From USD 27.3 billion in 2021 to USD 67.2 billion in 2025, the global EV battery market is expected to increase at a CAGR of 25.3 percent during the period of 2021 to 2025. Rising demand for electric vehicles, breakthroughs in battery technology, beneficial regulatory frameworks, and the release of new plug-in EV models are all driving the EV battery market.
During the projected period, the EV battery market is expected to develop significantly due to the rising sales of electric vehicles around the world. Furthermore, falling battery prices as a result of technology breakthroughs and increased research & development spending are two important factors driving EV adoption. Prominent government initiatives are projected to promote the growth of the global EV battery market.
|Estimated EV Battery Market Value (2021)||US$ 27.3 Billion|
|Projected EV Battery Market Value (2025)||US$ 67.2 Billion|
Drivers of the EV Battery Market
source: international energy agency
Drop in the Lithium-Ion Battery Prices
Lithium-ion batteries are now the primary source of electricity for electric vehicles. Battery prices are predicted to fall below 100 USD/kWh in the next few years as cell chemistry and battery pack manufacturing techniques progress. As a result, falling battery pack costs, which account for about 35 percent to 45 percent of electric car production costs, are expected to propel the electric vehicle battery market forward.
Emissions Regulations to Encourage EV Adoption
Because of the lack of transit-related emissions and the ability to use and expand renewable energy supplies, EVs have a significant pollution advantage over traditional fuel-based autos. Furthermore, as public awareness of climate change grows, regulatory agencies are being compelled to enact strict fuel economy standards and strongly push the development of electric vehicles (EVs) through subsidies and measures such as rewarding battery cell manufacture. As a result, worries about vehicular emissions are predicted to promote EV adoption, which will likely improve market growth in the approaching years.
Major EV Manufacturers are Introducing New Plug-in Variants
Across the globe, the electric car market is expanding at a breakneck pace. As a result of the increased demand for EVs, major vehicle manufacturers are entering the market. Several major manufacturers, including Toyota, Tata Motors, Mercedes-Benz, and Hyundai, are developing electric vehicle models in order to strengthen their positions in the industry. Electric car development is projected to accelerate in the near future, owing to major manufacturers’ interest in the field.
Restraints of the EV Battery Market
Lack of Charging Infrastructure and a Scarcity of Materials.
Several minerals, such as graphite, nickel, cobalt, manganese, and rare-earth elements like neodymium, are required to store and use electricity as a fuel, but supplies are restricted or non-existent. The rising demand for electric vehicles is projected to cause a short-term shortage of these critical battery components.
Furthermore, the absence of charging infrastructure, particularly in rising nations like India, is a barrier to widespread adoption of electric vehicles. The cost of installation is significant, and the cost-efficiency of charging automobiles for consumers is not up to par. As a result, market development is projected to be limited by a lack of charging stations and supply chain risks.
Concerns about the safety of batteries
Most electric vehicle batteries are deemed safe since they undergo numerous tests before being used. However, several occurrences, such as the recall of 68,000 Chevy EV Bolts following five battery-related fires have raised concerns about the safety of these batteries. Flammable materials such as lithium, manganese, and polymers are used in electric vehicle batteries. Lithium becomes particularly reactive when exposed to moisture. This has raised certain concerns about the safety and reliability of these systems in hot or moist environments.
Subsidies in big markets are being reduced
In key markets like China and France, purchase subsidies have been eliminated.The Chinese Ministry of Finance stated intentions to reduce electric car subsidies by half in 2019, 20% in 2021, and 30% by 2022. Because the Chinese Ministry only gives subsidies for cars with a large battery capacity, EV battery makers must either provide high-capacity batteries to car manufacturers or lower battery prices to keep overall vehicle costs within the supported range. Though this is intended to stimulate local manufacturing, EV battery makers may face challenges because they will need to increase battery capacity in order to earn greater subsidies while keeping battery prices low.
Trends of the EV Battery Market
In recent years, electric vehicles have experienced a considerable increase in popularity. Regulatory modifications addressing the use of electricity-powered commute solutions have been implemented around the world as a result of increased government initiatives to move to electric vehicles and reduce carbon emissions from vehicles. To encourage the adoption of electric vehicles, governments in various countries are providing incentives to consumers who purchase BEVs and PHEVs.
- Because of the high adoption rate of EVs in China, the passenger car category is likely to lead the EV battery market in Asia Pacific. The presence of major EV manufacturers including BYD, Byton, BAIC, and Geely in the country, which manufacture EV passenger cars in huge volumes, can also be attributed to the fast growth of the passenger car market.
- The market is divided into nickel-metal hydride (Ni-MH) batteries, lithium-ion (Li-Ion) batteries, lead-acid batteries, and others based on battery type. In 2020, the Li-ion sector had the biggest market share. In comparison to Ni-MH and lead-acid batteries, they have a higher energy density and do not suffer from memory effects (loss of maximum energy capacity due to fast recharge). In the future years, the lithium-ion category is expected to dominate the EV battery industry.
