2022-26 Global demand for lithium-ion batteries for electric vehicles increases at a compound annual rate of 27.48%

The trend of global energy transformation and the favorable policies of the government have significantly promoted the growth of the demand for electric vehicles. According to a recent report released by Technavio, an international market research institute, the market share of lithium-ion batteries for electric vehicles is expected to increase by US $38.96 billion from 2022 to 2026, with a compound annual growth rate of 27.48%.

Driving factors

One of the key factors driving the growth of the automotive lithium-ion battery market is favorable government policies. Governments are working with carmakers to address growing concerns related to environmental safety and the clean energy mix. For example, several countries, including France and the UK, have announced bans on the sale of diesel cars in their countries, which will help boost sales of electric vehicles.

In addition, the government is providing incentives and tax credits to promote the use of electric vehicles, which will increase demand for car lithium-ion batteries. The changing climate and atmospheric conditions caused by rapid urbanization and population growth have prompted the European Commission (EC) to implement stringent fuel efficiency and emission standards to address these problems. This encourages European governments and public operators to switch to electric cars. The increase in the adoption rate of electric vehicles will lead to an increase in the use of lithium-ion batteries.

The increase in global automotive lithium-ion battery capacity is another factor supporting the growth of automotive lithium-ion battery market share. Compared with 2019, the number of global electric vehicle registrations increased by 41% in 2020. Automotive battery production is mainly in China and other countries, accounting for 70% of the global production capacity of automotive batteries.

In addition, the price of car batteries has fallen in recent years. Car battery manufacturers are increasingly focusing on providing batteries at lower prices to increase purchases. These manufacturers are increasing the production capacity of their car batteries by building new manufacturing facilities. Automotive lithium-ion battery manufacturers are working with leading automakers to increase lithium-ion battery capacity. Market manufacturers' capacity expansion plans for such automotive lithium-ion batteries will have a beneficial impact on the growth of the global automotive lithium-ion battery market.

Limiting factors

However, on the other hand, in the forecast period, the development of high energy density batteries such as lithium-sulfur batteries will be the main challenge for the automotive lithium-ion battery market. With the rapid growth of the global population, the global demand for clean energy has increased greatly. Due to the limited capacity and energy density, traditional automotive lithium-ion batteries play a limited role in meeting these needs.

Other energy storage systems such as lithium-sulfur (Li-S) batteries provide higher energy density than lithium-ion batteries. Compared with the cathode materials used in lithium-ion batteries, sulfur has higher theoretical capacity. However, the commercialization process of lithium-sulfur battery is slow. They are not widely used in electric cars. The limitations of lithium-ion batteries in the field of energy storage have prompted researchers to study the possible use of lithium-sulfur batteries in electric vehicles because they can theoretically maintain six times the charging capacity of lithium-ion batteries. Another advantage of Li-S batteries is that they are cost-effective compared to lithium-ion batteries because sulfur is a richer material than cobalt.

Asia-Pacific region

During the forecast period, 45% of market growth will come from the Asia-Pacific region. China and Japan are the main markets for automotive lithium-ion batteries in the Asia-Pacific region. The market growth in this region will be faster than that in other regions. The huge demand for electric vehicles, as well as China's manufacturing and industrial boom, will boost the growth of the automotive lithium-ion battery market in the Asia-Pacific region during the forecast period.

In 2020, the COVID-19 pandemic had a negative impact on the regional automotive lithium-ion battery market. The governments of China, Japan, South Korea and India have imposed restrictions related to COVID-19 to curb the spread of the disease. Vaccination initiated by the regional government led to a decline in the number of COVID-19 cases in the second half of 2020. This has led to the lifting of COVID-19-related restrictions and the resumption of manufacturing operations for regional automotive lithium-ion battery manufacturers. In addition, in 2021, with the increase in regional sales of electric vehicles, the regional automobile industry recovered from the negative impact of the epidemic.

During the forecast period the market share of lithium-ion batteries in the (BEV) field of pure electric vehicles will increase significantly. Due to technological progress and government subsidies and other factors, the demand for BEV has increased in recent years. BEV's market share is growing around the world because they are the most feasible way to clean and efficient transportation systems. Compared with internal combustion engine vehicles, BEV has less impact on the climate, which leads to an increase in the demand for BEV. As a result, growing global demand for BEV will drive growth in this segment during the forecast period.