In the global wave of energy transformation and automotive electrification, the lithium-ion battery industry is experiencing epic growth. The latest industry projections show that driven by surging demand for electric vehicles (EVs) and energy storage systems (ESS), the global lithium battery market is expected to exceed $400 billion by 2030, marking a more than 5-fold increase from 2023, with a compound annual growth rate (CAGR) of 15%-30%.

China: A Leader in Both Production Capacity and Technology

The rise of China’s lithium battery industry is a “model of scale and efficiency.” It is predicted that by 2025, China will account for 45% of global lithium ion battery demand and more than 60% of production capacity (this proportion has reached 79% in 2021).

Industry giants such as CATL and BYD have built a vertically integrated supply chain system from lithium mining (mainly concentrated in Qinghai and Tibet in China, and in Australia and Congo overseas) to battery production, with costs 20% to 30% lower than international competitors.

In recent years, with the emergence of a series of technological innovations such as BYD’s blade battery and CATL’s sodium-ion battery, the energy density and safety of lithium batteries have continued to improve, while lithium ion batteries prices have fallen by 89% in the past decade.

Europe and the United States: Capacity Catch-Up Driven by Subsidies

Although the European and American markets face the dilemma of insufficient demand in the short term (for example, the sales growth rate of new energy vehicles in Europe will drop to 8% in 2024), their strategic deployment has not wavered in the long run.

Driven by the US Inflation Reduction Act and the EU Green Deal, the production capacity of lithium batteries in Europe and the United States is expanding rapidly. By 2025, Germany is expected to become the largest lithium ion battery producer in Europe (and the second largest in the world), with a production capacity of 164GWh, followed by Hungary, Poland and other countries.

Energy Storage: The Rise of the Second Growth Pole

The energy storage sector is becoming the “second growth curve” of the lifepo4 lithium battery market. As wind power and photovoltaic power generation continue to increase their share in the energy structure, the global installed capacity of energy storage batteries has reached 120GWh in 2023 and is expected to exceed 1000GWh by 2030.

In this emerging field, Chinese companies continue to take the lead: CATL and BYD's energy storage systems account for 55% of the global market share.

Challenges and the Future: Technological Disruption and Geopolitical Competition

Industry experts predict that competition after 2030 will focus on three key areas:

• Technological innovation, including solid-state batteries and cobalt-free technology.
• Supply chain resilience, with a focus on diversified lithium resource supply.
• Regional balance, driven by policies such as the US Chip and Science Act, which requires batteries component to be localized.

Jan Wasserbaech, partner of Alexec Consulting, pointed out: “Europe and the United States must achieve a breakthrough in the mass production of sodium-ion and solid-state batteries by 2030. Otherwise, they will remain reliant on Asian supply chains for a long time.”