Batteries: price drops and global expansion strengthen market competitiveness

The global battery market continues its rapid expansion, driven by falling prices and increasing production capacities, leading to heightened competition among major global producers.

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The battery industry is undergoing a major transformation, marked by rapid demand growth and a continuous decline in prices. In 2024, global battery demand reached a record with over 1 terawatt-hour (TWh) used for electric vehicle (EV) production. At the same time, battery pack prices fell below USD 100 per kilowatt-hour, a crucial threshold for competing with thermal vehicles on cost. This decline is largely driven by reduced raw material prices, particularly lithium, which has fallen by more than 85% since 2022.

In 2024, global battery production capacity reached 3 TWh, and announced projects could triple this capacity within five years. This rapid expansion highlights the entry of the battery industry into a new phase, where economies of scale, manufacturing efficiency, and speed of innovation adoption are becoming key factors for competitiveness.

china’s dominance in the global market

China remains the leading producer of batteries, accounting for over three-quarters of global production. In 2024, battery prices there fell more quickly than anywhere else, dropping by nearly 30%, allowing many Chinese electric vehicles to become more competitive compared to their thermal counterparts. Several factors explain this competitiveness: substantial expertise gained through concentrated production, full supply chain integration, and a cost-reduction policy through optimized manufacturing processes.

Chinese companies such as CATL and BYD have rapidly scaled up by streamlining production and benefiting from below-market prices for essential minerals. Their focus on lithium iron phosphate (LFP) battery technology, which is less expensive, has allowed China to capture nearly half of the global electric vehicle market, up from 15% five years ago. This battery chemistry, 30% cheaper than lithium nickel cobalt manganese (NCM) batteries, remains competitive in terms of electric vehicle range.

challenges for europe and the united states

Europe faces significant challenges in catching up to China. Production costs are about 50% higher than in China, and the supply chain remains fragile, with a heavy reliance on imports. The bankruptcy of Northvolt, one of Europe’s largest producers, highlights the difficulties of adopting viable large-scale production models. European companies, although active in LFP battery production, must intensify efforts to overcome this cost gap.

The U.S. industry has seen its battery production capacity double since 2022 thanks to federal tax incentives, reaching 200 GWh in 2024. However, the U.S. continues to rely on imports for certain key components, leaving its supply chain vulnerable to fluctuations in the global market. The growth of stationary battery applications, particularly in the energy sector, may offer an additional opportunity to diversify demand.

global expansion and new production hubs

Regions such as Southeast Asia and Morocco are also emerging as strategic centres for battery production. Indonesia, with its massive nickel reserves, has attracted significant investments to establish electric battery production plants. Likewise, Morocco, rich in phosphate, a key mineral for LFP batteries, benefits from partnerships with European and U.S. companies to develop its production sector.

Southeast Asia, backed by Chinese investments, could become a technological hub for batteries and their components, enabling rapid technology transfer. Investment initiatives, which reached over USD 15 billion in 2022, aim to reduce dependence on traditional markets and enhance the competitiveness of new installations.

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Alinta Energy has appointed GenusPlus Group to build the first phase of the Reeves Plains Energy Hub Battery, a high-capacity storage facility designed to support grid stability in South Australia.
A partnership between Indonesia Battery and Contemporary Amperex Technology aims to launch a lithium-ion battery plant in Indonesia by the end of 2026, with a 6.9 gigawatt-hour capacity and planned expansion.
State Grid Wuzhong Power Supply Company announces the completion of the energy storage compartment at Tongli substation, a key step for the upcoming integration of a 300 MW shared storage power plant in Ningxia.
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The Sino-Moroccan joint venture COBCO has begun manufacturing essential lithium-ion battery components at its Jorf Lasfar plant, targeting a final annual capacity of 70 GWh, enough to equip one million electric vehicles.
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Northvolt, recently placed under judicial administration, has received an indicative offer from a foreign investor to acquire its Swedish assets, signaling a potential imminent restart of its battery production units.
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The Dubai-based company obtains a USD72mn loan to add a 300MWh battery system to its 500MW solar plant in Kom Ombo, with commissioning expected in July 2025.
Asian developer Gurīn Energy selected Saft to supply a battery storage system exceeding 1 GWh in Fukushima, marking a new stage in Japan’s energy storage deployment.
Chinese lithium-ion battery manufacturer CBAK Energy confirmed a $11.6mn order for LFP cylindrical batteries to power the electric motorcycle fleet of a rapidly growing African group.
China’s 600MW/2400MWh project enters energisation phase following the installation of 240 battery containers, initiating initial maintenance of this ultra-high-voltage hybrid energy facility.
Wanhua Chemical has signed a strategic agreement with Serbian manufacturer ElevenEs to establish a localised supply chain for LFP battery materials, reinforcing their technical and industrial cooperation in the European market.
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