The global EV battery market is projected to grow at a CAGR of 19.0% from USD 56.4 billion in 2022 to USD 134.6 billion by 2027.
The growth of the EV battery market can be attributed to the increasing demand of electric vehicles, improvement in battery technology, supporting government policies and regulations, and launch of new plug-in EV models.
Market Dynamics:
Driver: Increasing demand for electric vehicles
Governments all across the world are promoting the use of vehicles that run on alternative fuels as environmental worries about conventional automobiles continue to rise. EVs are zero-emission vehicles that are becoming more and more popular for eco-friendly public transportation worldwide. To promote the use of EVS, several national governments provide financial incentives such tax exemptions and refunds, subsidies, decreased parking/toll rates for EVs, and free charging.
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Opportunity: Introduction of the battery-as-a-service model (BaaS)
Companies are coming up with business models like battery swapping and battery-as-a-service (BaaS) that allow users to change/swap EV batteries once discharged. This saves users the time spent on recharging the batteries, thereby improving customer satisfaction and addressing one of the main reasons consumers refrain from opting for EVs.
battery swapping at EV charging stations has grown as it eliminates the time for charging batteries for EV users. While the market is still developing for EV cars outside China, it has shown its potential due to high demand in China. While Level 3 EV charging can charge an EV in around 30 mins to one hour and ultra-fast charging can also provide charging in 15-30 minutes, their long-term use damages the EV batteries. Thus, battery swapping came up as an alternative for fast charging stations and its demand has grown over the past few years. NIO, for instance, installed over 300 battery swapping stations by July 2021 and plans to install around 4,000 more by 2025 in China. Its swapping stations have already been in use around 2.9 million times by July 2021 in the global market, with around 1,000 battery swapping stations planned outside China. Shell signed an agreement with NIO in November 2021 to jointly develop such battery swapping EV charging stations. This has created a new opportunity for the battery as a service in EV charging.
The lithium-ion battery segment is expected to be the during the forecast period
The lithium-ion battery dominates the EV battery market due to its high energy density, fast recharging capability, and high discharge power. As a result, lithium-ion batteries are the only available technology that is capable of fulfilling OEM requirements for developing electric vehicles with adequate drive range and fast charging. The cost of lithium-ion batteries is also a major factor driving its high demand since the decreasing cost of these battery types reached USD 130-140 /kWh in 2021 from around USD 800-900/kWh in the past years (Source: Multidisciplinary Digital Publishing Institute). Battery manufacturers are focusing on lithium-ion batteries and have invested in greenfield as well as capacity expansion projects to ramp-up production. For instance, CATL (China) plans to expand its production in Europe. the company plans to expand the production capacity of its Erfurt manufacturing site to 14GWh by the end of 2022 and 60GWh in 2026.
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