Electric cars remain the main driver of battery demand, but demand for trucks nearly doubled

Battery demand in the energy sector, for both EV batteries and storage applications, reached the historical milestone of 1 TWh in 2024. Demand for one average week alone in 2024 exceeded the total demand for an entire year just a decade earlier. Demand was largely driven by growth in EV sales, as demand for EV batteries grew to over 950 GWh – 25% more than in 2023. Electric cars remain the principal factor behind EV battery demand, accounting for over 85%. Compared to 2023, the sector whose demand grew the most was electric trucks, growing over 75% in 2024 to reach nearly 3% of global EV battery demand. Electric truck battery demand was driven by growth in China, but demand also ramped up in Europe (about 25%), which accounted for about 10% of the global total.

In 2024, EV battery demand grew by over 30% in China, and by 20% in the United States, in stark contrast with the European Union, where demand stalled. Battery demand in the United States nearly matched that of the European Union in 2024, in part as a result of its approximately 25% larger battery size per EV. Emerging markets and developing economies other than China continued to represent only a small share of global battery demand, reaching nearly 5% in 2024. Nevertheless, their share has doubled since 2022, underpinned by sustained growth in Southeast Asia, India and Brazil. 

EV battery demand continues to grow, and is expected to reach more than 3 TWh in 2030 in the STEPS, up from about 1 TWh in 2024. While electric cars will remain the primary driver of battery demand, other modes are set to gain market share. Notably, the contribution of electric trucks to EV battery demand triples by 2030 to reach more than 8%, up from nearly 3% in 2024. 

Battery demand is also set to become more geographically diverse. In the STEPS, emerging markets and developing economies other than China are expected to double their share of EV battery demand, from nearly 5% in 2024 to 10% in 2030. The share of global demand in the European Union and other advanced economies, such as the United Kingdom, Canada, Japan and Korea, is also projected to grow, while the share of the United States is projected to decline from about 13% in 2024 to less than 10% by 2030. Meanwhile, China’s share of global battery demand declines from 60% in 2024 to just under 50% by 2030, although it remains by far the single largest source of demand.

Low critical mineral prices and intense competition drove down battery prices in 2024, but China’s price advantage is widening

Prices for lithium-ion battery packs fell 20% in 2024 – the largest drop since 2017 – as a result of low critical mineral prices and battery margins being squeezed through competition, predominantly in China. Lithium prices, in particular, dropped nearly 20% in 2024, reaching similar prices to those at the end of 2015, despite lithium demand in 2024 being about six times bigger than in 2015.

Low critical mineral prices are primarily driven by supply surplus, which is making it difficult for some mining companies to compete, thus increasing the level of supply chain concentration among established players. This surplus is expected to persist over the next few years, but low prices could discourage future investments and might cause supply shortages for lithium and nickel by 2030. In addition, the high geographical and ownership concentration of their supply chains may cause market distortions, increasing market risk.

An undersupply of lithium would push up prices, to the benefit of the mining sector but to the detriment of battery and EV makers, as well as final consumers. The recycling sector, which could help curb cost increases, would also benefit from higher mineral prices. However, due to feedstock limitations, it will take about a decade before recycling has a significant impact on reducing primary mineral demand (see the Box on battery recycling).

Technology innovation, particularly related to sodium-ion batteries or direct lithium extraction, could be instrumental in reducing the risk of lithium undersupply and its potential impact, and avoiding price spikes similar to those seen in 2022. Additionally, vertical integration through upstream investments can help battery suppliers to lower production costs while safeguarding against the risk of volatile critical mineral prices.

Battery pack prices fell in all markets, but the extent of the drop varied significantly, with the fastest declines seen in China, where prices fell nearly 30% in 2024, compared to 10-15% in Europe and the United States. This widened the gap between battery prices in China and the rest of the world, increasing the competitive advantage of Chinese EV and battery producers. The faster pace of battery cost reduction and innovation in China has been enabled by fierce competition that has driven down profit margins for most producers (though not all), at the same time as driving up manufacturing efficiency and yields, as well as access to a large skilled workforce, and battery supply chain integration.

Battery chemistry also plays an important role, with lithium iron phosphate (LFP) batteries – the main battery chemistry used in China – being almost 30% cheaper per kilowatt-hour (kWh) than lithium nickel cobalt manganese oxide (NMC) batteries, which remain the most widely used batteries in the United States and Europe. NMC batteries still provide an energy density advantage, though the gap has narrowed in recent years. The energy density of LFP battery packs is about one-fifth lower by mass (Wh/kg) and about one-third lower by volume (Wh/L) than that of NMC packs. This is, however, partially offset by LFP’s ability to reach 100% state of charge when required without significant degradation, whereas NMC batteries are typically limited to 80% to preserve long-term performance.

