Battery is the fifth-largest segment within the electrical equipment market accounting for 6% of the total market share. The other segments are lighting equipment, power generation, transmission & control equipment, household appliances, and wires and cables.
The global battery market experienced a notable growth of 12% from 2021 to 2022, following a period of stability between 2019 and 2021. As reported by The Business Research Company, the market value reached USD 93.7 billion in 2022. This growth trend is evident from the market's progression from USD 64.44 billion in 2017 to USD 93.7 billion in 2022, representing a compound annual growth rate (CAGR) of 7.79%.
The upward trajectory in battery material costs, which began in 2021, was further impacted by geopolitical events such as Russia's invasion of Ukraine in February 2022. This led to a significant price increase in battery cells; LFP cells rose by almost 30% and NMC811 cell costs by 40% between January 2021 and January 2022. Although there was a price reduction towards the end of 2022, the costs stabilized at levels still higher than those in 2021.
Looking ahead, the global battery market is projected to continue its growth trajectory, with expectations to reach USD 153.9 billion by 2027. This growth is forecasted at a CAGR of 10.42%, indicating a market that is both growing stronger and expanding in scope.
The Market for Primary and Secondary Batteries
The global battery market can be broadly categorized into two segments: primary and secondary batteries.
Primary batteries are single-use, designed for devices requiring low current, such as flashlights and watches. These batteries generate electricity through chemical reactions between their terminals and electrolytes. Despite their widespread use in portable devices, primary batteries hold a smaller portion of the market.
Contrastingly, the secondary battery segment, encompassing rechargeable batteries, commands a dominant market presence. Predominantly utilized in automotive, household, and industrial applications, secondary batteries accounted for about 85% of the market, valued at approximately USD 79.6 billion in 2022. Projected to grow at a CAGR of 11.59% from 2022 to 2027, this segment reflects the increasing demand for rechargeable energy solutions.
On the other hand, the primary battery market, though smaller, maintains a significant presence. With a 15% market share and a value of USD 14.15 billion, this segment is anticipated to experience growth, albeit at a more moderate pace, with a projected CAGR of 2.70% during the same period.
Global Battery Market Segmented by Types
The Business Research Company's data did not delve into the technological segmentation of battery types. To gain insights into this aspect, we turn to Inkwood Research, which offers a comprehensive analysis of the battery market from a technological standpoint. Their research presents a broader market outlook, valuing the global battery sector at USD 123.3 billion in 2022. Looking forward, they project an expansion to USD 424 billion by 2030, growing at a robust CAGR of 16.68% during this period.
Inkwood Research's analysis divides the battery market into ten distinct segments, with lithium-ion batteries dominating in 2022. Holding half of the market share, this segment is not only the largest but also the fastest-growing, expected to accelerate at a 19.5% CAGR. Lithium-ion batteries' eco-friendliness has been a key factor in their increased usage in electric vehicles and grid storage. Additionally, their demand is expected to be bolstered by the manufacturing, railway, and solar power sectors, driven by the growing need for energy storage and power backup solutions.
The lead-acid battery segment is the second largest in the market. In 2022, it controlled approximately 37% of the market and is projected to grow at a 13% CAGR. The reliability and affordability of lead-acid batteries make them a preferred choice for a wide range of consumer and industrial applications.
Two other significant segments in the battery market are the zinc-manganese dioxide batteries, capturing about 4.5% of the total market share, and the nickel-metal hydride (NiMH) batteries, accounting for around 3% of the market. These segments, while smaller, play a crucial role in the diverse landscape of battery technologies.
A Closer Look at the Lithium-ion Battery Market
Lithium-ion batteries are part of our daily lives, commonly found on consumer electronics such as laptops, tablets, or mobile phones. A lithium-ion battery is a rechargeable battery that uses lithium ions as the main component of electrochemistry. This type of battery is popular for being lightweight and compact. It needs minimal maintenance and stands up well to repeated charging. Small lithium-ion batteries are widely used in portable electronic devices such as watches or mobile phones, while large ones have been developed to power electric vehicles.
