Electric Vehicle Battery Market Size, Share & COVID-19 Impact Analysis, By Battery Type (Lead Acid Battery, Nickel-Metal Hydride Battery, Lithium-Ion Battery, Others), By Vehicle Type (BEV, PHEV, HEV), and Regional Forecast, 2021-2028

The global EV battery market size was USD 21.95 billion in 2020 and is projected to grow from USD 27.30 billion in 2021 to USD 154.90 billion in 2028 at a CAGR of 28.1% in the 2021-2028 period. The global impact of COVID-19 has been unprecedented and staggering, with electric vehicle batteries witnessing a positive demand shock across all regions amid the pandemic. Based on our analysis, the global market exhibited a stellar growth of 20.4% in 2020 in comparison with the base years 2017-2019. The sudden fall in CAGR is attributable to this market’s demand and growth rate, returning to pre-pandemic levels once the pandemic is over.

The growing emphasis of prominent automobile manufacturers, including Ford Motors, General Motors, and BMW AG on launching EVs is anticipated to drive the market growth. Moreover, the growing demand for electric vehicles, the growing consumer interest to reduce vehicle carbon footprint, supporting government policies, and improved electric vehicle battery technology are several major factors responsible for driving this market. The key determinant for reducing the cost of EVs and increasing the driving range per recharge is the development of EV batteries. To make EV batteries smaller and lighter, and to store more energy, new cell chemistries are being developed for these batteries that would enable electric vehicles to compete with the traditional fuel-based vehicles.

Impact of COVID-19: Supply Chain Vulnerability for Crucial EV Battery Elements May Hamper Demand

China accounts for more than 75% of the global lithium cell manufacturing capacity and Chinese lithium reserves are around 30 times the U.S. levels. The outbreak of COVID-19 has resulted in a severe supply shortage of lithium for automakers such as PSA Group, Ford, and Fiat Chrysler among others which operate their production plants in the Hubei province, the initial epicenter of the virus. The pandemic induced lockdown is anticipated to reduce lithium-ion battery production output by 26 gigawatt-hours in China and has compounded the dependence of automakers on Asian battery manufacturers. Furthermore, the price of lithium hydroxide used in EVs has increased which is attributed to the logistical difficulties and greater production costs caused by the outbreak.

Previously, several European Original Equipment Manufacturers (OEMs) used to focus only on packaging and research & development activities. They have avoided battery manufacturing themselves owing to the difficulties involved in setting up the production process, developing the correct battery chemistry, and sourcing the minerals to produce battery cells.

However, the pandemic has created a severe bottleneck for electric vehicle battery supply in the automotive industry. For instance, Audi citing this battery issue halted the production of its electric e-tron SUV and reduced its production target by nearly 1600 EVs to 4100 EVs for 2020. Similarly, Daimler and Jaguar Land Rover, owing to the unavailability of key elements such as cobalt and lithium have paused production of the Mercedes EQC and I-Pace electric SUV, respectively. It has impacted the profitability of these automakers. Hence, efforts to diversify the supply chain for crucial elements such as lithium are expected to increase as a result of the pandemic and a short to a mid-term supply shortage for such elements will result in the reduced production of EVs over the next two years.

LATEST TRENDS

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Advancement of Battery Chemistry to Improve EV Performance is Current Market Trend

Presently, lithium-nickel-manganese-cobalt-oxide (NMC) is the generally used composition in electric vehicles batteries. In addition, lithium-nickel-cobalt-aluminum oxide (NCA) is used in electric vehicles in the United States (Tesla Model X, S, and 3). On the other hand, the adoption of new battery chemistries for electric vehicles is growing at a faster pace. For instance, the adoption of lithium-nickel-manganese-cobalt-aluminum oxide (NMCA) composition is estimated to start over in the coming three years. They offer higher energy density and a longer life cycle, as compared to the equivalent NMC and NCA material. Therefore, the development of advanced battery chemistry is a positive trend influencing market growth.

