The global battery market is experiencing significant growth, driven by soaring demand and declining prices, according to the International Energy Agency (IEA). The agency highlights that 2024 marked a turning point for the industry, with electric vehicle (EV) sales rising 25% to 17 million units, pushing annual battery demand beyond 1 terawatt-hour (TWh) for the first time. A key factor in this rapid expansion has been the sharp decline in battery pack prices, which dropped below $100 per kilowatt-hour a level widely considered crucial for cost competitiveness with conventional combustion-engine vehicles.
This price reduction has been supported by falling raw material costs, particularly lithium, which has plummeted by more than 85% since its peak in 2022. Alongside lower material costs, technological advancements and large-scale manufacturing investments have fueled price reductions. By 2024, global battery manufacturing capacity reached 3 TWh, and projections suggest that capacity could triple over the next five years if all announced projects proceed.
This rapid expansion indicates a shift in the industry toward greater standardization and economies of scale. The evolving battery landscape is also prompting industry consolidation and a restructuring of supply chains, influenced by both market dynamics and government policies. Efforts to geographically diversify battery production are reshaping the sector, which was previously concentrated in a few key regions.
Price decline accelerates global battery market growth
Currently, China dominates the market, producing over three-quarters of the world’s batteries. In 2024, battery prices in China fell nearly 30%, outpacing declines in other major markets. Chinese batteries were reported to be over 30% cheaper than those in Europe and 20% less expensive than those in North America. This price advantage has been a significant factor in making EVs in China more affordable than their gasoline-powered counterparts.
As the battery industry moves into its next phase of development, factors such as supply chain partnerships, manufacturing efficiency, and the rapid commercialization of innovations will be crucial for maintaining competitiveness. With continued technological progress and increasing production capacity, the market is poised for further transformation in the coming years. – By EuroWire News Desk.