Automotive Lithium Ion Battery Market Volume Forecast and Value Chain Analysis 2025

Lithium based batteries are advanced batteries used in Electric Vehicles (EVs) and in many other sectors such as portable consumer electronics. However, they were not initially used in Hybrid Electric Vehicles (HEVs) owing to the substantial cost associated with them and the availability of nickel based counterparts in the market. After 2005, with the decline in the prices of lithium batteries, automotive manufacturers have started using lithium batteries in hybrid vehicles, increasing its market size dramatically. The four materials used in lithium ion batteries are anode materials, cathode materials, electrolytic solution, and separators.

Automotive lithium ion battery has emerged as an eco-friendly, rechargeable power source as compared to conventional batteries such as lead acid and nickel metal hydride batteries. With the implementation of stringent fuel efficiency norms in countries such as the U.S., India, Germany and Japan, manufacturers are trying to reduce the cost of lithium ion battery, which in turn, increases the demand for electric vehicles.

Numerous Governments are providing incentives/ tax credits to promote the use of electric vehicles, which is expected to increase the demand for automotive lithium ion battery. For instance, the IRS (Internal Revenue Service) tax credit is of US$ 2,500 to $7,500 per new electric vehicle purchased for use in the United States. Similarly, countries such as California provides US$ 2,500 rebate, Delaware provides US$ 1,000 rebate and Colorado provides US$ 5,000 tax credit on the purchase of electric vehicles.

Increase in electric vehicle production and sales coupled with rising efforts to reduce carbon emissions and toxicity level are expected to spur the demand for automotive lithium ion battery over the forecast period. Moreover, the tax exemptions announced by government bodies on EVs powered by lithium ion batteries are expected to drive the demand for automotive lithium ion battery. Additionally, governments are providing incentives and subsidies for the installation and production of lithium ion batteries, which are expected to bolster the market growth. Also, in the automotive sector, growing shift towards sustainable clean fuels is the key factor driving the lithium ion battery market.

However, lack of infrastructure to charge electric vehicle in many countries will restrain the automotive lithium ion battery market. The concern on safety associated with the use of lithium ion battery also hinders the growth of automotive lithium ion battery market.

Owing to the increase in R&D activities and rise in financial incentives from the government, many countries are taking effort to lower the dependency on petroleum products such as petrol and diesel for transportation. Therefore, the global automotive lithium ion battery is projected to witness significant growth over the forecast period. In the past years, China has registered a growth in demand for electric vehicles by 300 percentage.

The electric car market is quite small, but the auto manufacturers are increasing their production. However, some markets have targeted vast rise in ownership, notably China that predicts there will be over six million cars with automotive lithium ion battery on road by 2020.

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Yogesh Sengar

Yogesh Sengar is an experienced digital marketing professional. He tracks the latest trends and happenings in the digital marketing landscape, also offering his opinion on their impact on businesses. He has experience in both B2C and B2B markets. His hobbies include reading books and travelling.