Cathode Materials Market Size, Share & Industry Analysis, By Battery Type (Lithium-Ion Battery, Lead-Acid Battery, and Others), By End Use (Automotive, Consumer Electronics, Energy Storage Systems, Power Tools, and Others), and Regional Forecast, 2025-2032

The global cathode materials market size was valued at USD 38.47 billion in 2024. The market is projected to grow from USD 44.78 billion in 2025 to USD 135.73 billion by 2032 at a CAGR of 17.2% during the forecast period.

The cathode in a battery is made from cathode materials, which act as an effective oxidizing agent. Common battery materials utilized in cathode includes metallic oxides, such as copper oxide, lithium oxide, graphic oxide, lithium manganese oxide (LMO), class of electrode material (used in lithium-ion batteries), and polyanionic compounds (used as an electrode material for sodium-ion batteries due to its stability, safety, and suitable operating voltages).

The choice of cathode material affects the battery's performance, safety, and longevity, making it a crucial element in battery production. The majority of these materials are primarily used in the production of lithium-ion batteries. The cathode active materials are the basis of the energy storage in lithium-ion batteries. Surging demand for lithium-ion-based rechargeable batteries in electric vehicles, laptops, mobile phones, and others is anticipated to foster the growth of the global market during the forecast period.

The global market is dominated by a few prominent players, including but not limited to LG Chem, POSCO, Sumitomo Metal Mining Co., Ltd., and Targray. These players focus on expanding their presence rapidly in order to gain maximum revenue from the EV market. As materials used in cathode account for the major part of a Lithium-ion Battery (LiB), it will provide maximum leverage to the players operating in this market.

MARKET DYNAMICS

MARKET DRIVERS

Growing Demand for Batteries Due to Surging EV Sales to Act as a Growth Factor for the Market

The surge in EV sales is driving an increase in the demand for batteries, spreading the upward trajectory seen in recent years. In 2023, the demand for EV batteries exceeded 750 GWh, reflecting a 40% rise compared to 2022, although the annual growth rate experienced a slight loss compared to 2021 and 2022. Electric vehicles represent 95% of this increase. On a global scale, 95% of the rise in battery demand is associated with EVs, which is attributed to the boost in EV sales. In comparison, around 5% was due to larger average battery sizes, driven by the growing proportion of SUVs in the electric vehicle market.

In addition, there has been another trend of Extended-range electric vehicles (EREVs), which utilize an electric motor as their primary source of power, supplemented by a combustion engine that can recharge the battery when necessary. LiBs have become the primary choice in EVs due to their high energy density and cost efficiency. Therefore, the growing demand for EVs in which materials used in the cathode are a major part of LiBs will aid the growth of the cathode materials market.

MARKET RESTRAINTS

Environmental Concerns Associated with Extractions & Processing of Cathode Materials May Impede Market Expansion

Extraction of materials used in cathode has a significant environmental impact, especially due to water depletion and pollution. LiBs can significantly impact the environment due to the mining process required to extract the necessary metals, including lithium, cobalt, and nickel. Excessive mining can lead to water depletion, soil contamination, and biodiversity loss in mining regions. Additionally, improper disposal of remaining LiBs can release harmful chemicals into the environment if not recycled properly, posing risks to soil and groundwater through leakage and potential fire hazards in landfills. Also, to process this metal, toxic chemicals are required, such as nickel, cobalt, manganese, copper, lead, and mercury, which generate safety issues.

Such issues can also lead to stricter regulations and the need for sustainable practices, pressuring companies to increase their production technology or find alternative ways to reduce their environmental footprint, thus increasing their operational costs. Therefore, increasing environmental concerns associated with its production and processing may impede cathode materials market growth.

Fluctuating prices of essential raw materials, including lithium, nickel, and cobalt, also pose challenges for manufacturers, particularly in industries, including electric vehicle production. This creates uncertainty in production costs, impacts profit margins, and makes it difficult to plan long-term investments due to potential price swings in these essential raw materials for battery production.

