Owing to the rapid development of charging infrastructure for electric vehicles (EVs) and advancements in the lithium-ion (Li-ion) battery technology, the electric vehicle battery market is projected to witness significant growth in the near future. This growth will be, most importantly, a result of the large-scale adoption of hybrid electric vehicles (HEVs) and battery electric vehicles (BEVs). The high incentives being offered on the adoption of EVs, along with the implementation of stringent emission norms, will lead to the increasing use of HEVs and BEVs.

A report by the International Energy Agency (IEA) states that government policies will continue to support the growth of the EV industry. As of July 2020, plans to achieve the 100% deployment of zero-emission vehicles and the phase-out of internal-combustion-engine (ICE) vehicles by 2050 have been announced by 17 countries. Additionally, the government subsidies offered by China, Italy, and Germany have been increasing the demand for EVs. As a result, “The 2.1 million electric car sales in 2019 represent a 6% growth from the previous year.”, says the IEA.

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The swelling EV market will create an uninterrupted demand for EV batteries. EV manufacturers are rapidly shifting toward lithium–nickel–manganese–cobalt oxide (Li-NMC) batteries from lithium–iron phosphate (LFP) batteries because of the demand for energy-efficient passenger cars, which can cover longer distances on a single charge. The reducing price and high energy density of Li-NMC batteries have led to the increasing demand for them in recent years, a scenario that would exist in the future as well.

The application segment of the electric vehicle battery market is categorized into BEV, HEV, and plug-in hybrid electric vehicle (PHEV). The BEV category dominated the market in the past due to the increasing adoption of such vehicles worldwide. The incentives and subsidies on BEVs are generally the highest, as they are the least polluting of all EVs. This will lead to a high demand for batteries, which would be aided by the fact that batteries are more important to a BEV than other EVs, since BEVs have no other power source.

Lithium-ion battery (LIB) and nickel–metal hydride (NiMH) battery are the two types of EV batteries. Of the two types, LIBs have a higher adoption rate than NiMH variants because of the former’s longer life, higher energy efficiency, and no memory effects. Other traits that make LIBs ideal for EVs are their greater energy density, lower weight, and lower prices. Furthermore, the technological advancements in LIBs will increase their demand among EV manufacturers in the coming days.

The electric vehicle battery market growth will be driven by the Asia-Pacific region during the forecast period. APAC will generate the maximum revenue because of the presence of numerous battery producers in South Korea, Japan, and China. Due to an abundant supply, the batteries produced in the APAC region are priced lower than the ones manufactured in other regions. The large-scale manufacturing is a result of the availability of raw materials, especially lithium, in high volumes. This region will thus contribute the most to the growth of the market in the future.

The current trend of the wide scale adoption of all kinds of EVs is the reason behind the high-volume production and sales of these batteries. Multiple varieties of EV batteries will be developed in the years to come, to keep up with the improving vehicle technology.