Authored by Dr. Moshiel Biton, co-founder & CEO, Addionics
In 2019, the global lithium-ion battery market was valued at $36.7 billion whilst a recent report stated that the global lithium-ion battery market revenue is expected to grow at an impressive 14.3% compound annual growth rate from 2018 to 2025.
By 2025, it is estimated that the global lithium-ion power battery market size will exceed $100 billion before hitting $129.3 billion by 2027.
Based on these predictions, we can deduce how many batteries will be required to fulfil these numbers and whether today’s current supply and demand model will be adapted to future needs. Government decisions will also influence these numbers as they attempt to slow down global warming via electrification.
Batteries in numbers
The growth of the battery market is fueled by increasing demand for energy storage around the world, notably in EV production, renewable energy production, home energy storage and more. Indeed, one EV alone requires on average 20-30 kWh for a small car, 60-100 kWh for a family / luxury car and 120-170 kWh for a truck / bus. To translate it into a number of batteries, the iPhone 12 battery has a 8.57 Wh capacity, while the Tesla Model S has a 85,000 Wh battery capacity. This means that each Tesla model S contains almost 10,000 times the amount of single batteries used in an iPhone.
Currently, battery factories are fully booked and are not able to meet today’s demand, meaning there is a huge battery shortage, all before the upcoming EV boom.
In 2020, global plug-in vehicle sales reached over 3.2 million whilst EVs are expected to number over 140 million vehicles by 2035.
If the average battery count of a small-medium EV is more than 3000 iPhone batteries, this means around 9.6 billion batteries were needed in 2020 solely for EV purposes. By the end of 2021, the EV market is expected to reach 4.18 million units. Based on the aforementioned average, this means that 12.5 billion batteries will be needed this year, an increase of 30.2% since last year. Moreover, this market is projected to grow at a CAGR of 21.7% to reach 228.7 million units by 2027, equating to 686.1 billion batteries needed to fulfil the amount of EVs being produced.
With manufacturers already struggling to keep up with the exponential demand, an expected shortage can be predicted. This added to renewable energy projects, such as solar energy storage, will require dozens of thousands of batteries per site. Therefore, as the battery industry grows exponentially, it’s only by delivering high volumes of high performing, cost-effective batteries, that the acceleration and adoption of the electrification process and green revolution will be enabled.
Supply and demand
However, the supply and demand model for batteries is limited as the market concentration of lithium-ion power batteries is very high. Indeed, the market share of the world's top five manufacturers exceeds 60% with CATL and Panasonic having the highest market share of 22.6% and 21.5% respectively. With more and more batteries needed, more manufacturing plants will follow to meet the demand and at the moment, manufacturers are struggling to keep up with the ever growing demand. Indeed, Ford Motor Co.’s top executive said the U.S. must start building batteries for the coming wave of electric vehicles to avoid supply disruptions similar to the semiconductor shortage currently shutting American auto factories.
It’s no secret that global warming is an important factor driving the growth of li-ion batteries usage globally. In fact, President of the United States, Joe Biden, is making batteries a component of his carbon-neutrality strategy by increasing their domestic production.
From the perspective of global policy planning, Norway, Finland, Germany, the United Kingdom, and France all announced a comprehensive ban on the sale of fuel vehicles in 2025, 2025, 2030, 2040, and 2040 respectively, with the United Kingdom also aiming for the sales volume of electric passenger cars to reach at least 50% by 2030. Additionally, to keep global warming below 1.5 degrees, the 2015 Paris Agreement states that by 2030, 100 million EVs should be added to the roads globally.
Looking forwards, as the world continues to go through the electrification process, the battery market is only going to get bigger and the opportunities for it are exponential.
Production and costs
Battery price is one of the biggest costs for EVs. According to BloombergNEF, the price of a lithium-ion battery pack fell by 89% from more than $1,100/kWh in 2010 to $137/kWh in 2020 and it is estimated that by 2024, average prices will be below $100/kWh whilst by 2030, the average price is expected to be around $62. Indeed, with increased production volumes, more efficient manufacturing and better technologies, battery price will continue to fall.
This growing demand for high performing, low-cost batteries requires new technologies and manufacturing processes to enter the market. There is a need for a new battery-design physics approach that uses a novel, cost-effective, scalable battery-graded manufacturing process to produce and utilize smart 3D electrodes, enhancing the capacity, power, safety, charging time, lifetime and cost of batteries.
I think we’ll see the battery industry moving to a next level, using revolutionary manufacturing processes of smart 3D integrated metals to create chemistry agnostic, high performing batteries at a low cost targeted for the green revolution era.