- This market is divided into three types of vehicles: hybrid electric vehicles (HEV), battery electric vehicles (BEV), and plug-in hybrid electric vehicles (PHEV) (PHEV). In comparison to the PHEV and HEV categories, the BEV segment is expected to grow at a faster rate. The adoption of BEVs that rely exclusively on rechargeable battery packs is projected to be driven by government agencies introducing quota systems and severe fuel economy rules, particularly in developing nations.
In 2021, Europe is expected to account for 31.0 percent of the global EV battery market by volume, with a CAGR of 35.3 percent over the forecast period. Because electric vehicles are currently relatively expensive, the growth of the EV battery business in the region is heavily reliant on government incentives and funds.
In 2020, the Asia-Pacific region controlled the global market share. The use of lithium-ion batteries is predicted to rise significantly in the region, owing to the increasing deployment of electric vehicles in countries like China, Japan, and India, as well as the strong demand for vehicles that comes with urbanisation and rising power purchase parity.
Favourable policies, such as energy efficiency standards and increased peak demand charges, as well as technological advancements, have resulted in the commercial and industrial (C&I) sector receiving more attention from project developers, primarily due to strong growth in China and India, which is expected to drive demand for lithium-ion-based energy storage systems in the region.
The battery market for electric vehicles is moderately fragmented. Panasonic Corporation, LG Energy Solution Ltd, Contemporary Amperex Technology Co. Ltd, Samsung SDI Co. Ltd, and BYD Co. Ltd. are just a few of the prominent players in this sector.
Prominent companies in India include Amar Raja Batteries Limited, Exicom Tele-Systems Limited, Exide Industries Ltd, Hero Electric Vehicles Pvt. Ltd., Okaya Power Pvt. Ltd., Panasonic India Private Limited (Panasonic Corporation), Samsung SDI Company Limited (Samsung SDI Co., Ltd.), Tata AutoComp GY Batteries Private Limited, Tata Motors Limited and Toshiba India Pvt. Ltd.
Long-term ties with active materials producers and miners will let early companies lock in supplies.Close collaborations may provide access to cash, allow for faster joint development of technology and intellectual property, and provide both parties with access to other collaborations.
Some of the major recent developments in the market include:
Inverted Energy, a Delhi-based battery manufacturer, announced the opening of its lithium battery production facility in New Delhi, India, in November 2020. The plant’s commissioning aims to reduce reliance on China, with a present output capacity of 100 MWh (megawatt hour) per year.
Amara Raja Batteries, India’s second-largest car battery manufacturer, inaugurated its first technological base to develop lithium-ion cells in Tirupati, Andhra Pradesh, in February 2021.
Lithium Werks, a cobalt-free lithium battery technology business, was acquired by Reliance Industries Ltd (RIL) for $61 million. The acquisition is expected to assist RIL in developing an end-to-end battery ecosystem for large-scale production of key supply chain elements such as cathode, anode, and electrolyte. As a result, the company will be able to develop batteries and battery module systems for use in the energy storage and mobility industries.
The Mahindra Group has also formed a partnership with Jio-BP, a joint venture between BP and Reliance Industries, to investigate technology alternatives such as battery swapping for electric three-wheelers.
The battery industry is booming. Within the next decade, it is expected to expand into a large industry, providing thousands of employment and serving as a national economic engine for decades. The actions that new market players in the industry and policymakers do now will determine which firms will succeed and which regions will profit from the battery market opportunity.
Analysis of the Indian EV Battery Market
According to a report released in December last year by consulting firm RBSA Advisors, India’s electric vehicle (EV) market, which is still in its infancy, is expected to reach $150 billion by 2030, rising at a CAGR of 90 percent over the next decade.
In India, the electric car industry is rapidly expanding. The national and state governments have recently launched initiatives to increase e-mobility usage in the country, as well as enacted legislation and industry standards.
Lithium-ion batteries are primarily employed in electric vehicles in India. India is a major importer of lithium-ion batteries in the Asia-Pacific region, having imported approximately 450 million units of lithium batteries used in a variety of electrical equipment, products, and electric vehicles (EVs) valued at INR 6,600 crore (approximately USD 929.26 million) in 2019-20, with China, Japan, and South Korea as the country’s major trading partners.
By 2030, the Indian government wants to convert all two-and three-wheelers to electric vehicles and convert 30% of all automobile sales to electric vehicles. As of now, India is reliant on foreign countries for EV batteries, which has resulted in the rise in EV prices. The growing popularity of electric vehicles in India is likely to boost domestic Li-ion battery production, making them more cost-effective.
While the country is attempting to transition to electric mobility by transitioning from internal combustion engines (IC Engines) to electric vehicles, there are still several obstacles that are keeping Indian customers cold and preventing a wider adoption of electric automobiles. The government is consistently trying to bring actionable recommendations on board and leverage the current window of opportunity in the global market. Here are some government initiatives that are expected to lead the market forward:
- From April 2021, the import duty on lithium-ion cells has been increased to 10% from the existing 5%.
