The global lithium-ion battery market size is expected to reach around USD 417.50 billion by 2034, valued from USD 65.33 billion in 2024 and is expanding at a CAGR of 20.38% from 2025 to 2034.
The automotive sector is expected to experience significant growth driven by the decreasing cost of lithium-ion batteries. Global electric vehicle (EV) registrations are projected to rise substantially in the coming years. In 2023, the U.S. emerged as the largest market for EVs in North America. This surge in EV sales is attributed to favorable federal policies and the presence of numerous key players in the U.S. market. Policies such as the American Recovery and Reinvestment Act of 2009, which introduced tax credits for EV purchases, have played a crucial role in this growth.
New Corporate Average Fuel Economy (CAFE) standards, which set fuel efficiency benchmarks for passenger cars and light commercial vehicles (LCVs), have also spurred the adoption of electric drive technologies. Increasing demand for EVs, fueled by rising consumer awareness of carbon emissions, is expected to further boost market growth. Additionally, a decline in the demand for lead-acid batteries, due to EPA regulations concerning lead contamination and environmental hazards, has contributed to the rise in lithium-ion battery adoption in vehicles. Mexico, a global automotive manufacturing hub, continues to attract investment from international companies, and its position as the fourth-largest automotive exporter (after Germany, Japan, and South Korea) is expected to further drive demand for lithium-ion batteries.
However, the COVID-19 pandemic has presented challenges to market growth, such as cost-cutting by end-users, disruption in the availability of spare parts, and logistics issues. In response, battery providers have implemented measures to ensure continued service to long-term customers, including the use of digital tools and adherence to social distancing and safety protocols during on-site inspections and repairs.
Key Takeaways
- The Asia-Pacific has accounted revenue share of 49% in 2024.
- The North America has held revenue share of 26% in 2024.
- By product, the lithium cobalt oxide (LCO) segment has captured revenue share of around 31% in 2024.
- By application, the consumer electronics segment has generated revenue share of 32% in 2024.
- By capacity, the 3,001 MAH-10,000 MAH segment was highest revenue holder in 2024.
- By voltage, the MEDIUM (12V-36V) segment highest revenue holder in 2024.
Driver: Increased Adoption of Battery-Powered Material Handling Equipment
The growing automation of industries has led to advancements in material handling equipment to meet the evolving demands of various sectors. Many of these advancements require battery-powered solutions, such as automated guided vehicles (AGVs), elevating equipment, industrial trucks, and intralogistics systems. Lithium-ion batteries are increasingly being adopted in material-handling equipment, including forklifts, robots, and ground support equipment, due to their consistent power output, even as the battery charge diminishes, unlike lead-acid batteries, where reduced charge negatively affects speed and lifting capacity.
Restraints: Issues Surrounding the Disposal of Spent Batteries
The accumulation of spent lithium-ion batteries from electric vehicles, smartphones, laptops, and other devices is a growing concern, as cost-effective recycling solutions are still lacking. Since spent batteries retain residual charge, they pose a risk of unintentional discharge, which could potentially harm people and property. Proper storage and labeling are crucial to mitigate these risks. For example, large automotive lithium-ion batteries, if mislabeled, could be mistaken for lead-acid batteries, which could lead to safety hazards. Incorrect sorting of spent batteries may also pose significant risks.
Opportunity: Global Integration of Renewable Energy into Power Grids
The global shift towards renewable energy is gaining momentum, driven by concerns about climate change, energy security, and technological advancements. More countries are implementing aggressive policies and setting ambitious targets to increase their reliance on renewable energy sources such as solar, wind, hydro, and geothermal. India, for instance, has made substantial strides in expanding its renewable energy capacity, setting a target to reach 500 GW of installed renewable energy capacity. The country has already achieved over 175 GW, spurred by favorable policies and incentives, leading to a significant increase in solar and wind power generation.
Challenge: Aging and Degradation of Lithium-Ion Batteries
The performance of lithium-ion batteries inevitably degrades over time, due to a variety of chemical and physical processes. While recent advancements in battery technology have improved their longevity, lithium-ion batteries still face challenges related to aging. Over time, the batteries lose their energy storage capacity as a result of factors such as charging cycles, dendrite formation, lithium plating, and thermal stress. This aging process is particularly problematic for electric vehicles, where diminished battery performance can lead to reduced driving range and efficiency.
Asia Pacific accounted for over 47% of the global lithium-ion battery market share in 2023. The European market is expected to grow steadily due to the increasing use of lithium-ion batteries in sectors such as medical, aerospace, automotive, energy storage, and telecommunications. Germany, a leader in energy storage systems and renewable energy development, is expected to see continued demand for lithium-ion batteries, driven by their use in EVs and consumer electronics.
In the Asia Pacific region, countries like India and China are contributing significantly to the demand for lithium-ion batteries, driven by the rapid growth of the electric vehicle market and increasing environmental concerns. In China, a ban on fossil fuel-powered scooters in major cities to reduce emissions has led to a rise in the sales of electric scooters.
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