DRIVING FACTORS

Falling Price of Lithium-Ion Batteries to Boost Market Growth

At present, the main source of power for electric vehicles is lithium-ion batteries. According to a study published by the U.S. International Trade Commission in 2018, Li-ion batteries account for more than 70 percent of the rechargeable battery market. In addition, the battery prices per kilowatt-hour (kWh) have dropped to less than 200 USD in 2019 from around 1000 USD in 2010. Furthermore, due to the advancement of cell chemistry and battery pack manufacturing techniques, battery prices are expected to drop below 100 USD/kWh in the coming years. Therefore, a decrease in the costs of battery packs that are responsible for around 35% to 45% of electric vehicle manufacturing costs is anticipated to drive the electric vehicle battery market growth.

Stringent Emission Regulations to Fuel Adoption of EVs

EVs hold a substantial emission advantage over traditional fuel-based automobiles attributed to the lack of transit-related emissions and the potential to utilize and develop renewable energy resources. Moreover, the growing awareness regarding climate change has obligated regulatory bodies to implement rigorous fuel economy regulations and vigorously encourage the development of EVs via subsidies and initiatives such as incentivizing cell manufacturing for batteries. Therefore, vehicular emission concerns are expected to drive the adoption of EVs that is likely to boost market growth in the upcoming years.

RESTRAINING FACTORS

Scarce Material Supply and Lack of Charging Infrastructure to Limit Adoption

Several minerals are essential to store and utilize electricity as fuel for instance graphite, nickel, cobalt, manganese, and rare-earth elements such as neodymium for that the supplies are geographically determined and alternatives are limited or non-existent. The increasing demand for electric vehicles is expected to lead to a short-term supply crunch for these necessary battery components.

Besides, the lack of charging infrastructure is also a hurdle for the widespread adoption of electric vehicles, predominantly in emerging countries such as India. In addition, the cost of installation is high and cost-efficiency for consumers to charge their vehicles is also not at the required level. Therefore, the lack of charging stations and the supply chain risks are expected to restrain the market growth.

SEGMENTATION

By Battery Type Analysis

Lithium-Ion Segment Dominated Market

By battery type, the market is segmented into nickel-metal hydride (Ni-MH) battery, lithium-ion (Li-ion) battery (Li-Ion), lead-acid battery, and others.

The Li-ion segment held the largest share of the market in 2020. They offer higher energy density and do not suffer from memory effect (loss of maximum energy capacity owing to rapid recharge), as compared to Ni-MH and lead-acid batteries. Therefore, the lithium-ion segment is anticipated to dominate the EV battery market in the coming years.

By Vehicle Type Analysis

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HEV Segment Held Largest Electric Vehicle Battery Market Share Backed by their Cost-effectiveness

Based on vehicle type, this market is segmented into the hybrid electric vehicle (HEV), battery electric vehicle (BEV), and plug-in hybrid electric vehicle (PHEV).

The BEV segment is estimated to exhibit a higher CAGR, as compared to the PHEV and HEV segments. The government agencies implementing quota systems and stringent fuel economy regulations, particularly in developing countries, are expected to drive the adoption of BEVs that rely entirely on rechargeable battery packs.

The hybrid electric vehicles segment held the largest share of the market in 2020. HEVs utilize electric drive technology to deliver reduced fuel consumption and eliminate dependence on charging stations. Therefore, these several major factors, coupled with their considerably lower costs, as compared to BEVs are anticipated to lead to the dominance of this segment in the coming years.

REGIONAL INSIGHTS

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Asia Pacific dominated the market owing to China, Japan, and South Korea that represent the majority of the global production capacity for EV batteries, and is valued at USD 12.70 billion in 2020. Further, the European electric cars mostly utilize batteries produced in Japan and South Korea due to the similarity of their electric grid to the European average. Besides, the majority of the EV batteries produced in China are used by the domestic market in China.

Furthermore, the global lithium cell manufacturing is heavily concentrated in China and more than half of the battery manufacturing gigafactories are based in China. Therefore, Asia Pacific is estimated to dominate the market from 2021 to 2028.

