Lithium-ion Battery For Electric Vehicle Market Size & Share Analysis - Growth Trends and Forecast (2026 - 2031)

Global Lithium-ion Battery For Electric Vehicle Market Trends and Insights

Declining Lithium-Ion Battery Pack Prices Below USD 80/kWh by 2029

Average pack costs fell to USD 115/kWh in 2024, down 14% year-on-year, driven by lithium carbonate deflation and gigafactory scale. Chinese LFP bids dipped to USD 95/kWh, enabling unsubsidized entry-level cars across Asia. Tesla projects USD 70/kWh by 2026 on its 4680 program, underscoring the captive-supply arbitrage available to vertically integrated OEMs.

Rapid Electrification Mandates for Heavy-Duty Trucks

China, the EU, and the United States have aligned timelines that push battery-electric trucks toward mainstream sales. China requires 50% zero-emission heavy-truck registrations in tier-1 cities by 2030, the EU is targeting a 90% emissions cut by 2040, and the U.S. EPA calls for 40% Class 8 battery-electric sales by 2032. Each tractor needs up to 400 kWh, amplifying cell demand far beyond passenger-car averages.

OEM Vertical Integration Driving Captive Cell Demand

BYD’s FinDreams supplied every battery for 3 million vehicles in 2024, Tesla’s Texas line is scaling toward 100 GWh by 2026, and Geely’s Zeekr introduced its Golden Brick LFP pack, all showcasing the pivot to in-house cell strategies. These moves erode purchasing volumes for contract manufacturers and compress negotiated pricing to single-digit margins.

Geopolitical Race to On-Shore Gigafactories

The U.S. Inflation Reduction Act gives USD 35/kWh cell production credits, the EU Battery Joint Undertaking co-funds 12 sites, and India’s PLI subsidizes 40 GWh of new capacity. Localization reduces shipping costs and tariff exposure while improving compliance with emerging traceability rules.

Raw-Material Price Volatility

Lithium carbonate collapsed 85% between January and December 2024, forcing miners such as Albemarle to throttle Australian output. Nickel sulfate swung 46% during the same period, squeezing NMC producers’ margins, whereas LFP suppliers faced relatively stable input costs. European cell makers, importing 90% of battery-grade lithium hydroxide, are especially exposed to currency risk.

Solid-State and Sodium-Ion Commercialization Risk

QuantumScape’s solid-state prototype achieved 800 Wh/L energy density in 2024 validation, promising 500-mile range sedans by 2028.^{(2)QuantumScape Corp., “Q4 2024 Shareholder Letter,” quantumscape.com} CATL’s 2024 sodium-ion launch sliced 30% off material costs but carried a 20% energy-density penalty, aligning with short-range urban vehicles. Successful scaling of either technology could strand billions in liquid-electrolyte assets.

Segment Analysis

By Battery Chemistry: Dual Disruption Looms

In 2025, lithium NMC, LFP, and NCA held 90.87% of demand inside the Lithium-ion battery for electric vehicle market. NMC rules premium 400-mile models despite a 20-30% cost premium, while LFP now owns 44.65% of China’s passenger segment due to cobalt-free stability. Sodium-ion debuted for entry-level applications, and solid-state cells are projected at a 30.90% CAGR toward 2028 commercialization. The Lithium-ion battery market size for LFP alone is on track to surpass USD 124.7 billion by 2031 as Asian scooters and buses adopt the chemistry. Yet, if solid-state production costs fall under USD 120/kWh, incumbent liquid-electrolyte gigafactories face accelerated depreciation.

The Lithium-ion battery for the electric vehicle market must therefore manage a dual-front threat. Solid-state promises 60% higher energy density that challenges nickel-rich NMC in long-range segments, while sodium-ion undercuts LFP in cost-sensitive fleets. Producers are diversifying cathode portfolios, with SVOLT commercializing cobalt-free NMX to hedge against ESG scrutiny. Regulators’ carbon-footprint disclosure rules intensify chemistry selection; low-emission cathodes earn procurement preference in Europe beginning 2025.

