Electric Vehicle Battery Market to Grow at a CAGR of 26% to Reach $175.11 Billion by 2028, Meticulous Research® Predicts

Electric Vehicle Battery Market by Type (Li-ion, Ni-MH, SLA, Ultracapacitors, Solid-state Batteries), Capacity (<50 kWh, 51-100 kWh, 101-300 kWh, >300 kWh), Bonding Type (Wire, Laser), Form, Application, End-user, and Geography - Global Forecast to 2028


Redding, California, Aug. 23, 2022 (GLOBE NEWSWIRE) -- According to a new market research report titled, Electric Vehicle Battery Market by Type (Li-ion, Ni-MH, SLA, Ultracapacitors, Solid-state Batteries), Capacity (<50 kWh, 51-100 kWh, 101-300 kWh, >300 kWh), Bonding Type (Wire, Laser), Form, Application, End-user, and Geography - Global Forecast to 2028,’ the EV batteries market is projected to reach $175.11 billion by 2028, at a CAGR of 26% from 2021 to 2028.

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Electric vehicle batteries are used to power the electric motors of battery electric vehicles (BEV) or hybrid electric vehicles (HEV). EV batteries are made up of numerous cells put into a frame called a ‘module’ to protect them from external shocks such as heat or vibration. A number of modules combined with a BMS (Battery Management System) and a cooling device that controls and manages the battery’s temperature, voltage, etc., is called a battery pack.

The growth of this market is backed by factors such as the increasing adoption of EVs worldwide, the decreasing battery prices, and the increasing investment by leading automotive OEMs to secure the battery supply chain for their future electric vehicles. Moreover, the increasing adoption of electric mobility in emerging economies, the growing investments in developing lithium-ion battery capacity, and the deployment of battery-as-a-service provide significant opportunities in this market.

However, the potential shortfall in lithium mining capabilities and less energy density of batteries obstruct this market's growth to some extent. In addition, potential safety issues in EV batteries are challenging the growth of the

Increasing Investment by Leading Automotive OEMs

Leading automotive OEMs in the market are engaging in partnerships and collaborations with battery OEMs to expand their operation in the EVs battery market. For instance, in April 2021, LG Chem and General Motors (U.S.), an automotive company, invested more than USD 2.3 billion in a U.S. battery cell plant for electric vehicles in Tennessee. This plant supports the production of General Motor’s upcoming Cadillac Lyriq Crossover and other upcoming EVs. Furthermore, in April 2021, Porsche AG set up a joint venture with Customcells, a producer of lithium-ion batteries, to produce high-performance batteries. This will significantly reduce the charging times of EV batteries.

Moreover, leading battery OEMs are investing in developing new battery manufacturing capabilities.

  • For instance, in April 2020, SK Innovation (South Korea) announced its plan of an additional investment of USD 2.5 billion in its battery business to build two plants in Commerce, Georgia. It also announced its plans to invest USD 5 billion in its U.S. battery business to help meet anticipated consumers' demand for EVs in the U.S.
  • In March 2021, Zhejiang Geely Holding Group Co. (China), a global mobility technology group, invested USD 5 billion to build a battery power plant in South China.
  • In November 2020, SVOLT Energy announced its plan to build the first European lithium-ion cell Gigafactory in Saarlouis, Germany. For this expansion, the company invested USD 2.4 billion in manufacturing capacity.
  • In April 2020, Vehicle Energy Japan completed a new production line for lithium-ion battery cells and battery modules for hybrid vehicles in Kyoto, Japan. This production building can produce 150,000 to 200,000 batteries annually.
  • In July 2021, LG Chem (South Korea) announced its plan to invest USD 5.2 billion to produce essential chemicals and materials used in electric vehicle batteries, expanding the company's manufacturing capacity to meet the demand for battery materials in the market.
  • In July 2021, C4V (U.S.), a lithium-ion cell manufacturer, invested over USD 538.69 million (INR 4,000 crore) in setting up an electric battery manufacturing plant in Karnataka (India). The company set up a 5-Gigawatt hours (GWh) plant in Karnataka.
  • In another such instance, in May 2021, Ford (U.S.) announced its plans to invest USD 30 billion by 2025 into its EV and battery development strategy, Ford+.

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China supports its battery and EV companies through research and development funding, manufacturer subsidies, and financing battery-charging stations. European Union established the European Battery Alliance in 2017 to support battery manufacturing, charging infrastructure, and electric-car uptake in Europe. In January 2021, European Commission announced investments of USD 3.5 billion in subsidies to Tesla, BMW, and other companies to produce more batteries in Europe. The government bodies in Chile and Australia are encouraging greater value-add through developing a localized battery supply chain. With Energy Renaissance Pty. Ltd.'s project in Australia aimed to start production of lithium-ion batteries from mid-2021, with a capacity of 0.066 GWh. This is promoting the OEMs to invest in EV battery development and innovation in battery technology.