The higher energy density of NMC batteries remains an advantage for applications requiring longer ranges or operation in cold climates, where LFP technology is typically less effective. However, LFP batteries have now reached a performance level sufficient for most EV applications, making their lower cost a key advantage for automakers aiming to mass markets.

The battery price per kWh is also heavily dependent on the targeted application, with BEVs enabling the lowest costs. In 2024, battery pack prices per kWh for plug-in hybrid electric cars were more than three times those for battery electric cars, because of their smaller size and greater power requirements. In 2024, the average price of a 20 kWh PHEV battery pack – roughly the global sales-weighted average for standard plug-in hybrids – was about the same as a 65 kWh BEV battery pack, the global sales-weighted average for battery electric cars.

Pack components such as the battery management system are common to BEV and PHEV battery packs, but given that PHEV packs are smaller, the price of such components is spread across fewer battery cells, increasing the price per kWh. PHEV battery packs may also require more complex designs to accommodate the internal combustion engine, which increases their production cost. Additionally, because of the smaller pack size, each battery cell in the PHEV pack has higher power requirements to guarantee minimum acceleration standards while driving in full electric mode. This demands different battery designs, such as thinner electrodes, to improve battery power at the expense of its energy density,1 further increasing the cost per kWh compared to BEVs. Smaller battery sizes also increase prices per kWh for 2/3W batteries.

Battery specifics, however, only determine prices for high volume. For instance, in China, electric truck battery prices per kWh are slightly lower than for battery electric cars, thanks to their larger size and therefore the reduced contribution of the battery pack cost. Electric truck markets in other countries are far less mature, and their battery price per kWh remains significantly higher – in 2024, prices were more than double those in China.

Lithium iron phosphate batteries continue to gain market share, and with them so do Chinese manufacturers

In 2024, LFP batteries made up nearly half of the global EV battery market, underpinning the efforts of manufacturers to lower EV prices and production costs in order to maintain or gain market share in an increasingly competitive market. China leads on the uptake of LFP batteries, which met nearly three-quarters of its domestic battery demand in 2024, and their share shows no sign of slowing down, reaching 80% of batteries sold in November and December 2024.

In the United States, the share of LFP batteries used in EVs slightly contracted in 2024, remaining below 10%, which may be a result of tariffs on Chinese batteries. In contrast, in the European Union, LFP battery adoption grew by about 90% for the second consecutive year to reach more than 10% of the EU EV market. Notably, nearly all the LFP batteries for electric cars sold in Europe or the United States were produced in China, which today has a de facto monopoly on this type of battery. Market penetration of LFP batteries is moving even faster in other markets. In Southeast Asia, Brazil and India, the share of electric car batteries using LFP reached more than 50% in 2024. In Southeast Asia and Brazil, LFP uptake is led by imports from China, mostly by BYD, whereas in India it is driven by cars produced domestically, led by Tata Motors.

In the United States, the vast majority (three-quarters) of EVs equipped with LFP batteries are produced domestically, whereas in the European Union nearly two-thirds are imported from China. In both regions, LFP batteries are primarily sourced from China, with Tesla playing a central role – accounting for 85% of LFP battery-powered EVs produced in the United States and almost half of those sold in the European Union. Of Tesla’s LFP EVs sold in the European Union, over half are produced in Germany, with the remainder imported from China.

European OEMs are looking increasingly favourably on LFP batteries as a way of reducing production costs and are therefore interested in securing more supplies. Initiatives such as the recently announced joint venture between Stellantis and CATL for an LFP battery manufacturing plant of up to 50 GWh in Spain could therefore help the European automotive industry to reduce costs and increase its competitiveness in the coming years. However, investments in LFP battery manufacturing in Europe might suffer as a result of the recent proposition from the Chinese government to limit exports of key battery technologies, including LFP cathode production and lithium processing. Overall, renewed interest in the LFP chemistry exacerbates the difficulties facing the European battery industry, which has historically focused on NMC batteries.

The year 2024 was a challenging one for the European battery industry, with both small and large producers suffering for different reasons. New players such as Northvolt, which filed for bankruptcy in the United States and Sweden, faced serious difficulties in scaling up production, leading to insufficient manufacturing yield and high production costs. The case of Northvolt was further aggravated by limited experience, ambitious expansion plans, and excessively widened scope, leading to insufficient focus on scaling up high-quality battery cell production. Falling battery prices worldwide also weighed heavily on small producers, which have fewer resources and insufficient production volumes to withstand lower profit margins, and are now turning to a more cautious growth path.

