According to Wood Mackenzie, a global research and consultancy firm, the cumulative lithium-ion battery capacity is likely to rise over five-fold to 5,500 GWh between 2021 and 2030, keeping in count the various pipeline capacities announced to meet the rising demand for batteries.

The lithium-ion battery market encountered shortages last year due to the growing EV market demand and the rising raw material prices. As per Wood Mackenzie’s base case scenario projection, the battery supply would not meet the demand until 2023.

Global battery manufacturers are implementing expansion plans to meet this market demand, pushing the total capacity to more than 5,500 GWh by 2030 across 300 manufacturing hubs.

Wood Mackenzie consultant Jiayue Zheng said, “The electric vehicle (EV) market accounts for almost 80% of lithium-ion battery demand. High oil prices are supporting more markets to roll out zero-emission transportation policies, causing demand for lithium-ion batteries to skyrocket and exceed 3,000 GWh by 2030.”

Led by China, the Asia Pacific Region (APAC) accounted for 90% of the battery manufacturing worldwide in 2021. The research firm estimates that North American cell capacity could expand tenfold by 2030, while Europe would account for over 20% of the global capacity through more rapid expansion. By the end of this decade, APAC is expected to reduce its share to just 69%.

Chinese manufacturers have already announced plans to build over 3,000 GWh capacity. The top 15 lithium-ion battery manufacturers commissioned 200 GWh in 2021, taking the cumulative capacity to 600 GWh. Contemporary Amperex Technology (CATL) led the expansion with outstanding operating and planned capacity of 800GWh by 2030.

According to Wood Mackenzie, Chinese battery makers like SVOLT, CALB, and Gotion Hi-Tech have also set ambitious capacity targets for 2025, and 2022 will likely witness many more new plant announcements.

Also, given its availability and maturity, nickel-cobalt-manganese (NCM) batteries were primarily deployed until recently. But now, lithium iron phosphate (LFP) batteries have dominated NCM in market share. The competitive cost, long lifecycle, and safety performance have made the LFP batteries a better fit for power and energy applications. Wood Mackenzie claims that the LFP market share will surpass NCM by 2028.

In India, the annual battery market is expected to surpass $15 billion, and the battery demand is expected to rise to 260 GWh by 2030, as per a recently published report by NITI Aayog.

As move towards the Lithium Iron Phosphate batteries, Reliance New Energy (RNEL) recently acquired all the assets of an LFP battery provider, Lithium Werks, for $61 million, including funding for future growth substantially.