Electric Vehicle Battery Market Size to Hit USD 566 Bn by 2035 | 21.1% CAGR Growth Forecast | Analysis Report by TMR

EV batteries serve two primary functions: powering the vehicle and storing electricity recovered through regenerative braking.

WILMINGTON, DE, UNITED STATES, September 22, 2025 /EINPresswire.com/ -- The global electric vehicle (EV) battery market, valued at USD 74.6 Bn in 2024, is set for rapid expansion and projected to reach USD 566 Bn by 2035. Driven by the accelerating shift toward clean mobility, government incentives, and advancements in battery technology, the market is forecast to grow at a robust CAGR of 21.1% from 2025 to 2035.

A rechargeable energy storage unit is built specifically for electric vehicle (EV) power. Electric vehicle batteries are essential for the current propulsion and operation of electric vehicles that depend on electric power, rather than using conventional internal combustion engines that run on gasoline or diesel to power the vehicle.

The global electric vehicle battery market is poised for tremendous growth, fueled by the rising need for electric vehicles in multiple locations. With the environment-oriented advantages of electric vehicles and an array of government interventions enacted, consumers are showing increasing commitment toward EV adoption. Though confronting hurdles such as escalating costs of production and vulnerabilities within the supply chain, manufacturers must actively evaluate emerging opportunities.

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Battery manufacturers can position themselves well to identify opportunities within the market by focusing on improving material efficiency, developing less costly variants, and considering alternative battery technology such as solid-state batteries. Manufacturers and players should also be cognizant of sustainability efforts, such as developing battery recycling programs and identifying bio-based raw materials, as a greater number of consumers and regulators request sustainability measures.

Market Segmentation

The EV battery market is a complex ecosystem that can be segmented in various ways to understand its dynamics fully.

By Battery Type: Lithium-ion batteries currently dominate the market and are projected to maintain a significant share, with some reports anticipating they will hold 60% of the market by 2035. This is due to their high energy density, long lifespan, and ongoing cost reductions. However, emerging technologies are gaining traction. Solid-state batteries are a key focus for future development, promising higher energy density, faster charging, and enhanced safety.

Other chemistries, such as Nickel-Metal Hydride (NiMH) and Lead-Acid, also hold niche applications, primarily in hybrid vehicles and low-speed EVs.

By Application: The automotive sector is the primary driver of the EV battery market and is expected to hold a dominant share of 38% by 2035. This is largely due to the rapid electrification of passenger cars and light-duty fleets. However, EV batteries also find application in other areas, including consumer electronics and energy storage systems (ESS). The use of second-life EV batteries for stationary energy storage is a growing trend, offering a sustainable and cost-effective solution for grid stabilization and renewable energy integration.

By Sourcing Type: While specific data on "sourcing type" as a market segmentation is limited, the competitive landscape and recent developments point to a clear trend: a move away from reliance on a few key regions, particularly China, for critical raw materials and manufacturing. Companies are investing in diversified supply chains, including domestic mining, refining, and battery production facilities in North America and Europe to mitigate geopolitical risks and supply chain vulnerabilities.

By Industry Vertical: The market is intrinsically tied to the automotive industry, encompassing passenger cars, commercial vehicles, and two- and three-wheelers. The passenger car segment is expected to hold a significant share of 50% by 2035, driven by consumer demand and a wider availability of EV models. The electrification of commercial fleets, including buses and trucks, is also a growing vertical, supported by corporate sustainability goals and government initiatives.

By Region: The Asia-Pacific region is the undisputed leader in the EV battery market, projected to garner a robust 40% share between 2026 and 2035. This is primarily due to strong government backing, rapid urbanization, and significant investments in EV infrastructure and manufacturing in countries like China, Japan, and South Korea. North America and Europe are also key markets, with North America expected to hold a 30% share by 2035, driven by growing environmental awareness and supportive policies.

Regional Analysis

Asia-Pacific: Led by China, the Asia-Pacific region is the powerhouse of the EV battery market. The region benefits from a well-established supply chain, significant government subsidies, and a large consumer base. China, in particular, has ambitious policies to promote electric vehicle adoption and is home to some of the world's largest battery manufacturers.

