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This report includes data from 2011-2031 in 5 year intervals and tables featuring year-by-year data for 2018-2025.
This Freedonia industry study analyzes the $53 billion automotive battery industry. It presents historical demand data (2011, 2016, and 2021) and forecasts (2026 and 2031) by product (lead-acid, lithium-ion, nickel-based, other automotive batteries), engine type (internal combustion engine, hybrid and electric), application (OEM, aftermarket), and region (North America, Central and South America, Western Europe, Eastern Europe, Asia/Pacific, Africa/Mideast). The study discusses the impact of the COVID-19 pandemic. The study also evaluates company market share and competitive analysis on industry competitors including CATL, Clarios, GS Yuasa, LG Energy Solution, and Panasonic.
Global demand for automotive batteries is forecast to increase 16% per year to $112 billion in 2026. Growth will be driven by the proliferation of hybrid and electric vehicles and a rebound in motor vehicle production from a low 2021 level.
HEVs to Rapidly Gain Market Share Worldwide
Hybrid and electric vehicles are expected to account for an increased share of global vehicle output in 2026, with electric vehicles becoming more common. Such vehicles tend to use very high-value batteries, so the segment’s expansion will boost the automotive market. The fastest growth in HEV adoption is expected in Europe, with rapid gains in EU countries in both Western and Eastern Europe. The EU has set an organization-wide target for ending sales of new ICE cars by 2035; motor vehicle industries in the region are expected to rapidly shift their output to making EVs as that target approaches. Strong growth in HEV market share is also expected in the US and other high-income nations worldwide.
Resolution of Supply Chain Issues Provides Opportunities
Global automotive output fell sharply in 2020 due to the onset of the COVID-19 pandemic, and it remained low in 2021 and 2022 because of associated supply chain issues. A shortage of semiconductors has made it difficult for automakers to step up production despite recovering demand. Consequently, significant pent-up demand for new motor vehicles will support strong output gains beginning in 2023.
The development of the HEV market helped to sustain automotive battery sales even during this downturn, as automakers tended to prioritized HEVs and other high-value models during the supply constrained period. As a result, demand for batteries used in HEVs fared well in 2020 and 2021. However, this leaves substantial room for growth in ICE vehicle battery sales coming out of this period, even as these vehicles lose market share.
Rapid Growth Fueling Investment in Alternative Chemistries
The massive growth expected in lithium-ion battery demand going forward is driving battery makers to support development of alternative battery chemistries. The largest trend in the short term is the growing use of LFP batteries, a variety of lithium-ion batteries that have typically been considered inferior performers compared to the ternary lithium batteries more commonly used in EVs. LFP batteries have the advantage of requiring neither cobalt nor nickel, as both materials pose supply risks. These batteries are already widely used in lower-end EVs in China, and Tesla has started incorporating them into its vehicles; this signals that the performance disadvantages of such batteries may be manageable for them to find broader use.
A less-developed alternative technology is sodium-ion batteries, which are attractive because they are inexpensive and avoid the lithium supply chain altogether. China’s CATL unveiled sodium-ion batteries for EVs in 2021; commercial-scale production is slated to begin in 2023. While these products are also perceived as inferior performers compared to ternary lithium batteries, if those disadvantages can be managed then the lower cost of sodium-ion could lead to them taking significant market share.
Historical Market Trends
Key factors impacting annual automotive battery demand include:
motor vehicle manufacturing activity
consumer spending levels
the types of motor vehicles being produced
Motor vehicle manufacturing has historically shown high levels of year-to-year volatility, resulting in similarly high volatility for the batteries used in these vehicles. Demand in the aftermarket tends to be comparatively steady. While consumer spending levels do impact the ability of vehicle owners to operate and repair their vehicles, vehicle owners tend to routinely replace batteries on an as-needed basis.
As the market for hybrid and electric vehicles has developed, this segment has had an increasingly large impact on automotive battery demand. These vehicles – especially EVs – tend to use very expensive batteries compared to those used in conventional vehicles, and growth in HEV usage is an important driver of expansion in the automotive battery market.
Demand by Region
Global demand for automotive batteries is forecast to increase 16% per year to $112 billion in 2026. Growth will be driven by the proliferation of HEVs – particularly electric vehicles – which will fuel rising demand for high-value battery types.
Sales gains will be fastest in Western Europe, which is projected to increase from 19% of the global market in 2021 to 26% in 2026. Many countries throughout the region have adopted ambitious targets for ending the sale of new ICE cars, and automakers are expected to rapidly modify existing capacity to produce electric vehicles. The promulgation of EU-wide standards will, likewise, lead to rapid growth in many East European countries.
The Asia/Pacific region will post strong growth and continue to account for the largest share of demand. China is expected to achieve massive gains in the HEV market, while expansion of this segment will also allow for demand gains in the otherwise-mature Japanese and South Korea markets.
The North American market will advance rapidly, with very high motor vehicle ownership rates in the region contributing to ongoing replacement demand. Sales gains in Central and South America and the Africa/Mideast region will be largely attributable to growth in motor vehicle ownership, as HEV penetration will lag and automotive OEM industries in these regions will remain limited.