The electric vehicle (EV) battery market is projected to experience significant growth, with demand expected to surpass 3 TWh by 2030, up from approximately 1 TWh in 2024.
This surge is largely driven by the expanding electric car market, though other modes, such as electric trucks, are set to increase their share of the demand. The market is set to become more geographically diverse, with emerging markets and advanced economies gaining ground, while China’s dominance is projected to decline, IEA said in its recent report.
The global EV battery demand is anticipated to reach over 3 TWh by 2030, representing a threefold increase from 2024 levels.
Electric trucks are expected to contribute significantly, increasing their share from nearly 3 percent in 2024 to over 8 percent by 2030.
China, though maintaining the largest share, will see its market share decline from 60 percent in 2024 to just under 50 percent by 2030.
Emerging markets and developing economies, excluding China, will double their share from 5 percent in 2024 to 10 percent in 2030.
The United States is projected to see its share decline from 13 percent to less than 10 percent by 2030, while the European Union and other advanced economies (e.g., UK, Canada, Japan, Korea) are expected to increase their shares.
The supply surplus of critical minerals, such as lithium, has led to increased market concentration, with fewer mining companies dominating the market.
Potential undersupply risks are anticipated by 2030, potentially driving up mineral prices.
Persistent low mineral prices could discourage investment in new supply projects, leading to future supply shortages.
High geographical and ownership concentration in the supply chain increases market volatility and risk.
Recycling of battery minerals, though limited in impact in the near term, is expected to play a significant role in stabilizing supply by 2035.
Technological advancements in sodium-ion batteries and direct lithium extraction may alleviate potential shortages and prevent price spikes.
Vertical integration and upstream investments can mitigate the risks associated with volatile mineral prices.
Lithium-ion battery pack prices fell by 20 percent in 2024, marking the largest decline since 2017, driven by low critical mineral prices and heightened competition.
Lithium prices dropped nearly 20 percent in 2024, aligning with 2015 price levels, despite significantly higher demand.
In 2024, battery pack prices declined globally, with the steepest drop in China (nearly 30 percent) compared to 10-15 percent in Europe and the US, widening China’s competitive edge in the EV market. The rapid cost reduction in China is driven by intense competition, improved manufacturing efficiency, and supply chain integration.
Lithium iron phosphate (LFP) batteries, dominant in China, are about 30 percent cheaper per kWh than lithium nickel cobalt manganese oxide (NMC) batteries, which remain prevalent in the US and Europe. NMC batteries offer higher energy density but at a higher cost, while LFP batteries, despite being less energy-dense, are sufficient for most EVs and can reach 100 percent charge without significant degradation.
Battery costs per kWh also vary by application; plug-in hybrid electric vehicle (PHEV) batteries are more expensive per kWh than battery electric vehicle (BEV) batteries due to smaller pack sizes and higher power requirements. Electric truck batteries in China benefit from lower costs due to larger pack sizes, a trend not yet seen in less mature markets.
In 2024, LFP batteries accounted for nearly half of the global EV battery market, driven by cost-reduction efforts in a competitive EV landscape. China led the adoption, with LFP batteries comprising nearly 80 percent of domestic battery sales by the end of the year.
The US saw a slight decline in LFP battery usage, remaining below 10 percent, likely due to tariffs on Chinese imports, while the EU’s LFP adoption grew by 90 percent for the second consecutive year to exceed 10 percent of the market.
China maintained a near-monopoly on LFP battery production, supplying most LFP batteries for EVs in Europe and the US. In Southeast Asia, Brazil, and India, LFP batteries gained over 50 percent market share, driven by Chinese imports and domestic production by Tata Motors in India. Tesla dominated the US and EU markets for LFP-powered EVs, producing 85 percent of US LFP EVs domestically and sourcing nearly half of the EU’s LFP EVs from its German plant.
Baburajan Kizhakedath