Global battery market forecast to grow 186% by 2025

Over the last year, North America has become the fastest growing region for planned battery cell manufacturing capacity. Much of the growth is buoyed by federal incentives of the U.S. Inflation Reduction Act, according to an industry report by Clean Energy Associates (CEA).

CEA’s Energy Storage System (ESS) Supplier Market Intelligence Program (SMIP) offers a biannual market report about the leading global lithium-ion battery cell manufacturers and energy storage system integrators.

As the U.S. ramps up to become a major battery cell supplier in at least two more years, China remains the largest global supplier of lithium-ion batteries at year end 2022. CEA forecasts a two-year 186% growth rate on the 1,706 GWh of batteries produced in 2022.

Contemporary Amparex Technology Co. Ltd. (CATL) was the largest Tier 1 battery cell supplier in 2022, with its 387 GWh of batteries supplied representing the largest portion (30%) of the 75% market share held by Tier 1 suppliers. Following CATL were LG Energy Solution (198 GWh) and BYD (149 GWh) among major Tier 1 suppliers.

Tier 1 companies produced 1,270 GWh of 1,706 GWh of lithium batteries last year. Tier 1 is a designation for companies that supply more than one multinational original equipment manufacturer (OEM) or EV producer outside of China, with capacity of greater than 10 GWh per year. Tier 2 suppliers are not yet qualified to supply multinational automotive OEMs or EV companies, while Tier 3 suppliers are not yet qualified to supply EV end markets and annual capacity is less than 1 GWh per year.

CEA notes that industry fragmentation between the different tiers is expected to increase in the coming years due to global expansion of the Energy Storage systems market, as specialized companies emerge among the stationary storage market, such as Pylontech (7 GWh) and Hithium (15 GWh), the only two suppliers to appear on CEA’s top suppliers chart that focus exclusively on the storage market.

Future onshored North America battery supply is being driven by multi-year financial incentives for domestic content under the Inflation Reduction Award and Department of Energy-led grant funding under the Bipartisan Infrastructure Law of 2021 for sourcing advanced materials for battery production in the U.S.

Recent planned battery cell capacity in the U.S. driven by the IRA include:

• American Battery Factory (ABF)- Founded by Lion Energy, will build a network of lithium iron phosphate (LFP) battery factories in the U.S., starting with its first facility in Tucson, Ariz. The company plans to build battery cells for both EV and energy storage applications.
• Amprius Technologies– California-based company will build a 5 GWh factory in phases in Colorado. The first phase, at 0.5 GWh capacity, is expected to be online by 2025.
• CATL-Ford Motor– The tie-up between the U.S. automaker and the largest global lithium-ion battery supplier is being set up with a 35 GWh cell production facility in Marshall, Mich.
• FREYR Battery– The Norwegian listed battery developer will parallel develop its Giga America and Giga Arctic production facilities to gain IRA incentives. Tax credits would allow FREYR to receive $37 million per GWh of capacity installed in the U.S.

CEA’s Supplier Market Intelligence Program recognizes ten battery systems integrators of lithium-ion batteries used in the utility-scale storage market. Evaluating the integration of battery cells, modules, racking, enclosures, inverters, battery management and energy management systems to engineering and construction functions, CEA found that Tesla is the only company that is currently developing a battery cell supply chain for the utility storage market.

CEA, an Intertek company, is a market intelligence company that provides product consulting support to buyers and long-term owners of solar and energy storage equipment. The company has consulted for project developers, power producers, engineering groups and investors, executing on more than 160 GW of solar and 15 GWh of storage projects to date.

An executive overview of CEA’s Energy Storage System Supplier Market Intelligence Program report is available for download.