The electric vehicle (EV) battery market is expected to grow at a CAGR of more than 13% during the forecast period 2021 to 2026. The COVID-19 pandemic had a very little impact on the electric vehicle industry as the most important market, China started growing after the first two months of 2020, even Tesla was able to continue its production throughout the pandemic. The concerns regarding the negative effect of climate change, along with the growing carbon emission in major cities, have created a significant demand for electric vehicles. The EV30-30 Scenario, which targets to increase the market share for electric vehicles (EVs) to 30% by 2030 (excluding two/three-wheelers) and the supportive government policies to promote electric vehicle sales, is expected to increase the demand of the EV batteries over the forecast period. However, the high cost of electric vehicles, the demand-supply gap of the vital raw materials such as cobalt, and the lack of charging infrastructure are expected to restrain the growth of the market.
Key Market Trends
Lithium-ion Battery to Dominate the Market
- The lithium-ion battery segment is expected to dominate the market over the forecast period. The technological advancements, which has led to a sharp increase in the energy density of the lithium-ion battery market even while decreasing the overall cost of lithium-ion batteries, has enabled the increase in uptake of li-ion powered EVs.
- Supportive government policies and investment for the deployment of the public charging infrastructure clubbed with the increasing efficiency of the electric vehicle is expected to create a significant opportunity for the growth of the market studied in the near future.
- Asia-Pacific is expected to dominate the EV battery market, owing to the increasing demand from countries such as China, India, Japan, and others.
Asia-Pacific to Dominate the Market
- The lithium-ion battery is expected to dominate the market during the forecast period, due to its high energy density, fast recharging capability, and high discharge power, owing to which, the lithium-ion batteries are the only available technology that is capable of meeting OEM requirements for vehicle driving range and charging time.
- Additionally, the cost of lithium-ion batteries has been decreasing, reaching a value below USD 137/KWh in December 2020, from around USD 900/KWh in 2011. The decreasing cost of the battery has promulgated the increase in the demand for EVs since the battery cost occupies a large share of the total EV cost.
- One of the main reasons for the high cost of the battery is due to components such as - Cobalt, lithium, and graphite which are the primary active components of the cathodes and anodes in lithium-ion batteries. A sudden rise in demand from the EV industry may result in a shortage of these minerals, and it seems likely that the lack of availability of these materials may act as a bottleneck in the production of lithium-ion batteries in the near future.â€‹ This has led to many companies competing to build the next age batteries which can replace the batteries.
- Furthermore, the recycling of Li-ion batteries is expected to secure the supply of raw materials, such as lithium and cobalt, and reduce the reliance on extracting and refining materials from mineral resources. Recycling of lithium-ion batteries that are currently being used in electric vehicles offers an excellent opportunity for companies to utilize the refined constituent materials for manufacturing lithium-ion batteries that are to be used for energy storage systems (ESS).
- Hence, lithium-ion batteries are expected to dominate the market due to their technical capacities.
- The Asia-Pacific region dominated the global market share in 2019. With the increasing deployment of electric vehicles in countries, such as China, Japan, and India, and the high demand for vehicles with urbanization and increasing power purchase parity, the usage of lithium-ion batteries is expected to witness significant growth in the region.
- China is one of the largest markets for electric vehicles, and the increasing adoption of electric vehicles in the country has been in line with the clean energy policy. Moreover, the Government of China has been providing both financial and non-financial incentives to promote the adoption of electric vehicles.
- However, in January 2021, China's Ministry of Finance has cut subsidies for electric vehicles (EVs) by 20% for the year 2021, as sales of so-called new energy vehicles (NEVs)â€”a category covering hybrids, plug-ins, and hydrogen-powered autosâ€”regained momentum after plunging during the pandemic last year.
- On the other hand, despite the lack of prominent reserves or production of raw material, such as lithium and cobalt in line with its aspiration to achieve 100% electric vehicle (EV) sales by 2030, is expected to emerge as a regional hotspot for global lithium-ion battery players, during the forecast period.
- Favorable policies, such as the energy efficiency standards, and increasing peak demand charges and technological advances, have led to the commercial and industrial (C&I) sector receiving more attention from project developers, primarily driven by strong growth in China and India, which, in turn, is expected to drive the demand for lithium-ion-based energy storage systems in the region
- Hence, Asia-Pacific is expected to dominate the market due to its large population and governmental support.
The electric vehicle battery market is moderately fragmented. Some of the major companies operating in this market include Panasonic Corporation, LG Chem Ltd, Contemporary Amperex Technology Co. Ltd, Samsung SDI Co. Ltd, and BYD Co. Ltd.
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