Study "Battery Monitor 2024/2025": Global battery market continues to grow strongly despite uncertainties and offers opportunities for European manufacturers

Currently, technologically leading producers from Asia dominate the market - especially from China, where significant overcapacities are causing prices to fall worldwide. This puts additional pressure on European manufacturers, who are already struggling with higher production costs and uncertainties regarding the further ramp-up of electromobility.

Nevertheless, Europe has the potential to become an important player in battery manufacturing, with competitive advantages in innovations, high-quality process technologies, and the ecological footprint of batteries. To catch up with Asian market leaders, Western manufacturers must work towards cost-effective mass production, conduct extensive research, and collaborate closely, including with Asian players.

These and other findings are provided by the "Battery Monitor 2024/2025," for which Roland Berger and the Chair Production Engineering of E-Mobility Components (PEM) at RWTH Aachen analyzed the development of the market, technologies, and innovations in the global battery industry.

"In 2024, volatility in the battery cell market has increased significantly," says Wolfgang Bernhart, partner at Roland Berger. "This is mainly due to uncertainties regarding demand, because the number of sold e-cars is rising more slowly than expected and it is uncertain in both the USA and the EU how things will proceed from a regulatory perspective. This not only complicates manufacturers' planning but also makes our forecasts more complicated."

Three Forecasts

The authors of the study have thus created three forecasts for the development of demand: In a positive scenario, based on the targets of the automotive manufacturers and assuming rapid progress in electrification, the demand for batteries rises to a capacity of 4.6 terawatt-hours (TWh) by 2030 - 0.3 TWh less than forecast in last year's "Battery Monitor" - and to 8.8 TWh by 2040.

In a basic scenario, where emission targets in the EU and the USA are met despite a temporary decline in electric car sales, demand stands at 4.3 TWh in 2030 and 8.6 TWh in 2040. In the worst-case scenario, a negative scenario with significant delays, such as a postponement of the "combustion engine ban" in the EU, demand would be 4.0 TWh in 2030 and 8.1 TWh in 2040.

EU Manufacturers Want to Massively Reduce the Carbon Footprint of Batteries

Since China is currently producing significantly more batteries than its domestic market demands, the surpluses are being exported.

"This leads to falling prices worldwide, which, however, cannot remain so low permanently, as some of the suppliers and producers in China are already no longer operating profitably," says Bernhart.

Nevertheless, the price decline puts pressure especially on European manufacturers, who are working on building their own capacities and could theoretically cover more than the European demand.

Bernhart therefore assumes that not all announced projects will actually be realized: "Currently, companies outside of China are recording significant losses. They made advances, but order volumes were then partially drastically reduced, resulting in overcapacities and underutilization both in the EU and in the USA. Therefore, the affected companies are now acting extremely cautiously in their investment planning, which in turn carries the risk of undersupply - additionally driven by delays and problems in industrialization as well as lack of economic competitiveness."

Sustainability in Focus

European battery manufacturers are primarily focusing on sustainability to distinguish themselves from their Chinese and American competitors. They have set the goal of reducing emissions in the production of battery cells to 30 to 40 kilograms of CO₂ per kilowatt-hour; this corresponds to about a third to half of the current CO₂ footprint of battery cells.

The authors of the study consider this realistic, primarily through the optimization of raw material procurement, but also through innovations such as dry coating or laser drying, which reduce the energy requirements of important production processes.

"Even though cost reduction currently takes priority, a smaller carbon footprint of the batteries could become a competitive advantage for Europeans," says Professor Achim Kampker, head of the RWTH Chair PEM. "Especially since it is unlikely that European and also North American companies with the same products and technologies will ever catch up to the Chinese lead in cost structures and access to raw materials."