MARKET OPPORTUNITIES

Advancements in Battery Technology is Set to Increase the Product Demand

Ongoing research focuses on enhancing energy efficiency and reducing costs, leading to increased demand for advanced materials. Various government policies also support this growth, including recent climate legislation in the U.S., The Inflation Reduction Act of 2022, which became effective in January 2023. Under this act the nation is investing billions of dollars to expand its battery manufacturing capabilities and offering incentives for EV purchases. Similarly, the European Union and several states in the U.S. passed bans on gas-powered vehicles starting in 2035. However, LiBs are expensive, which makes EVs more expensive than ICE vehicles, making it challenging for middle-class income and low-income populations. Also, there is a huge concern related to the range of vehicles and their replacement costs. Therefore, there is a need for continuous R&D on battery technology to tackle this impediment.

Companies are investing in R&D to boost capacity, speed up charging time, and cut costs. Batteries play a key role in the transition toward renewable energy, and ongoing advancements in battery technology increase the demand for cathode materials.

CATHODE MATERIALS MARKET TRENDS

Transition toward Renewable Energy Sources to Fuel Market Growth

Energy storage solutions allow for the dissociation of energy consumption from energy generation, including electrical and thermal. Typically, electricity is stored through chemical processes (such as lead-acid batteries and lithium-ion batteries) or mechanical techniques (including pumped hydro storage). As the expenses associated with solar and wind energy technologies continue to decline, an increasing share of renewable energy becomes prevalent. At the same time, the rise in electric vehicle usage is advancing the movement toward lower carbon emissions within the transportation industry. This scenario underscores the considerable potential and significance of both electrical and thermal energy storage in facilitating extensive decarbonization initiatives.

Electricity storage systems, which benefit from the swift evolution of batteries and other technologies, provide greater flexibility within the system, which is an essential factor as the share of renewable energy sources grows. Lithium-ion batteries are the most commonly utilized batteries for electrical and electromagnetic purposes. Consequently, the momentum toward energy storage and the substantial expansion of this sector will generate lucrative opportunities for market participants. The global shift toward renewable energy sources has heightened the need for efficient energy storage systems, further propelling the market.

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IMPACT of COVID-19

Lockdown measures, economic uncertainty, and reduced consumer spending declined the sales of ICE vehicles, leading to lower demand for materials for batteries required for this particular segment. However, global electric vehicle sales increased by around 50% in 2020, which significantly fueled the demand for materials during the pandemic. As a result, sales of materials for EV batteries grew broadly in line with EV battery demand. However, the COVID-19 pandemic created different challenges, including disrupting the supply chain for cathode materials and causing shortages and delays. Due to fear of the pandemic and its uncertain effects, companies were forced to reduce their strategic investments. For instance, Umicore Company, a prominent player in the cathode material market, reduced its strategic capital expenditure by -27.1% in 2020 compared to 2019. However, due to the massive demand for EVs, the overall market experienced positive growth in the year 2020.  

TRADE PROTECTIONISM AND GEOPOLITICAL IMPACT

China leads the global Li-ion battery production and EV production, accounting for more than 50% of the production. China's leadership in battery research and development influences global academic and industrial practices. The country also controls a significant portion of the global supply chain for key EV components, such as rare earth elements and lithium-ion batteries. As a result, there is over-reliance on battery materials, which is concentrated in limited geographies, including China, Europe, and the U.S. Therefore, any supply chain blocks, such as trade restrictions, tariffs, and geopolitical tensions, can create instability in cathode materials prices, creating various challenges for the market players.

SEGMENTATION ANALYSIS

By Battery Type

Lithium-ion Segment Held a Dominant Share due to Growing Popularity of EVs

On the basis of battery type, the market is categorized into Lithium-ion battery (Lithium iron Phosphate (LFP), Lithium Nickel Manganese Cobalt Oxide (NMC), Lithium Nickel Cobalt Aluminum oxide (NCA), and others), lead-acid battery, and others.

The lithium-ion battery segment held a dominant global cathode materials market share in 2024. Lithium-ion batteries are rechargeable batteries that store energy by moving lithium ions between two electrodes. The battery has two electrodes, an anode and a cathode, that store lithium ions. These batteries have a higher energy density than traditional batteries, thus becoming the primary choice among automotive makers. The materials used in cathode are a key factor in determining the battery's energy density. The growing popularity of EVs is set to drive the segment's growth during the forecast period.

