Market size research reports usually evoke a yawn from me. However, I like the methodology and rigor of Interact Analysis. It’s still a guess, but much data underlies the analysis from this group. Senior Analyst Maya Xiao recently took a look at the lithium ion batter market. You can read the entire report. Following are some highlights. I need to mention that battery manufacturing was also highlighted by Honeywell at its conference as it seeks to lead in new batter technology. Stay tuned in case there is a disruption.
The global Li-ion battery market is moving into surge mode. According to our newly released Li-ion battery database, global shipments in 2021 equated to 476.3 GWh, amounting to a 72.6% increase on 2020, and that wasn’t a blip. We’ve identified it as being part of a longer-term trend.
We’d expect that demand is driven by electric vehicles, but there are other demands for batteries.
Unsurprisingly, it’s the electric vehicle sector that is driving demand for Li-ion battery technology. In 2021, EV battery shipments accounted for 354.5 GWh, representing 74.4% of total battery shipments and a phenomenal year-on-year increase in EV battery shipments of 90.2%. But the increase of shipments in the same period to the energy storage sector (ESS) was even more marked – 113.3%. Accounting for 11.8% of total battery shipments, ESS is way behind the EV sector in terms of demand, but the huge 2021 increase is a clear pointer to sustained future growth. Meanwhile, consumer electronics (CE) battery shipments totalled 65.5 GWh, representing 13.8% of total shipments, a year-on-year increase of 6.3%.
This is where market analysis gets tricky—the famous 5-year projection demanded of these firms.
We estimate that global demand for li-ion batteries will rise to over 1.6TWh by 2026, representing a 5-year CAGR of 27.9%. The share of shipments to EV manufacturers will remain stable, standing at 75.9% of the total, but there’ll be growth in demand from the ESS sector, with shipments forecast to total 312.4 GWh, accounting for 19.2% of all battery shipments: a 5-year CAGR of 40.9%. CE battery shipments are expected to total 81.3 GWh over the 5-year period, with a CAGR of 4.4%.
What types of battery technology will prevail over the next few years?
The market share of different Li-ion battery technologies is changing. Back in 2018, lithium cobalt (LCO) and lithium iron phosphate (LFP) batteries accounted for over 50% of the global market. But LCO’s share has steadily declined over the past three years, in line with the decline in growth of the consumer electronics sector. Conversely, the demand for high quality nickel-cobalt-aluminium oxide (NCA)/ nickel-cobalt-manganese (NCM) batteries from the electric vehicle and industrial energy storage sectors has exceeded supply, which is why many battery makers announced plans to expand production capacity between 2018 and 2020. We forecast that the market shares of LFP batteries and NCM/NCA batteries will be evenly divided by 2026.