North America: The market in North America is expanding due to federal incentives, emission regulations, and significant investments in gigafactories.

While the U.S. market has seen a temporary slowdown in some areas, the long-term outlook remains strong, with a focus on building a resilient, domestic supply chain to reduce dependence on foreign manufacturers.

Europe: Europe is a strong market driven by stringent environmental regulations and a collective push towards a zero-emission future. The European Union's law to mandate zero CO2 emissions for all new cars sold by 2035 is a powerful catalyst for EV adoption and, consequently, battery demand.

Market Drivers and Challenges

Drivers:

Rising EV Sales: The most significant driver is the exponential growth in electric vehicle sales worldwide.

Government Incentives and Regulations: Subsidies, tax credits, and strict emission standards are accelerating the shift to EVs.

Technological Advancements: Innovations in battery chemistry and design are improving energy density, charging speed, and safety.

Declining Battery Costs: The average price of batteries has fallen significantly, making EVs more affordable for the mass market.

Challenges:

Supply Chain Vulnerabilities: A heavy reliance on a few countries for critical raw materials like lithium, cobalt, and nickel poses a risk of supply disruptions and price volatility.

High Initial Cost: While battery costs are falling, the overall price of some EVs remains a barrier for many consumers.

Charging Infrastructure: A lack of sufficient and accessible charging infrastructure, particularly in emerging markets, creates "range anxiety" and can hinder widespread adoption.

Geopolitical Instability: Tensions between key players in the supply chain can impact material availability and market stability.

Market Trends and Future Outlook

Several key trends are shaping the future of the EV battery market. The development of solid-state batteries is a major focus, with companies like Toyota and QuantumScape making significant investments. These batteries have the potential to deliver higher energy density and improved safety, but commercialization at scale remains a challenge. Fast-charging technology is also a critical trend, with new batteries capable of adding hundreds of miles of range in minutes, addressing a key consumer concern. The focus on a circular economy is another important development, with companies like Redwood Materials and Li-Cycle pioneering new methods for battery recycling to recover valuable materials and reduce environmental impact.

The future outlook for the EV battery market is overwhelmingly positive. Despite short-term challenges like supply chain risks and economic shifts, the fundamental drivers remain strong. The market is expected to become more diversified and resilient, with increased domestic production in key regions. The continuous evolution of battery technology will unlock new possibilities, making EVs more efficient, affordable, and accessible to a global audience.

Key Market Study Points

Dominance of Lithium-ion: Lithium-ion batteries, especially NMC and LFP chemistries, will remain the market leader.

Rise of Solid-State: While not expected to fully displace lithium-ion in the next decade, solid-state batteries will emerge as a premium, high-performance option.

Supply Chain Localization: The trend of "giga-factory" construction in North America and Europe will intensify to secure supply and reduce reliance on Asian manufacturers.

Circular Economy: Battery recycling will become a critical component of the value chain, driven by both sustainability goals and the need to secure raw materials.

Competitive Landscape

The EV battery market is highly competitive, dominated by a few major players, primarily from Asia. Key companies in the competitive landscape include:

Contemporary Amperex Technology Co., Limited (CATL): The world's largest EV battery manufacturer, based in China.

LG Energy Solution: A leading South Korean battery manufacturer with a strong global presence.

BYD Company Ltd.: A major Chinese player known for its Blade Battery technology.

Panasonic Corporation: A Japanese giant that has long been a key supplier to major automakers.

Samsung SDI Co., Ltd.: Another South Korean powerhouse in the battery market.

These companies are in a constant race to innovate, reduce costs, and secure partnerships with global automakers to expand their market share. The competitive landscape is also seeing new entrants and collaborations aimed at accelerating the development of next-generation battery technologies.

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Recent Developments

May 2025: China's Nio and CATL announced plans to build a "battery-swapping ecosystem" to further promote EV adoption and infrastructure development.

April 2025: CATL unveiled its new "Shenxing" battery, which can add significant driving range in just five minutes of charging, directly addressing consumer concerns about charging time.

Q2 2025: Panasonic signed a multi-year battery supply deal with Tesla, reinforcing a key strategic partnership in the North American market.

Q2 2025: CATL opened a new $2 billion EV battery plant in Hungary, highlighting the company's expansion into the European market.

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