The lithium-ion battery segment is followed by the lead-acid battery segment, which is a prominent part of the global battery market. Lead-acid batteries are rechargeable batteries that use chemical reactions between lead, lead dioxide, and sulfuric acid to store and release energy. They are the oldest rechargeable batteries and are commonly used in cars, boats, and trucks. These batteries are important due to their wide adoption in many industries, including transportation, communications, and energy storage. Being an important part of the starting, lighting, and ignition, the lead-acid segment is expected to grow moderately in the coming years.

In addition to these two battery types, there are other battery types on which companies are investing, such as sodium-ion, solid-state, and flow batteries. Growing demand for these batteries is set to create an additional requirement for materials utilized in the cathode.  

By End Use

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Automotive Segment Dominates the Market Due to a Growing Preference for Hybrid and Electric Vehicles

On the basis of end use, the market is segmented into automotive, consumer electronics, energy storage systems, power tools, and others.

The automotive segment dominated the market in 2024. The automobile industry is currently dominated by fossil fuel consumption but is increasingly moving toward alternate sources of energy, such as lithium-ion-backed battery technology. The increasing demand for EVs and the shift toward clean energy will drive the product demand in the coming years. For instance, the Indian Ministry of Heavy Industries launched Phase II of FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) on 1st April 2019 with a total budgetary support of USD 1,200 million for five years. Such government initiatives are set to drive the automotive segment in the market during the forecast period.

The consumer electronics segment has grown significantly in recent times. LIBs are used in rechargeable gadgets to store the energy-to-weight ratios and high open-circuit voltage. The advancement in battery technology is making electronic products more refined and slim, which requires more batteries to increase product running time. LiBs' lifespan, energy efficiency, and storage capacity depend upon cathode materials. Hence, an increase in demand for smartphones and consumer electronics is expected to drive the segment growth.

Demand for energy storage systems is projected to grow significantly in the global market. This growth is mainly due to the rising popularity of renewable energy sources, such as solar and wind, which are intermittent and require a proper way to store excess energy.

Apart from the above-mentioned major application areas, the materials present in the cathode are utilized in several industries for a wide range of applications, including power tools, e-bikes, drones, and others. Such a wide range of application areas will fuel product demand at a moderate rate in the forthcoming years.

CATHODE MATERIALS MARKET REGIONAL OUTLOOK

Based on geography, the market is studied across China, Europe, U.S., and Rest of the World

China

The China market is estimated to hold the largest share of global sales revenue. China is the production hub for electric vehicles, lithium-ion batteries, and consumer electronics, which creates massive demand for materials used in cathodes for battery production. The presence of massive battery-producing companies, such as BYD and CATL (Contemporary Amperex Technology Co. Limited), is fueling the product demand. China is one of the largest producers of electronic components, such as fuel cells, batteries, and capacitors. The nation also leads fuel cell technologies or electric vehicles, and ongoing development in these sectors which is anticipated to act as an epicenter of global market growth.

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U.S.

The U.S. is projected to become the second-largest manufacturer of lithium-ion batteries by the year 2030, with an estimated capacity of 1.261 GWh. Investments in the U.S. battery value chain by companies, including Tesla, LG Energy Solution (LGES), and SK On, are poised to fuel this growth. Tesla’s Gigafactories, especially the factory located in Nevada, are pivotal to this development. In addition, U.S. governmental policies and incentives designed to enhance local battery production and decrease dependence on overseas supply chains are also facilitating this expansion. Cathode materials are an essential ingredient in Li-ion batteries; thus, they are expected to grow in line with Li-ion battery production growth.