The North American region is one of the leading consumers of batteries, the integration of renewables with energy storage systems is offering a market growth opportunity for the lithium-ion (Li-ion) battery market. Moreover, the U.S.-based OEMs are concentrating on eliminating the supply chain risks and the concerns regarding battery sourcing from a single region such as China. For example, establishing nearby manufacturing plants such as the Gigafactory 1 in Nevada operated by Tesla in collaboration with Panasonic would allow the co-development of battery cells and packs, as well as the swift troubleshooting of issues related to these components.

Furthermore, the U.S. government published a federal strategy to ensure a reliable and secure supply of critical minerals which directs the Department of the Interior to localize the production of 35 critical minerals that include nickel and cobalt. Therefore, North America is expected to show good growth in the market.

In addition, major factors for the market growth in Europe are the intense promotion of plug-in EVs, the 95g CO2 emission mandate, and incentive boosts by green recovery funds. Also, several gigafactories are planned across Europe to meet the surge in demand for electric vehicles. Key EVs battery manufactures have been expanding their battery cell production networks in the European region that has allowed noteworthy growth of electric vehicles and batteries. For instance, Tesla is planning to massively expand their European battery cell production in the coming years.

KEY INDUSTRY PLAYERS

LG Chem & Panasonic Corporation to Lead Stoked by Rising Investments in R&D Activities

Key players in the global electric vehicle battery market include Samsung SDI, LG Chem, Panasonic, and BYD Company, among others. The cost of batteries continues to be a hurdle in increasing the affordability of EVs. Therefore, companies such as Panasonic and LG Chem are investing heavily in research and development to lower the use of expensive cobalt in nickel-cobalt aluminum and nickel-cobalt-manganese batteries.

Another example is CATL, which supplies lithium iron phosphate batteries to Tesla. The company is developing a battery that does not contain cobalt or nickel. CATL also supplies Daimler and Volkswagen and has partnerships with Honda and Toyota. The development of such batteries can enable widespread adoption in commercially popular EVs and reduce the cost burden on manufacturers, as well as consumers. Therefore, the increased investment in research and development of appropriate alternatives to expensive EV battery elements is a vital area of focus for the majority of electric vehicle battery manufacturers.

LIST OF KEY COMPANIES PROFILED:

• Panasonic Corporation (Osaka, Japan)


• LG Chem (Seoul, South Korea)


• BYD Company Ltd. (Shenzhen, China)


• GS Yuasa International Ltd. (Kyoto, Japan)


• Samsung SDI CO., LTD (Seoul, South Korea)


• Hitachi Chemical Co., Ltd. (Tokyo, Japan)


• Contemporary Amperex Technology Co., Limited (CATL) (Ningde, China)


• EXIDE INDUSTRIES LIMITED (Kolkata, India)


• SK INNOVATION CO. LTD. (Seoul, South Korea)


• East Penn Manufacturing Company (Pennsylvania, U.S.)

KEY INDUSTRY DEVELOPMENTS:

• June 2021 – Nissan Motor Co. Ltd., announced its plan to build the UK’s first battery gigafactory, along with Envision AESC, a China-based battery technology company.


• March 2021 - General Motors partnered with SolidEnergy Systems, a lithium metal battery startup. This partnership aimed to boost the U.S. automobile manufacturer’s battery development, allowing for high EV driving range in a smaller package.


• February 2021 – Amara Raja Batteries Limited, is an India-based leading battery manufacturer, has opened its advanced lithium-ion cells technology hub located at Tirupati, India.


• March 2020 – BYD Motors Inc. launched the new Blade Battery for electric vehicles that optimizes the battery pack structure by above 50%, as compared to the traditional lithium iron phosphate batteries. It also exponentially increases battery safety.

REPORT COVERAGE

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The electric vehicle battery market research report covers a detailed analysis of the market and focuses on key aspects such as the leading companies, battery types, and vehicle types. Besides this, the report offers insights into the market trends and highlights the key industry developments. In addition to the aforementioned factors, the report delivers an in-depth market analysis of several factors that have contributed to its growth over recent years.