Battery Manufacturers: Charging Toward the Next Level

Global electric vehicle (EV) sales reached 6.75 million units in 2021, representing a 110% increase over 2020. In China alone, 2.7 million EVs were sold. The EV market share in China’s automotive sector rose from 5% in 2020 to 16% in 2021.

While total automotive sales in Europe declined by 25% compared to 2019, EV sales grew by 65%, reaching 2.3 million units. In the U.S., 630,000 EVs were sold in 2021.

As EV adoption accelerates in Europe and China, the U.S. government issued a presidential executive order aimed at increasing EV usage by 2030. This order mandates that 50% of all vehicle sales in the U.S. will be EVs by 2030, supports the development of a nationwide charging infrastructure, provides R&D incentives for battery production, and aims to bolster America’s leadership in clean energy technologies.

China currently dominates global EV battery production with a 75% market share, followed by the U.S. and Europe at 7% each, and South Korea at 5%. With geopolitical tensions rising, similar to the chip technology restrictions placed on China, battery tech may face similar hurdles. To reduce dependency, the U.S. is ramping up lithium mining investments in Nevada, North Carolina, and California.

According to the report "Global and China EV Batteries and Materials: Technology, Trends and Market Forecasts", EV sales distribution by region for 2025, 2030, and 2035 is expected to significantly expand.

Key Battery Technologies:

• Lithium Nickel Manganese Cobalt (NMC)
• Lithium Nickel Cobalt Aluminum Oxide (NCA)
• Lithium Iron Phosphate (LFP)

As EV demand surged in 2021, the corresponding rise in battery demand led to a spike in the prices of nickel, cobalt, and lithium. Despite the raw material price increases, technological advancements and higher production volumes have helped reduce the cost per unit of stored energy.

This trend mirrors the evolution of photovoltaic panels, whose falling costs led to the rapid growth of solar energy. Similarly, as battery costs decline—currently the most expensive EV component—vehicle adoption is expected to increase significantly.

According to the International Energy Agency (IEA), while raw material prices have risen, the cost of energy storage per unit has decreased, as depicted in relevant charts.

Currently, batteries without cobalt or nickel exist but are generally more expensive than LFP batteries. Tesla’s Model 3utilizes LFP batteries, which, although more cost-effective, store less energy than NMC batteries—resulting in shorter range and longer charging times.

By 2030, the nickel-to-cobalt ratio in battery production is expected to reach 8:1, significantly increasing energy densitycompared to current batteries.

Market Outlook for EV Batteries:

In 2020, EV battery usage was approximately 340 GWh. By 2030, this figure is projected to reach 3,500 GWh—an annual growth rate of 25%. (For perspective, Turkey's total energy consumption in 2021 was about 330 GWh.)

Lithium production, which stood at 345,000 tons in 2020, is forecasted to rise to 2 million tons by 2030.

Solid-State Battery Technology: Will It Replace Lithium-Ion?

Solid-state battery technology has the potential to store up to 10 times more energy than traditional lithium-ion batteries. Key advantages include:

• Greater energy output per unit volume
• Longer driving range
• Lighter batteries
• Faster charging capabilities
• Lower environmental impact

Founded in 2010 in California, QuantumScape (QS) is a pioneering solid-state battery developer. The company is working on lithium-metal battery technology that can store 80% more energy and reach 80% charge in just 15 minutes. QuantumScape has a strategic technology partnership with Volkswagen Group.

Similarly, SES AI (SES) is also focused on lithium-metal batteries and collaborates with General Motors (GM), Hyundai, Honda, and Geely.

Why It Matters for Investors

As EV adoption surges, disruptive battery innovators like QuantumScape and SES are expected to become household names in the years ahead. BV Portföy is committed to investing in innovative, forward-looking companies developing disruptive technologies in the battery and EV ecosystem through its technology-focused investment funds.

These strategies aim not just to generate financial returns but also to drive the future of sustainable mobility and energy.