Investment by the companies and government initiatives will help speed up the lithium-ion batteries' production capacity, supporting the market growth of EV batteries during the forecast period.

To provide efficient analysis, Meticulous Research® has segmented this market based on type ( lithium-ion battery, sealed lead acid battery, nickel-metal hydride battery, ultracapacitors, solid state batteries, and other batteries), capacity (less than 50 kWh, 51 kWh to 100 kWh, 101 kWh to 300 kWh, and more than 300 kWh), bonding type (wire bonding, and laser bonding), form ( prismatic, cylindrical, and pouch), application (electric cars, light commercial vehicles, heavy commercial vehicles, e-scooters and motorcycles, and e-bikes), end-user (electric vehicle OEMs, and battery swapping stations), and geography (Asia-Pacific, Europe, North America, Latin America, and the Middle East & Africa).

Based on type, the EV batteries market is segmented into lithium-ion battery, sealed lead acid battery, nickel-metal hydride battery, ultracapacitors, solid-state battery, and other batteries. In 2021, the lithium-ion battery segment accounted for the largest share of the EV batteries market. The large market share of this segment was attributed to their higher energy density, compactness, durability, and lightweight. Various automotive OEMs are partnering with battery OEMs to develop lithium-ion batteries, secure the supply chain for their existing and upcoming electric vehicles, and achieve technology leadership in EV batteries.

Based on geography, in 2021, the Asia-Pacific region accounted for the largest share of the EV batteries market. The large market share of this regional market was attributed to the increasing adoption of electric vehicles in this region, a growing number of start-ups offering numerous battery solutions, a higher concentration of lithium reserves in China, the leadership of China in global EV battery manufacturing capacities, a higher concentration of global EV battery OEMs in the region, and the increasing investment by leading battery OMEs for setting up battery manufacturing capacities in emerging economies of the region such as Thailand, Indonesia, and India.

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China

Based on volume, China is one of the top battery manufacturers. The country has the advantage of affordable labor, which allows it to dominate the manufacturing industry. According to an analysis by BloombergNEF, in 2019, there were 316 gigawatt-hours (GWh) of global lithium cell manufacturing capacity. China is home to 73% of this capacity, followed by the U.S., far behind in second place with 12% of global capacity.

Additionally, China has more lithium reserves and much greater lithium production. In 2018, Chinese lithium production was in the third position, with 8,000 metric tons of production capacity. Lithium is one of the most important materials used in battery production. This drives the production of EV batteries in China. According to Benchmark Mineral Intelligence (U.K.), Chinese chemical companies account for 80% of the output raw material for advanced batteries. In 2020, the country also dominated global lithium-ion battery production, accounting for 77% of the global production.

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Key players operating in the EV batteries market in China are taking initiatives to promote the manufacturing of batteries.

  • For instance, in June 2021, CATL (China) extended its lithium-ion battery supply deal with Tesla Inc. till 2025. Tesla is making Model 3 and Model Y sport-utility vehicles in Shanghai, China, for which CATL will supply batteries. This agreement will increase the production of EV batteries in China and support the EV batteries market during the forecast period.
  • In February 2021, CATL (China) invested USD 4.49 billion to build or upgrade battery factories to meet the growing demand. Furthermore, in August 2021, CATL raised USD 9.0 billion to fund six projects to increase the production of lithium-ion batteries, including the construction of new giga factories in China's Fujian, Zhejiang, and Guangdong provinces.
  • In July 2020, CATL (China) partnered with Honda Motor Co (Japan) for the joint development of energy vehicle batteries. Additionally, Honda also announced to buy shares in CATL to hold a 1% stake of the company.
  • In November 2020, SK Innovation Co. began operating its second electric vehicle battery plant in China.

The growing government initiatives, the increasing availability of charging infrastructure, the growing strategic business developments by energy companies, the rising fuel prices, and the growing awareness regarding environmental concerns are boosting the demand for electric vehicles in China, resulting in increasing demand for lithium-ion batteries. China is supporting its battery and EV companies with state support, including R&D funding, subsidies for manufacturers, and financing for battery charging stations.

The EV battery market was dominated by the top three players, namely, LG Chem, Ltd. (South Korea), Contemporary Amperex Technology Co., Limited (CATL) (China), and Panasonic Corporation (Japan). These players continuously focus on growth strategies such as agreements, collaboration, and partnerships and product development & launches to increase their respective market shares.

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