The electric vehicle’s (EV) race to the mainstream continues, with investor interest soaring, deliverables for major contracts coming due, and technology innovations and new product introductions by both established automakers and EV start-ups improving the affordability and performance of electric vehicles. Even as COVID-19 rocks the global automotive industry, EVs represent a bright spot.
Because hybrid and electric vehicles (HEVs) make use of high-value lithium-ion batteries, these trends will drive robust expansion in the global battery market, which is forecast to grow 8.1% per year to $156 billion in 2024, according to a new Freedonia Group analysis:
- Advances will be bolstered by rising sales of the wide variety of consumer products that are powered by batteries, including high-value power equipment and electronic devices like smartphones and tablets.
- Other trends – such as increasing use of battery storage in solar and wind energy systems – will also contribute to growth.
Rapid Expansion of Global HEV Industry to Drive Global Battery Market Growth Through 2024
While lead-acid batteries for conventional vehicles will continue to account for the majority of automotive battery demand, the HEV segment holds much greater growth potential. Through 2024, sales of batteries for HEVs are projected to more than double, accounting for 69% of automotive market growth. Advances will be fueled by particularly strong gains in full electric vehicles, which typically use higher priced batteries than hybrid electric variants, which have constituted the bulk of the HEV industry until very recently.
Battery firms participating in the HEV industry are investing heavily in technological innovations to capture share in this fast-growing market. In addition to seeking production efficiencies to reduce the cost of lithium-ion batteries, firms are exploring a variety of novel technologies. Shorter term opportunities exist for battery designs that minimize cobalt content, while solid-state batteries represent a potentially transformative innovation in the longer term.
Rising Sales of Battery-Powered Consumer Products Will Supplement Growth
Battery power is gaining in popularity as an alternative to gas and plug-in electric power in a variety of consumer applications. The most notable of these are power tools and power lawn and garden equipment, where battery-powered variants are increasingly popular in both basic products for household use and higher end items intended for professional users. Battery sales are also expected to advance rapidly in a number of emerging product categories, such as drones and smart wearables.
Among batteries used in consumer product applications, lithium products are expected to post the fastest growth, as the superior performance of these batteries will allow them to gain market share in high-income markets like the US and Western Europe. However, alkaline batteries will remain the most widely used primary battery type, as these products offer sufficient performance for most consumer needs.
Energy Storage Market Holds Long-Term Growth Potential
Battery-based energy storage systems are increasingly key to the development of global renewable energy systems, particularly solar and wind. Energy storage batteries find significant use in residential and distributed energy systems and are increasingly being commercialized for grid-scale energy storage. While the grid storage battery market remains fairly small, sales are expected to advance rapidly as this technology takes hold and renewable energy generation expands:
- Grid-scale energy storage holds particularly healthy prospects. This emerging battery market segment – which only began to be commercialized at a large scale in 2014 – is expected to see extremely rapid growth, albeit from a small base.
- Rising use of solar and wind power will create an increased need for grid storage systems to manage energy load.
- Demand for smaller-scale energy storage solutions will also expand as residential solar installations become more common.
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About the Author:
Peter Kusnic is a Content Writer with The Freedonia Group, where he researches and writes studies focused on an array of industries.