Note: Segment shares of all individual segments available upon report purchase

By Cell Format: Structural Benefits Drive Prismatic Leadership

Prismatic cells delivered 47.55% of 2025 shipments within the Lithium-ion battery for electric vehicle market. BYD’s Blade integrates long prismatic units into the chassis, removing module housings and cutting weight by 15%. CATL’s Qilin achieves 255 Wh/kg pack density by embedding coolant channels within sidewalls. In contrast, cylindrical designs like Tesla’s 4680 held a 35.25% share and excel at automated production; tabless electrodes lower internal resistance by 50% to support 5-minute fast charging.

Pouch cells, at 17.20% share, are forecast for 22.80% CAGR through 2031 as BMW’s Neue Klasse favors flexible footprints that maximize cabin space. The Lithium-ion battery market size tied to pouch formats could reach USD 60 billion by decade-end as European gigafactories ramp up. Regional bias is evident: Asia champions prismatic, North America leans cylindrical, and Europe eyes pouch, forcing suppliers to maintain multi-format lines or risk customer attrition.

By Propulsion: BEV Centricity Simplifies Platforms

Battery electric vehicles generated 71.62% of 2025 cell demand and are growing at a 21.15% CAGR, accelerating the Lithium-ion battery for electric vehicle market. Each BEV uses 65 kWh on average, quadrupling PHEV needs and driving volume concentration. Ford, Stellantis, and Mercedes-Benz have published timelines to exit plug-in hybrids before 2030, simplifying cell qualification to one or two chemistries per OEM. In Latin America and Southern Europe, charging gaps keep PHEVs relevant, yet their share declines steadily as public charging builds out.

The Lithium-ion battery market share for BEV-specific cells reached 71.62% in 2025 and is forecast to reach near 79% by 2031, signaling contracting revenue pools for hybrid-only suppliers. Dedicated BEV platforms improve purchasing economies: Tesla’s unified cell order book yielded 15% lower prices than multi-propulsion rivals in 2024.

Note: Segment shares of all individual segments available upon report purchase

By Vehicle Type: Two-Wheeler Momentum

Passenger cars absorbed 70.12% of 2025 volume, but two- and three-wheelers are racing ahead at 31.20% CAGR, a key growth lever inside the Lithium-ion battery for electric vehicle market. Ola Electric’s swap-station network proved swappable LFP packs can remove home-charging barriers, while Indonesia’s similar deployments target 15 million annual motorcycle sales.

Light commercial vehicles, electrifying for e-commerce logistics, are running at a 18.62% CAGR as operators like Amazon lock in high-capacity van orders. Medium and heavy trucks, though only 6.15% of 2025 cell demand, will balloon once China’s 50% zero-emission rule and the EU’s 90% CO₂ cut blend into fleet procurement cycles. Region-specific chemistry splits remain: LFP dominates buses and two-wheelers; NMC holds premium sedans; emerging sodium-ion can capture intra-city delivery bikes by late decade.

Geography Analysis

Asia-Pacific accounted for 50.35% of the Lithium-ion battery for electric vehicle market in 2025, with China’s 550 GWh installed capacity dwarfing Europe and North America combined. Regional CAGR of 20.92% persists through 2031 as India’s PLI-backed plants and Southeast Asia’s two-wheeler boom raise cell offtake. China’s vertically integrated chain, covering 70% of global lithium refining, provides a 15-20% cost advantage versus import-dependent rivals.

North America’s IRA incentives underpin a 22.05% CAGR. Announced U.S. capacity reached 80 GWh in 2024, led by Tesla, GM-LG, Ford-SK, and Panasonic projects scheduled for 2025-2027 commissioning. Domestic sourcing requirements reshape supply deals, encouraging Asian giants to license technology locally to capture credits.

Europe follows at 19.35% CAGR on the back of the EU Battery Regulation and EUR 3.2 billion of joint-undertaking co-funding, which lifted the pipeline to 700 GWh in 2024. Northvolt, ACC, and CATL’s Hungarian site illustrate cost-competitive continental sourcing that erodes Chinese export margins.

South America and the Middle East-Africa collectively stood at 8.25% share but are accelerating. Brazil’s Stellantis line and Saudi Arabia’s Ceer venture target 2026 starts, creating early footholds for localized supply. Regional adoption focuses on buses and ride-hailing fleets where fuel savings are immediate.