Korean companies, such as LG Energy Solution in Poland, are the largest battery producers in Europe, but their market share is also under pressure. Over the past 2 years, the market share of Korean manufacturers in the European Union has fallen from nearly 80% in 2022 to 60% in 2024, to the benefit of Chinese manufacturers. A key reason for this is the increased success of the LFP chemistry. In contrast, the share of Korean companies in the United States grew from about 20% in 2022 to over 35% in 2024, at the expense of Japanese manufacturers.

Korean manufacturers are rising to the challenge and are now investing in LFP, including through innovation efforts, and are scaling up LFP battery production, including in Europe and the United States. LFP battery development is also advancing in Japan: In early 2025, Nissan announced plans to build an LFP battery plant after receiving government certification in late 2024. Yet Chinese manufacturers are continuing to innovate LFP chemistry and performance simultaneously, further raising the bar for other producers. At the same time, the Chinese government’s proposed export restrictions on advanced LFP technologies could limit technology transfer.

In the United States, Panasonic – historically Tesla’s main battery partner – remained the country’s largest battery producer in 2024, accounting for nearly half of the electric car market. However, its share is declining as Korean producers like LG Energy Solution, Samsung and SKI invest heavily in the US market. Tesla also ramped up its own battery production in 2024, primarily for use in the Cybertruck.

Battery production in the United States is expanding rapidly, spurred by the implementation of tax credits. Manufacturing capacity has doubled since 2022, reaching more than 200 GWh in 2024, with nearly 700 GWh of additional capacity under construction. Around 40% of existing and committed capacity is being operated or developed by established battery makers in close collaboration with automakers. Nevertheless, the cost of production remains higher than in Asia, if not accounting for incentives, and sudden policy shifts could affect the emerging US battery industry, increase production costs, or slow expansion in the near to medium term. 

Advanced battery technologies under development include solid-state, sodium-ion, lithium-sulphur, iron-air, and redox-flow batteries, among others. Some of them, like iron-air and redox-flow batteries, target different applications to established lithium-ion technologies, such as longer-duration storage for grid applications. Others, like sodium-ion batteries, aim to reduce dependence on lithium. Lastly, technologies like solid-state and lithium-sulphur batteries could also accelerate electrification in sectors that require or would benefit from higher energy densities, such as long-haul electric trucks or short-haul boats and planes. However, their deployment in these sectors will depend on meeting stringent safety requirements and on their total cost of ownership.

Sodium-ion batteries gained significant attention in 2022 as lithium prices surged, leading to the first EVs using the technology. Despite enthusiasm waxing and waning as a result of material supply chain challenges and falling lithium prices in 2023 and 2024, CATL – the world’s largest battery producer – announced its second generation of sodium-ion batteries in 2025, alongside the launch of a dedicated sodium-ion battery brand. Meanwhile, BYD is also investing in sodium-ion battery production for EVs and battery storage. In March 2025, HiNa launched its new sodium-ion battery, which offers improved energy density and faster charging compared to the previous generation, heralding a promising year for this technology. However, recent analyses indicate that sodium-ion batteries will require either increased energy density or more favourable operating conditions – particularly higher lithium prices – to compete with LFP batteries on a price per kWh basis. Nevertheless, sodium-ion technologies could play a significant role during times of elevated lithium prices and may offer a cheaper option for batteries in cold climates, where LFP batteries typically perform less well.

In 2024, solid-state batteries moved closer to commercial reality with new large prototypes and manufacturing investments from Samsung SDI, Toyota, NIO, Honda, Quantum Scape, BASQUEVOLT, and Factorial, among others, and the creation of a government-led Chinese battery alliance, including large producers such as CATL, BYD, SAIC and Geely, to accelerate solid-state battery development. Despite this, their potential advantages, including enabling higher ranges and safety, still need to be demonstrated for battery packs manufactured at scale and tested under controlled, realistic and standardised conditions. The technology readiness level (TRL) of solid-state batteries therefore remains at large pilot stage (TRL 6), although this could change rapidly with companies like Toyota and BYD planning first mass production by 2027-2028. However, volumes will be limited initially, and it will take several years following roll-out for solid-state batteries to eventually become competitive with lithium-ion batteries. Additionally, “solid-state batteries” is often used as a generic term covering a range of options between fully solid-state and incumbent lithium-ion batteries, which creates some confusion. The first “solid-state batteries” to be commercialised might be semi- or quasi-solid-state batteries – for example using gel-like electrolyte2 or incorporating small volumes of liquid electrolytes – as they could help address some scale-up challenges and reduce production costs.

