Battery Manufacturing Outlook and Trends

Recent years have seen a strong expansion of global battery manufacturing capacity in anticipation of sharp increases in demand from both the electric vehicle and stationary energy storage markets, as well as countries' efforts to establish domestic supply chains. However, this strong build-out has largely exceeded the pace of demand increase, and numerous markets are now grappling with overcapacity. Despite industry headwinds, GlobalData forecasts that both battery electric vehicles (BEVs) and Battery Energy Storage Systems (BESS) will still present major demand drivers for battery manufacturing, with strong growth rates forecast over the next five years.

China remains the largest source of battery manufacturing capacity globally, with a strong suite of domestic manufacturers, including monoliths in the form of EV cell suppliers CATL and BYD. Despite rising domestic competition in China's battery market forcing firms to reduce pack prices, China also remains the biggest contributor to Li-ion battery plants that are currently under construction, a project pipeline that represents over $275B in spending. Although the prices of core minerals such as lithium have fallen sharply from their 2022 peak, a future price increase could accelerate industry consolidation in China's crowded battery market.

The US is the second largest contributor to pipeline Li-ion battery plants, with a strong increase in project activity taking place in response to clean manufacturing incentives set out under the Inflation Reduction Act, such as the 45X Manufacturing Credit. However, an end to federal clean vehicle tax credits and amendments to the 45X have spurred a wave of battery plant cancellations in 2025 and are expected to continue to dampen battery plant construction activity moving into 2026.

Key Highlights

• Recent years have seen a strong increase in capacity across all phases of the battery production value chain in response to the expected increase in demand from both electric vehicles and stationary energy storage systems.
• For example, GlobalData's recent Critical Mineral report identified a strong increase in the mined production capacity of battery metals, with lithium production increasing by 34% between 2020 and 2024.
• In the mid and downstream portion of the value chain, which refers to the production of battery cells and the assembly of modules and battery packs, there has also been an increase in new project activity.
• According to GlobalData's construction project tracker, there are over 700 lithium-ion battery plants currently in active pipeline. This pipeline of construction projects amounts to almost $700B in project spending.

Scope

• Overview of battery manufacturing plant construction activity, as well as demand trends from the stationary energy storage and electric vehicle sectors.

Reasons to Buy

• Understand the prevailing trends across battery manufacturing plants, including identifying key growth markets.
• Gain an understanding of key demand trends across both the stationary energy storage and electric vehicle sector.
• Stay informed about the latest shifts in battery innovation.