Europe

In Europe, Germany is anticipated to lead the continent’s lithium-ion battery manufacturing, aiming for a capacity of 262 GWh by the year 2030. A significant portion of this capacity will stem from Tesla’s Giga Berlin facility, which marks the company’s inaugural production site in Europe. Major German automotive manufacturers, such as Volkswagen, are also making substantial investments in battery manufacturing to bolster their ambitious electric vehicle initiatives. Europe is highly investing in expanding its energy infrastructure. For instance, to boost Europe’s battery manufacturing industry, the European Commission funded over USD 3 billion in December 2023 for the next three years.

Rest Of The World

The rest of the world will create a moderate demand for materials used in cathodes as compared to major economies. Latin America, being the prominent region for cathode materials reserves, will support regional growth in the upcoming years. Similarly, The Middle East & Africa is expected to have significant market growth driven by GCC countries due to increased investment in green energy and tourism. There are many initiatives undertaken to produce batteries in the Gulf Cooperation Council (GCC) region. For instance, Statevolt, a California-based battery producer, plans to build a gigafactory in Ras Al Khaimah, UAE, to manufacture solid-state battery cells by 2026. Such parameters will support the regional market growth in the foreseen period.

COMPETITIVE LANDSCAPE

KEY INDUSTRY PLAYERS

Market Players are Adopting Product Innovation Strategies to Attract New Customers

LG Chem, NEI Corporation, POSCO, Shanshan co, Sumitomo Metal Mining Co., Ltd., and Umicore are a few key manufacturers operating in the global cathode materials market. These players have adopted both organic and inorganic expansion strategies to capitalize on the growing market potential. The global market is partially consolidated, with few prominent players commanding a significant chunk of global sales volume. These prominent players are anticipated to maintain their dominance over the assessment period due to their lead in production technology and existing production capacities. Market giants are also strengthening their presence in their domestic geographies to extract maximum profit from their current potential. However, many governments are supporting their domestic players in scaling, which will benefit the company and the nation. However, their shares are likely to remain limited owing to pricing advantage from economies of scale from the leading players.

LIST OF KEY CATHODE MATERIAL COMPANIES PROFILED

• LG Chem (South Korea)


• NEI Corporation (U.S.)


• Nippon Denko Co., Ltd. (Japan)


• POSCO (South Korea)


• Shanshan Co (China)


• Shenzhen Dynanonic Co., Ltd. (China)


• Sumitomo Metal Mining Co., Ltd. (Japan)


• Targray (Canada)


• Umicore (Belgium)


• Zhejiang Huayou Cobalt (China)

KEY INDUSTRY DEVELOPMENTS

• In July 2024, LOHUM, the only producer of Nickel Manganese Cobalt (NMC) based cathode active material producer in India, planned its recycling capacity from 5 GWh to 30 GWh in the next three years.


• In December 2023, Himadri Specialty Chemical planned to build a Lithium-ion phosphate in India in phases in the next 5 to 6 years. With an estimated cost of USD 130.4 million, the company will complete phase 1 and will establish a production facility with a production capacity of 40 kilotons.


• In November 2023, Sumitomo Metal Company, a key supplier of nickel-cobalt-aluminium (NCA) cathode materials, planned to expand its production capacity by 24 kilotons in Niihama, western Japan, by 2025 from the existing production capacity of 60 kilotons.


• In April 2023, POSCO Future M Co., a unit of South Korean steel giant POSCO Holdings Inc., planned to invest USD 460.5 million to produce an additional 46 kilotons of high-nickel cathode, which is a key component in electric vehicle batteries. The plant is set to start by the end of 2025, and after the facility is completed, the company’s total capacity will reach 271 kilotons per annum.


• In July 2022, BASF and TODA KOGYO CORP announced the establishment of a joint venture to expand the production capacity of BASF TODA Battery Materials LLC (BTBM) at the Onoda site in Japan. Under this expansion plan, BTBM’s annual capacity for high nickel cathode active materials (CAM) will reach 60 kilotons by 2025 per year.

REPORT COVERAGE

The research report provides a detailed market analysis, focusing on crucial aspects such as leading companies, battery type, and end use. In addition, it provides quantitative data regarding market size, analysis, research methodology, and insights into market trends. The report also highlights vital industry developments and the competitive landscape. In addition to the above-mentioned factors, the report encompasses various factors that have contributed to the market's growth in recent years.

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