Battery Market Trends

Growth Drivers

• Rapid electrification of transportation: The ever-increasing adoption of electric vehicles across passenger, commercial has been the strongest catalyst for the battery market. Also, the government incentives, coupled with OEM commitments to phase out internal combustion engines, continue to expand EV production volumes. In December 2024, Stellantis reported that with Zeta Energy have entered a joint development agreement to advance lithium-sulfur battery technology for future electric vehicles, targeting lighter packs with comparable energy output to lithium-ion systems and the potential for 50% faster charging. It also stated that the partnership aims to cut battery costs to less than half of today’s levels while using sulfur-based materials that eliminate reliance on cobalt, nickel, manganese, and graphite, significantly improving supply-chain resilience.
• Expansion of renewable energy: This, coupled with grid modernization, is providing encouraging opportunities for pioneers in the battery market. The shift toward solar and wind power requires large-scale stationary battery storage to stabilize grids, support peak-load management, and ensure round-the-clock renewable availability. Therefore, utilities and grid operators are increasingly investing in battery-based energy storage systems to reduce curtailment.  In this regard, IBEF in August 2025 reported that India is accelerating renewable energy expansion, which is creating strong downstream demand in the battery sector due to higher solar and wind integration and the growing need for grid-scale storage to stabilize variable generation, thereby positively impacting market growth.
• Increasing public and private sector investments: In November 2022, the U.S. Department of Energy announced a major investment to accelerate lithium production in the U.S. by funding advanced research into extracting battery-grade lithium from geothermal brines, particularly from California’s Salton Sea region. It also stated that this USD 12 million initiative aims to strengthen the nation’s supply chain for lithium batteries, which are extensively utilized in EVs, consumer electronics, and grid-scale storage by reducing dependence on foreign sources. Furthermore, through continued support from AMMTO, the Geothermal Technologies Office, and critical materials programs under the Bipartisan Infrastructure Law, DOE is positioning geothermal brine extraction as both a viable lithium source and a catalyst for expanding clean-energy manufacturing, hence suitable for overall battery market growth.

Challenges

• Raw material supply: The constraints associated with raw material supply are the major obstacle hindering growth in the worldwide battery market.  Securing access to critical raw materials such as lithium, cobalt, nickel, and graphite is a persistent challenge that has become a major burden in the sector. On the other hand, mining and refining these materials are highly concentrated in specific regions, making the supply chain vulnerable to geopolitical tensions, trade restrictions, as well as environmental regulations. Also, the existence of fluctuating commodity prices and export controls is exacerbating the risks for manufacturers who are relying on imports. Furthermore, limited domestic production capacity in most countries is compelling reliance on foreign suppliers, thereby increasing both logistical complexity and expenses.
• Manufacturing and production bottlenecks: This is also a considerable challenge in the battery market since to meet the surging the operational challenges arise wherein manufacturers need to efficiently scale the entire process. Also, advanced battery cell production requires high precision, specialized equipment, and stringent quality control, which limits the speed at which new capacity can be deployed. On the other hand, assembly lines are extremely capital-intensive, and establishing new gigafactories demands extensive lead times, skilled work professionals, and reliable energy inputs. Therefore, bottlenecks in electrode coating, cell formation, and testing stages can delay overall output.  Furthermore, recycling and second-life battery integration are still in early stages, thereby limiting raw material recovery, marking a critical obstacle for industry growth.