March 20, 2025: The global battery market has entered a new phase after demand hit the “historic milestone” of one terawatt-hour annually last year, according to new analysis published by the International Energy Agency.
Meanwhile battery manufacturing capacity worldwide reached 3 TWh — and in the next five years production capacity could triple if all announced projects are built, said the IEA expert commentary released on March 5.
Electric car sales rose by 25% to 17 million in 2024, as the average price of a battery pack for a battery electric car dropped below $100 per kilowatt-hour — commonly thought of as a key threshold for competing on cost with conventional models, the analysis said.
Cheaper battery minerals have been an important driver as lithium prices in particular fell by more than 85% from their peak in 2022.
However, rapid advancements in the battery industry itself are also supporting price declines.
Today, China produces over three-quarters of batteries sold globally, and in 2024 average prices dropped faster there than anywhere else in the world, falling by nearly 30%, the IEA said.
“Batteries in China were reported to be cheaper than in Europe and North America by over 30% and 20%, respectively. Declining battery prices in recent years are a major reason why many EVs in China are now cheaper than their conventional counterparts.
These trends point to a battery industry entering a new phase of its development, according to the IEA.
While markets used to be regionalized and small, they are now global and very large, and a range of technological approaches is giving way to standardization.
Looking ahead, the IEA said economies of scale, partnerships along the supply chain, manufacturing efficiency, and the capacity to bring innovations swiftly to market will be crucial to compete.
“This will likely result in greater consolidation across the sector, which is simultaneously being reshaped by government-driven efforts to geographically diversify battery supply chains.”
The full IEA analysis can be found here online.