As previously written, Inkwood Research estimates that lithium-ion batteries account for 50% of the total battery market, with a revenue of around USD 61.8 billion in 2021. MarketsandMarkets valued the global lithium-ion battery market at USD 46.1 billion in 2022 and forecasted the market to grow to USD 73.3 billion by 2026, at a CAGR of 12.3%. A report from Next Move Strategy Consulting offered another forecast where the market was valued at USD 33.2 billion in 2022 and projected to reach USD 107 billion by 2030, registering a 15.4% CAGR.
The relentless growth in electric vehicle (EV) sales has significantly spurred the demand for lithium-ion batteries, a trend that is becoming increasingly pronounced each year as the world relies more on battery power. The rising popularity of EVs is evident in their market share, which exceeded 10% of global vehicle sales in 2022. Projections suggest that EVs are on track to constitute 30% of vehicle sales by the end of this decade. This surge in EV adoption directly translates into a sustained and robust demand for lithium batteries.
Data from the International Energy Agency (IEA) shows demand for automotive lithium-ion (Li-ion) batteries surged by approximately 65% in 2022, reaching 550 GWh, up from about 330 GWh in 2021. This significant increase is primarily attributed to the escalating sales of electric passenger cars, with new registrations climbing by 55% in 2022 compared to the previous year. Demand for lithium batteries is likely to remain strong, due to the current lack of viable lithium-ion substitutes and the long lead times of new lithium mining projects.
The IEA also indicates that the escalating demand for lithium-ion batteries is driving up the need for critical raw materials. In 2022, the demand for lithium continued to exceed its supply, a trend consistent with 2021, despite a 180% increase in lithium production since 2017. The consumption patterns for these materials have shifted dramatically in favor of EV batteries: in 2022, around 60% of lithium, 30% of cobalt, and 10% of nickel demand were attributable to EV batteries, a stark contrast to the figures in 2017, where these proportions were only about 15%, 10%, and 2%, respectively.
Battery Production Capacity is Highest in Asia
Roland Berger's research indicates three Asian companies controlled over 70% of the global battery sales. Specifically for lithium-ion batteries, IEA data shows China was a major producer, manufacturing 1.2 TWh in 2022 while Europe and the US reached capacities of only 0.13 TWh and 0.11 TWh, respectively, in the same year. China's dominance in this sector is expected to remain strong through 2030, although its share is predicted to decrease slightly from 76% to 68% of total global production capacity. Conversely, Europe and the US are poised to capture a larger market share, with Europe's production expected to rise to 0.77 TWh (accounting for 11% of the global share) and US production increasing to 1.03 TWh (representing 15% of the global share).
Roland Berger also emphasizes the crucial role played by the amount of money invested in establishing battery cell production facilities, citing other studies that demonstrate how the cost of production equipment significantly impacts overall expenses, particularly in smaller-scale operations. Asian manufacturers, particularly, are looking for suppliers that provide all-in-one solutions, mainly because of the large scale of their operations. Another study from PEM of RWTH Aachen University highlights that Asian manufacturers invest half as much in their facilities as their European counterparts but continue to lead in offering affordable production equipment and all-in-one solutions for battery cell manufacturing.
American cell producers are shown to invest approximately €99.6 million per GWh/year. European producers invest slightly more, at €105.9 million per GWh/year, reflecting their commitment to scaling up production capabilities. In contrast, Asian cell producers invest significantly less, at €55.1 million per GWh/year.
Top Companies in the Global Battery Market
The market for batteries is highly fragmented, with the top ten biggest companies having a grip on more than 50% of the market. These companies are also involved in the usage and distribution of batteries. CATL, Samsung SDI, LG Chem, BYD, Panasonic, CALB, EVE, and SK On are some companies that made it to the major player list in the market.