Understanding the fast-evolving battery market
Battery technologies are an essential catalyst to unlock growth and new advances in sectors such as electric vehicles (EVs), electronic devices and battery energy storage (BES) for renewable energy. The increasing reliance on battery storage is driving enormous demand – overall, battery applications are expected to become a $90 billion-plus market by 2025, up from $60 billion in 2015.
This is driving unprecedented growth in battery supply, from a wide range of existing – and new – players.
However, current technologies are not enough to unleash the full potential of applications such as power, renewable energy, consumer electronics, and mobility. Innovation is required to drive a step-change in performance and price for subsidy-free, mass-market adoption of products such as EVs. For example, Arthur D. Little estimates based on industry expert assessments, that to make EVs price-competitive with vehicles with internal combustion engines (ICEs) on an unsubsidized basis, EV battery packs need to fall to a cost of $100/kWh. Currently, lowest-cost estimates are in the range of $190–$250/kWh. The same is true for energy grids – for regions with high renewable penetration, such as Texas (where wind covers roughly 25 percent of demand), battery prices need to drop by 50 percent in order to switch back-up from gas-fired units to battery storage.