Lithium-sulphur (Li-S) batteries, promising higher specific energy (Wh/kg) and lower reliance on critical minerals, have also gained momentum. The US start-up Lyten announced the world’s first Li-S gigafactory, while Stellantis partnered with Zeta to commercialise this technology by 2030. However, several challenges remain, including improving volumetric energy density (Wh/L), enhancing durability, and addressing safety concerns related to the use of lithium metal anodes. Overcoming these hurdles will be key to enabling real-world applications.

Advances in battery recycling are also being made, for example combining pyrometallurgy and hydrometallurgy processes, increasing the recovery efficiency of reactive metals such as lithium, recycling the graphite in the anodes, or through the development of new recycling approaches, such as electrochemical extraction. However, recycling feedstock availability remains limited, restricting the impact of recycling in the short term.

Options for battery reuse at the end of their first life for less demanding applications are also under development, with the majority of companies in the sector based in Europe. However, the economic viability of reuse is complicated by upstream competition from recyclers looking for access to end-of-life batteries, downstream competition from the falling prices of new batteries, and challenges associated with battery dismantling and repurposing while ensuring strict safety standards. Second-hand EV markets may play a larger role in supporting reuse and also increasing affordability.

Innovation extends far beyond battery chemistries, and the already broad landscape of battery innovation is getting even broader.3 In 2023 and 2024, there was a remarkable surge in improvements for incumbent lithium-ion batteries, from superfast charging and “no-degradation” batteries to ultra-energy-dense batteries and new charging platforms, manufacturing processes, cell formats and pack designs, among others. Advances in manufacturing are also notable: for example, artificial intelligence for image analysis can enable the early detection of battery defects and their root causes, thereby improving production yields and reducing scrap rates. This capability is critical for scaling up production given the pace of modern gigafactories – a 50 GWh facility can produce up to 10 million (cylindrical) or hundreds of thousands (prismatic) EV battery cells per day.4 The nature and pace of innovations in legacy technologies are already making a big impact on the market, posing a formidable challenge for emerging technologies to compete.

The battery market is being reshaped by two distinct trends: increasing consolidation, and government-led efforts to geographically diversify battery supply chains. Whereas markets used to be regionalised and small, they are now global and very large, and uncertainty over technological development is giving way to standardisation. In this new phase, economies of scale, partnerships along the supply chain, manufacturing efficiency, and the capacity to bring innovations swiftly to market will be even more crucial for manufacturers to remain competitive. 

The EV and battery supply chain becomes increasingly geographically concentrated when moving upstream from car manufacturing to battery cell and component production. China was responsible for 80% of global battery cell production in 2024, while the remainder was produced in the United States, the European Union, Korea and Japan. Importantly, the production of lithium-ion battery manufacturing equipment is also highly concentrated, with China, Korea, and Japan leading the market. China has also established a near monopoly on battery components production, supplying almost 85% of cathode active materials – including NMC and LFP chemistries – and over 90% of anode active material production, predominantly graphite. Outside of China, only Korea and Japan offer sizeable production capacity for cathode components. Korea also produces anodes, and Indonesia is expected to bring some diversification to the market. Nonetheless, China is set to remain the largest producer of batteries and their components by some distance in the medium term, based on announced projects and competitive advantages.

The geographical concentration of battery mineral mining and refining needed for battery cathodes and anodes is also a concern. In 2023, Australia, Chile and China mined about 85% of global lithium, with almost 65% refined in China and another 25% in Chile. Indonesia accounted for over half of nickel mining in 2023, while China and Indonesia together refined more than 60%. In the same year, the Democratic Republic of Congo was home to almost two-thirds of the world’s cobalt mining, though three-quarters of all cobalt refining was handled in China. Graphite supply, the only critical mineral used for anodes today, is even more concentrated, with China responsible for 80% of mining and over 90% of refining.

