Why the Li-ion Battery Market Will Explode

As the global transition to electric vehicles (EVs) accelerates, the Li-ion battery market is experiencing record growth. Two leading industry analyses—Technavio's market forecast and IDTechEx's deep dive into cell manufacturing—offer a comprehensive view of the forces shaping this dynamic market. Together, they highlight the drivers of this rapid expansion and the material and technological advancements that will sustain it.

Technavio’s perspective

The Technavio report forecasts robust growth in the global lithium-ion battery market, estimating an increase of $448.8B from 2024 to 2028. This growth, anticipated at a CAGR of 42.93%, is primarily driven by the growing demand for consumer electronics and the global shift towards electric vehicles (EVs). A key factor fueling this trend is the increasing environmental concerns and regulatory pressures pushing for the adoption of EVs and the implementation of battery recycling initiatives.

"Governments worldwide are introducing initiatives to promote EV adoption and recycling of lithium-ion batteries to mitigate environmental impact," the report highlights. Notably, regions like China and the European Union are taking significant steps. China, for instance, is not only providing subsidies for EVs but also imposing restrictions on the production of new fossil fuel-powered vehicles. In Europe, the EU has introduced a directive focused on battery collection and recycling, although the current recycling rates remain low.

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The global lithium-ion battery market size is estimated to grow by $448.8B from 2024-2028, according to Technavio. Courtesy of PRNewswire.

Technavio’s challenges and key players

The report identifies a fragmented market structure with prominent players such as Tesla Inc., LG Chem Ltd., Panasonic Holdings Corp., and Samsung SDI Co. Ltd. leading the charge. These companies are strategically focusing on collaborations and mergers to meet the rising demand for reliable power solutions in the EV industry and beyond.

However, the market is not without challenges. The growing popularity of fuel cell technology, which offers higher efficiency and zero emissions, is seen as a potential threat to lithium-ion batteries. The report notes, "With fuel cells gaining traction in automotive applications, particularly in electric vehicles (EVs), the demand for lithium-ion batteries is expected to decline, impacting the market growth during the forecast period."

Moreover, supply chain disruptions, especially for critical materials like lithium and cobalt, pose additional risks. The report also emphasizes the need for advancements in battery technology, such as improving conductivity and reducing costs, to maintain the market's momentum.

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IDTechEx’s insights into cell manufacturing trends

Addressing these challenges requires advancements in manufacturing and materials, where IDTechEx’s latest report, “Li-ion Battery Market 2025-2035: Technologies, Players, Applications, Outlooks and Forecasts,” provides critical insights. The report claims that the surging demand for Li-ion batteries has fueled the growth of gigafactories, led by major players like CATL, BYD, and LG Energy Solution.

China now controls approximately 70% of global cell production and dominates the supply chain for critical materials, including anodes, cathodes, and electrolytes. According to IDTechEx, "Chinese companies control much of the Li-ion value chain," which has prompted Europe and the US to develop domestic supply chains. The US, spurred by the Inflation Reduction Act (IRA), has seen a surge in gigafactory investments, raising battery cell capacity projections from 600 GWh to 850 GWh by 2030. Meanwhile, Europe faces challenges due to uncertain EV battery demand and intense competition.

Chinese companies control much of the Li-ion value chain. Courtesy of IDTechEx.

Material trends in cathodes and anodes

In this rapidly evolving landscape, the choice of cathode and anode materials plays a pivotal role. IDTechEx notes that “LFP is gaining market share, particularly within Chinese EVs,” while high-nickel NMC/NCA cathodes remain crucial for long-range EVs in Europe and the US. On the anode side, the market is shifting towards synthetic graphite, with natural graphite maintaining its relevance due to its lower CO2 profile. Emerging materials like silicon anodes also garner attention for their potential to significantly boost energy density, a critical factor for next-generation batteries.

Together, the insights from Technavio and IDTechEx paint a comprehensive picture of the Li-ion battery market’s future. The growth is driven by increasing demand for consumer electronics and EVs. However, sustaining this growth will require overcoming significant challenges through strategic manufacturing investments and material innovations. As companies navigate this complex landscape, their ability to adapt to these emerging trends will determine their success in the evolving global market.