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Electric Vehicle Battery Market Trends [2023-2033]

Electric Vehicle Battery Market Trends [2023-2033]

Author Ravi K

The global EV battery market is projected to grow from USD 132.6 billion in 2023 to USD 508.8 billion by 2033, registering a CAGR of 14.4%. Increased awareness about environmental concerns and the desire for sustainable transportation options are driving consumer interest in electric vehicles. Longer battery life, faster charging times, and increased driving ranges are influencing consumer decisions.

Additionally, Innovations in battery technology, such as advancements in lithium-ion batteries, solid-state batteries, and other emerging technologies, drive efficiency, range, and cost-effectiveness, making EVs more appealing to consumers. 

Prominent automakers are investing heavily in electric vehicle technology and are pledging to transition their fleets to electric. This commitment to EVs pushes battery development and market growth.

Driver: Improvements in Battery Technology

There have been substantial improvements made by several companies in EV battery technology to make EVs a viable alternative to conventional vehicles. The table below covers significant improvements/innovations achieved by organizations in the EV battery market. Ongoing developments in the field of EV batteries are targeted toward improving the range of EVs, with most major manufacturers of EV batteries innovating in battery design and chemistry to extend the range of EVs to eliminate the requirement of regular charging. 

Cathode chemistry in the battery plays a critical role in battery performance. Presently, in the automotive sector, three broad categories of cathode chemistries are widely used: lithium nickel manganese cobalt oxide (NMC), lithium nickel cobalt aluminum oxide (NCA), and lithium iron phosphate (LFP). Out of these, NMC and NCA cathodes are in huge demand as they offer high energy density owing to the higher nickel content in the cathode.

Opportunity: Development in Solid-State Batteries

Solid-state batteries are a promising technology for electric vehicles as they can overcome various limitations of ordinary lithium-ion batteries. Many corporations and research organizations across the world are working on solid-state battery technologies. They are working to improve material design, manufacturing techniques, and scalability to make these batteries commercially viable. Furthermore, automakers, battery manufacturers, and technology firms are working together on research and development activities to speed the advancement and acceptance of solid-state batteries for EVs.

A solid-state battery, which stores more energy with fewer components, can cut an electric car battery's already low carbon footprint by 24%. The study contrasts an NMC-811 solid-state battery, one of the most promising chemistries under development, with current lithium-ion technology. Solid state technology replaces liquid electrolytes with solid ceramic materials to transport electric current, making batteries lighter, faster to charge, and eventually cheaper. Solid-state batteries are expected to be used in EVs in the second half of the decade, according to battery manufacturers.

Lithium-Ion Batteries Hold the Largest Market During the Forecast Period.

In the EV battery market, lithium-ion batteries have the largest market share. Several decades have passed since the development and refinement of lithium-ion battery technology. It is a mature technology with considerable research that has resulted in excellent levels of reliability and safety, making it a popular choice for EV producers. Continuous research and development activities aim to improve lithium-ion battery technology. In the market, incremental advancements in energy density, charging speed, lifetime, and safety features have solidified its supremacy.

Additionally, their decreasing cost is a major factor driving their demand. In June 2023, Toyota announced that it aims to launch next-generation lithium-ion batteries in 2026, offering longer ranges and quicker charging. Vehicles such as the Hyundai IONIQ 6, Nissan Ariva, Genesis GV60, Cadlillac Lyriq Toyota Bz4x, and Chevrolet Silverado EV are popular EVs with lithium-ion batteries launched in 2023. lithium-ion battery is making EVs more affordable and practical for consumers. Also, the expansion of charging infrastructure supports the growth of EVs. As more charging stations become available, consumers are more inclined to switch to EVs, further driving the demand for lithium-ion batteries.

The Cylindrical Segment is Expected to Grow at the Fastest Rate During the Forecast Period.

The cylindrical segment is projected to register the highest CAGR during the forecast period. Cylindrical batteries are known for their durability and robustness. Compared to the other EV battery formats, cylindrical cells are the least expensive to manufacture because their casing allows for superior containment and provides efficient mechanical resistance from both external and internal stresses.

According to Laserax, on average, EVs with cylindrical cells have between 5,000 and 9,000 cells. This is in stark contrast with pouch cells, which only have a few hundred cells, and an even lower number in prismatic cells. OEMs are also adopting cylindrical battery form for example, Tesla chooses to use cylindrical batteries because of their reliability and durability. Also, in January 2023, General Motors considered using cylinder batteries over pouches for EVs.

“North America to be the Prominent Growing Market for EV Battery During the Forecast Period.”

North America's automobile industry is among the most advanced in the world. Due to the presence of major commercial automotive manufacturers such as Tesla, Proterra, MAN, and NFI Group, the region is known for cutting-edge R&D, innovations, and technological developments in EVs. These companies are investing in building and expanding battery manufacturing facilities in North America. These facilities aim to produce lithium-ion batteries and other advanced battery technologies to cater to the rising demand for electric vehicles. In North America, the US has long been a technology pioneer, and has the largest EV battery market in North America.

In the North American EV market, top EV battery providers and startups have teamed with OEMs. For instance, GM has teamed with LG Chem. Stellantis, on the other hand, has teamed up with Samsung SDI to develop EV batteries. Also, Ford is collaborating with SK Innovation. Tesla manufactures its own EV batteries. All these corporations are collaborating to establish manufacturing centers in the US. Moreover, Various federal and state-level policies and incentives are encouraging EV adoption and the development of the EV battery market.

Key Market Players:

The EV battery 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).

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