Global battery (cell) manufacturing capacity grew almost 30% in 2024 to reach more than 3 TWh – three times EV and battery storage demand in the same year. About 85% of global manufacturing capacity is in China, showing little change from 2023, and over 75% is owned by Chinese producers. Manufacturing capacity in the United States grew by almost 50%, led by Korean companies attracted by tax credits, which accounted for nearly 70% of the growth in 2024. This led installed capacity in the United States to surpass that in the European Union, which nonetheless increased by 10% in 2024 despite the Northvolt plant in Sweden being halted following its bankruptcy. The first Indian and Indonesian battery plants also opened in 2024, totalling more than 5 GWh/year and 10 GWh/year of manufacturing capacity, respectively.

Korean manufacturers remained the largest investors in overseas battery manufacturing capacity,5 accounting for over 400 GWh globally, compared to 60 GWh for Japanese and 30 GWh for Chinese producers. Korean manufacturers, such as LG Energy Solution (with capacity in Poland), and Samsung and SKI (in Hungary), continue to be the main source of capacity in the European Union, and their importance is growing in the United States. If all announced projects are completed in full, the manufacturing capacity of Korean manufacturers outside of Korea would reach more than 1.1 TWh by 2030, 85% more than the announced overseas manufacturing capacity of Chinese battery producers.

Asian manufacturers are leading battery market expansion

Expansion plans for manufacturing capacity can drive geographical diversification in the battery industry. Committed projects – i.e. those that are either under construction or have reached a final investment decision – would increase manufacturing capacity in China by nearly 60%, and almost quadruple capacity in the European Union and the United States. This expansion would lead global manufacturing capacity to grow to about 6.5 TWh (and more than 9 TWh if accounting for all announcements), up from 3.3 TWh in 2024, and reduce China’s share of global manufacturing capacity to about two-thirds by 2030, down from 85% in 2024. Ownership distribution is expected to diversify less, given that capacity expansion is predominantly driven by established manufacturers headquartered in China, Korea or Japan, whose expertise in the battery sector provides a significant competitive edge. 

The European Union is the largest single destination for overseas investments by Chinese battery producers, whose share of manufacturing capacity in the region could quadruple, rising from less than 10% in 2024 to more than 30% by 2030. These investments are an opportunity for technology transfer, bringing the expertise needed to scale up production in the region and drive down costs, which would benefit domestic automakers at a critical time for the industry. However, this may also create challenges for the region’s established and emerging battery producers.

The share of battery manufacturing capacity in the European Union owned by Korean producers is expected to fall sharply from about 85% in 2024 to nearly 30% in 2030, while the share of EU-based companies could reach 20%, up from 5% at the end of 2024. However, this includes plants facing significant uncertainty, such as the Northvolt plant in Germany, for which Germany assumed over EUR 600 million in debt, and which is not directly affected Northvolt’s bankruptcy. More generally, concerns are growing about the ability of smaller European producers to scale up production and compete with established global players, which may lead to a much smaller share of the future EU battery market being captured by domestic manufacturers. 

Collaboration between Korean or Japanese battery producers and OEMs operating in the United States is proving successful, with Korean companies leading investments in the country. They held or participated in 40% of the battery manufacturing capacity in the United States in 2024, and committed investments are expected to boost their share to over 50% by 2030. Meanwhile, based on committed projects, the share of Japanese companies would fall by almost half by 2030, and that of domestic companies like Tesla would drop from nearly 40% in 2024 to less than 30% in 2030. In addition, some companies primarily or fully owned by Chinese groups, such as Envision and Gotion, have also invested or announced plans to invest in the United States, but recent policies might lead to the cancellation of these plans.

Outside of today’s three main EV markets, 60% of committed capacity is set to be added in other advanced economies thanks to growing demand and government support, including in Canada, other European countries, Korea, and Japan. The remaining more than 150 GWh of committed manufacturing capacity is being built in Southeast Asia, India and Morocco. Although these regions have attracted fewer investments to date due to limited domestic battery demand, they are increasingly generating interest from battery manufacturers.

Southeast Asia is attracting significant Chinese investments, which could speed up technology and innovation transfer. Indonesia, home to half the world’s mined nickel needed for NMC batteries, is also investing heavily in battery component production – such as cathode and anode active materials – and its first graphite anode plants began production in 2024. India also has the potential to unlock a substantial battery market and is investing in domestic battery production, but realising its ambition to become a major battery manufacturer will require additional investments and clear policy signals supporting EV demand. In Morocco, abundant phosphate reserves – a mineral essential for LFP batteries – along with an established car manufacturing industry and free trade agreements with the European Union and the United States, have spurred USD 15 billion over USD 15 billion in announced investments. These investments comprise lithium processing and battery and component manufacturing, including a large battery manufacturing plant of 100 GWh, the first in Africa.