Automotive Battery Market - Growth, Trends, and Forecast (2020 - 2025)

The growth in the battery market is primarily attributed to the increasing demand for automobiles and enactment of stringent emission standards set by numerous government and environmental agencies. 

The automobile regulatory framework in Europe and North America has been instrumental in creating a sustainable environment in the automobile industry.

• The latest regulatory framework, the Euro 6, which got introduced in 2011 and came into effect from September 2014 onward, changed the regulatory standards that have been crucial in determining the dynamics of the automotive market in the region. Since 2013, the EC (European Commission), along with EEA/EMEP, has been maintaining the record of the emission performance standard for each new vehicle registered in Europe.

The EC targets to reduce the average fleet emission of 187g CO2/km in 2011, to an average fleet emission of 175g CO2/km by 2017, and 147g CO2/km by 2020, for the light vehicle segment.

• Manufacturers were mandated to meet the emission targets of 175g CO2/km in 70% of the commercial vehicle fleet in 2014, and they were also expected to do so in 75% of their LCVs in 2015, 80% by 2016, and 100% by 2017.
• Penalties would also be levied to those manufacturers, who fail to meet their average targets. There is a penalty of EUR 5 per vehicle for the first g/km of exceed, EUR 15 for the second g/km, EUR 25 for the third g/km, and EUR 95 for each succeeding g/km. From 2019, the cost would be EUR 95 from the first gram of exceedance.

The micro-hybrid, also known start-stop vehicle, is automakers’ solution for the stringent emission standards, which are getting tougher over stages. The start-stop technology facilitates the vehicle engine to remain shut, when the vehicle is at stand-still, thereby, reducing the emissions. At the initial stages, the micro-hybrid vehicles were operated manually, which gave the driver an option to turn-off the start-stop system. The inferior battery technology of these vehicles and the increasing power requirement in modern vehicles, with the increase in a number of features offered, the demand for the technologically advanced automotive battery has been on the rise, which, in turn, is propelling the demand for batteries.

With the advancements in the automotive battery technology, the number of vehicles equipped with technologies, such as EFB (Enhanced Flooded Battery) and AGM (Absorbed Glass Mat), increased at a high pace. The latest technologies have succeeded in powering the start-stop system with a multi-fold increase in the number of engine starts. Currently, over 20 million start-stop batteries are produced annually, and this number is forecast to cross 55 million units, by the end of 2020. With deployment in most of the models, the start-stop technology is anticipated to penetrate the market at a high pace, thereby, increasing the automotive battery market.

Asia-Pacific is expected to witness the fastest growth rate during the forecast period, and high demand for the automotive battery. Some of the major factors driving the growth of the market in the region are - rising commercial vehicle sales driven by countries, like China, India, and ASEAN countries, like Thailand, Philippines, Indonesia, and Malaysia; rise in electric vehicles sales in countries, like China (both cars and commercial vehicles (especially buses)) and India (commercial vehicles (especially buses)); and rise in sales of passenger cars, especially in ASEAN countries.

Apart from the aforementioned, electric vehicle manufacturers have been signing contracts or deals with Asia's vehicle battery manufacturers, which, in turn, is also augmenting the demand for automotive battery in the region. For instance, BMW and Volkswagen have signed contracts to buy batteries from CATL, as well as Korean producers, LG Chem and Samsung SDI. 

The European region is also witnessing rapid growth in the automotive battery market, with the rise in sales of both IC engine and electric vehicles. The region has been planning to stop the production of IC engine vehicles, and is expected to shift to electric cars, maximum by 2035 (on an average). This, in turn, is expected to result in increased investments in automotive technologies.