- India and Bolivia have formed a co-operation in which India will engage in developing Bolivia’s massive lithium deposits in exchange for Bolivia facilitating India’s supply of lithium, lithium carbonate, and cobalt. The MoU between the two countries is expected to foster alliances for lithium battery/cell manufacturing units in India, as well as the possibility of Indian companies establishing manufacturing capabilities in Bolivia.
- Cabinet approved the DHI proposal in May 2021 for the implementation of the PLI Scheme for the ‘National Programme on Advanced Chemistry Cell (ACC) Battery Storage’ with a budget of INR 18,100 crores over five years.
- In 2019, the National Mission on Transformative Mobility and Battery Storage will be launched, with the goal of establishing large-scale production units for cells, batteries, and other EV value chain components.
Nirmala Sitharaman, India’s Finance Minister, indicated on February 1 during the presentation of the Union Budget 2022 that a “Battery Swapping Policy” will be drafted soon.
With the growing popularity of electric vehicles, particularly in the commercial vehicle arena, numerous stakeholders are seeking ways to make them more affordable, easy to charge, and cost-effective to operate. Battery swapping is one such solution that provides all of these advantages to fleet operators.
What is Battery Swapping and Why is it Needed?
A battery swapping technology, as the name implies, is a means of keeping a vehicle operating by swapping a battery.
A swapping station is a station with many batteries that are constantly charged and it is positioned at a strategic area. An EV driver can find a charging station, swap out the depleted battery for a charged one, charge the empty battery, and return to work. For fleet owners who want to keep their vehicles operating without worrying about charging time, this technology has opened up a world of possibilities.
By industry standards, an EV is 1.5-2 times more expensive than an ICE counterpart, with the battery pack accounting for at least half of the cost. Tata Nexon, for example, begins at Rs 7 lakh and Nexon EV at Rs 13 lakh. However, several manufacturers now sell batteries separately from vehicles, lowering the price. In that instance, a fleet owner can purchase vehicles without batteries and power them using battery switching, lowering the original cost.
Another big factor discouraging people from purchasing electric vehicles is range anxiety, or the dread of running out of battery power without being able to reach a charging station. Unlike gas stations, EV charging facilities are hard to come by, which increases range anxiety even more, especially when travelling by car. Even if you locate a charging station, the procedure is similar to that of charging mobile batteries. The greatest and fastest charger will recharge the battery to 80 percent in over an hour, which is a long time considering that petrol pumps can fill a tank in 5 minutes. When using a Swapping Station, simply identify one, walk to it, and exchange the empty battery with a fresh one.
The battery swapping technology provides the EV Battery market with transformational capabilities.
Battery as a Service Model
Battery swapping will fall under the battery-as-a-service (BaaS) business model, according to Niti Aayog, and such models will need to provide interoperability between EVs and batteries for battery switching to become commonplace.
Customers can lease batteries as a separate component from cars or battery suppliers under this approach. Customers can also remove the discharged battery and replace it with one that is fully charged.
For individual buyers, who have been put off by the high price as an entrance hurdle, leasing the battery could make it financially viable. This service also offers battery swapping possibilities, allowing a drained battery or battery pack to be replaced with a fully charged one, strengthening the entire value chain. The battery-as-a-service approach has also proven to be an additional cash stream for the businesses.
Under the first phase, which begins within 1-2 years of the draught policy being finalised, all metropolitan cities with a population of more than 40 lakh will be prioritised for the creation of battery swapping networks. The second phase will cover other significant cities with populations greater than 5 lakh, like state capitals.
This model is globally accepted in European countries such as Norway, Sweden, Netherlands and has also been introduced in China.
Bounce, a two-wheel electric vehicle manufacturer, has just released an electric scooter with a swappable battery. Customers can pay to change their batteries at one of the company’s stations anytime it runs out of power, according to the company’s business plan.
Many private companies and government-backed organisations, such as EESL, BSES, and Sun Mobility, are already launching battery swapping stations. Fleet operators such as Delhivery, Flipkart, Amazon, and Dominoes, on the other hand, have expressed interest in exploiting the Swapping Battery benefits to cut delivery costs and save the environment.
Ola has its own e-rickshaw battery changing operation in Gurgaon. Around 14 battery-swapping devices, each with 20 battery packs, power 100+ e-rickshaws at the station. More businesses are expected to enter the battery swapping industry as the technology has the potential to accelerate the adoption of electric vehicles in India, particularly in the smaller car category.
The growing focus on electrification of public transportation fleets is fueling the EV Battery market expansion. In addition, various car rental firms in the country, such as OLA, Uber, Meru, and others, are shifting their focus to electric two-wheelers and hybrid electric vehicles in order to promote environmental sustainability.
The lowering costs of high-capacity Li-ion batteries, together with increasing domestic manufacturing of EV batteries rather than relying on exports, will continue to fuel market growth in India in the coming years. With the right government support, the Indian EV Battery can rise outpacing the rest of the world.