that can drive new revenue in Future of EV Batteries Market?

Unlock Insights

Click on image to enlarge

Scope of the Report

This research report categorizes the future of EV batteries market based on Battery type, Battery Form, Vehicle type, battery packaging form and Region.

Based on Battery Type:

• Lithium-Ion
• Sodium-Ion
• Solid-State
• Lithium-Air

Based on Battery Form:

• Prismatic
• Pouch
• Cylindrical

Based on Vehicle Type:

• Passenger Cars
• Commerical Vehicles
• Off-Road Vehicles

Based on Packaging Form:

• Cell to Module
• Cell to Pack
• Cell to Chassis/Vehicle
• Module to Chassis

Based on the region:

• China
• US
• Europe
  • France
  • Germany
  • Spain
  • Italy
  • The UK
  • Sweden
  • Norway
  • Denmark
• Asia Pacific (excl. China)
  • India
  • Japan
  • Thailand
  • South Korea
• Rest of the World
  • UAE
  • Egypt
  • South Africa

Recent Developments

• In August 2024, A Memorandum of Understanding (MoU) was signed between Amara Raja Advanced Cell Technologies (ARACT), a wholly owned subsidiary of Amara Raja Energy & Mobility (ARE&M) (India), one of the top battery manufacturers in India, and Ather Energy (India). Under the terms of this partnership, Amara Raja and Ather will work together to develop and supply advanced chemical cells, such as lithium iron phosphate (LFP) and lithium-ion (Li-ion), locally produced at their future Gigafactory in Divitipally, Telangana.
• In June 2024, ExxonMobil (US) and SK On (South Korea), a leading global developer of electric vehicle (EV) batteries, inked a non-binding memorandum of understanding that paves the way for the business to obtain a multiyear offtake agreement of up to 100,000 metric tons of MobilTM Lithium from its first planned facility in Arkansas. SK On intends to use lithium in its American operations to produce EV batteries. This will help the development of an American electric vehicle supply chain and further ExxonMobil's objective, declared in late 2023, to supply lithium for around one million EV batteries annually by 2030.
• In March 2024, StoreDot, a developer of extreme fast charging (XFC) battery technology for EVs, announced a collaborative partnership with EVE Energy. The partnership gives StoreDot access to EVE Energy's extensive manufacturing footprint and the ability to mass produce its 100 in 5 extreme fast-charging battery cells.
• In February 2024, LG Energy Solution signed an offtake agreement with Wesfarmers Chemicals, Energy, and Fertilisers for lithium concentrate, advancing the companies' pre-existing partnership to deliver efficient and sustainable power solutions to the North American market.
• In January 2024, Jianghuai Automobile Group and CATL signed a strategic cooperation agreement in Ningde, Fujian Province. According to the agreement, both companies will actively cooperate in the supply of EV batteries, introduction of battery swapping technology, joint development and application of new technologies and products, market expansion at home and abroad, and carbon emission reduction across the industry chain, as well as work together to formulate an action plan and build a strategic alliance.

Frequently Asked Questions (FAQ):

To speak to our analyst for a discussion on the above findings, click Speak to Analyst