Driven mainly by electric vehicles, the Li-ion battery cell market is projected to surpass $400 billion by 2035, with China at the forefront as increased gigafactory investments fuel the growth.
The market for lithium-ion battery cells is set to touch US$405 billion by 2035, with a projected compound annual growth rate (CAGR) of 9.9%, according to a report published by IDTechEx. Electric vehicles are the primary driver of this growth.
Besides, the report estimated that about 70% of global cell production is based in China, reflecting Chinese dominance across the Li-ion supply chain. In 2023, China held a principal share in various segments of the global Li-ion market, with over 90% of anode production, more than 80% of electrolytes, and over 60% in both cathodes and separators.
The analysis also stated that due to their high performance, low cost, and wide availability, Li-ion batteries will remain the top energy storage technology for electronic devices, electric vehicles, especially e-cars, and large-scale storage systems for at least the next decade.
This surge in demand for Li-ion batteries has led to a rise in gigafactories, primarily driven by significant manufacturers like CATL, BYD, and LG Energy Solution.
Despite some regional concerns about the pace of EV adoption, electric vehicle sales surged in 2023. Ongoing government support for the EV and battery sectors, coupled with increasing competition, has led to improved battery performance and price reductions.
Furthermore, advancements in Li-ion anode and cathode materials, manufacturing, and design are accelerating, with increased industry investment.
Besides China, Europe and North America are working to develop domestic battery manufacturing capabilities and reduce reliance on a single region. In response to the Inflation Reduction Act, North America is seeing increased gigafactory investments, with projected battery cell capacity rising from 600 GWh to 850 GWh by 2030.
Europe also aims to boost its battery market share. Still, it faces challenges due to uncertain EV battery demand, intense competition, and declining prices and margins, making it difficult for new or inexperienced entrants.
According to the report, cathode materials are crucial for Li-ion battery performance and price. In 2024, LFP and NMC/NCA are the dominant materials. LFP is growing in popularity for EVs and stationary storage, while high-nickel NMC/NCA remains important for long-range EVs in Europe and North America.
Manufacturers are focusing on ultra-high nickel-layered oxides to enhance energy density and reduce cobalt content. Their innovations include LMFP, LNMO, and Li-Mn-rich materials, as well as high-voltage NMC materials.
For anodes, graphite is the predominant material, with a recent shift towards synthetic graphite due to declining prices. However, natural graphite is expected to continue playing a significant role due to its lower CO2 footprint and potential for increased supply outside China.
Silicon anode materials are gaining attention for their potential to boost energy density. Both US start-ups and established Asian producers are expanding manufacturing, with significant growth expected in their use through 2035.
