A new BNEF analysis shows that global manufacturing capacity for lithium batteries has doubled demand last year. A trend destined to continue thinning the market of the producers and still decreasing the prices
China already produces as many Li-ion batteries as the world uses
The world of accumulation has never seen growth like today. Between the spread of e-mobility and the new need for network flexibility, the sector is currently riding a very positive wave. The question that now arises is: can supply still satisfy demand? Well, as the latest BloombergNEF (BNEF) analysis of the lithium-ion battery industry shows, not only does supply keep pace but demand for several strides continues. What we are witnessing in this period is in many ways reminiscent of the global situation of solar panels. The world market, in fact, is currently managing an overproduction of lithium batteries with Chinese factories that alone could completely saturate world demand.
According to data from BNEF in 2023 the worldwide demand for Li-Ion batteries for electric vehicles and stationary storage systems has been about 950 GWh, compared to a more than double production capacity, of more than 2,600 GWh, of which more than 900 GWh manufactured only in China.
The overproduction of lithium batteries is destined to exacerbate
On the BloombergNEF website, Colin McKerracher, Head of Advanced Transportation, writes “BNEF is monitoring 7.9 TWh of annual battery production capacity announced for the end of 2025. Comparing it to the demand projections of 1.6 TWh, which presupposes a constant growth in demand for electric vehicles and a very rapid battery for storage applications”. In other words, the gap between supply and demand looks set to continue.
“Now, much of the announced capability will simply not be available. Much of it will be delayed or even deleted as […] the list of contenders narrows. Some parts of the supply chain are not able to work at that level, and we still cannot perfectly match supply to demand, because the batteries of electric vehicles do not yet represent a basic product […] In addition, plants generally do not operate at the expected capacity and utilization rates have decreased in recent years”.
Nevertheless, the world continues to be destined to fuel the overproduction of lithium batteries. With large economies such as the United States, Canada, the European Union and India committed to supporting their lithium battery industries to carve out a wider space in the global market.
The prices of lithium-ion batteries
One of the direct effects of this overcapacity will be a decrease in lithium battery prices. The first drops began in 2023, with a good 14% less than the average price of rechargeable. Whether it is battery packs for heavy electric vehicles, electric cars or stationary accumulations, today all products are below 200 dollars per kWh, with costs that seem to converge progressively.
“A few years ago, commercial vehicle batteries were much more expensive than cars, as trucks and vans represented much lower volumes and therefore had less purchasing power. But that gap has narrowed as the market has swung in favour of buyers and should continue to close as the problem of overcapacity grows. This is good news for electric truck manufacturers“.
