Global battery demand to quadruple by 2030: Bain

Global battery demand is expected to quadruple to 4,100 gigawatt-hour (GWh) between 2023 and 2030 as electric vehicle (EV) sales continue to rise, according to a new report by Bain & Company.

As a result, original equipment manufacturers (OEMs) must hone in on their battery strategies, the report says.

“Batteries are the single biggest cost driver for OEMs and they influence product performance. However, ongoing flux across battery chemistries, especially within lithium-ion batteries, are affecting OEM product roadmaps,” says Mahadevan Seetharaman, a Bengaluru-based partner at Bain & Company’s Advanced Manufacturing Services practice.

OEMs across the world face the critical choice of which battery type to use and whether to develop batteries in-house or through collaboration with other companies, says Seetharaman.

“Lithium-ion batteries have dominated the global EV battery market and will continue to do so. Emerging technologies such as solid state and high-density sodium-ion are still in the prototype and pilot manufacturing stages and their market share is expected to stay in the single digit range until 2030,” says the report.

Lithium-iron phosphate (LFP) and nickel manganese cobalt (NMC) chemistries together currently make up more than 90% of lithium-ion battery sales for EVs. In China, LFP will become more dominant due to robust demand for mass-market EVs and established supply chains, in addition to the emergence of LFP variants with improved energy density, it says.

“In the U.S. and EU, LFP will gain share but will still be lower than that in China for multiple reasons. First, domestic LFP production is nearly nonexistent, and existing iron and phosphorous supply chains are significantly less mature in these regions compared to those in China. Consequently, the cost advantage of LFP vs. NMC will be undercut by the costs of importing LFP from China,” the report says.

Many companies are looking into no- or low-cobalt NMC variants, which would further reduce the cost advantage of LFP. Import tariffs and broader geopolitical challenges may make LFP less suited for western OEMs looking to build up more resilient supply chains, says Bain & Company.

The lithium technology stack will see major shifts across cathode chemistries, anode chemistries, cell form factors and pack architecture, according to the report. “OEMs are keeping a close eye on multiple innovations such as battery integration via cell-to-chassis technology, where the battery is built directly into the structure of the car; dry electrode manufacturing process, which reduces energy consumption and hence, manufacturing cost; and AI-powered battery management systems that are increasing the longevity of batteries,” it says.

Solid-state batteries promise significantly higher energy density vs. NMC, along with improved safety, faster charging, and potentially longer life. However, players have only recently been able to demonstrate initial proofs of concept following multiple delays, and commercialisation is likely three to four years away.

Sodium-ion cells promise lower cost than lithium-ion, along with improved safety and the ability to operate at lower temperatures. However, energy density has historically been substantially lower, but there has been progress on this front, with prototypes delivering energy densities comparable with LFP. Multiple players have announced plans to scale production by 2025, and Bain expects commercial availability of sodium-ion-based EVs by the first half of 2025.