Next-gen batteries could dominate Europe by 2040

Spanish Market: Battery materials, Metals
26/09/23

New battery chemistries such as sodium-ion and solid-state lithium batteries could dominate the European battery industry by 2040, because of their lower-cost input materials and the sustainability of new chemistry types, according to a new report by the UK's Faraday Institute (FI).

Under a "next-generation breakthrough" scenario, these new battery technologies would appear in 2027 and reach about a 50pc market share by 2040. The market share of lithium-iron-phosphate (LFP) batteries would grow to about 21pc of the total market from about 3pc today, while the current most favoured technology — nickel-cobalt-manganese-oxide (NCM) — would drop to about a quarter share as compared with 84pc today.

The FI expects rapid growth in the whole European battery market regardless of chemistry, forecasting that capacity will increase to about 1.4TWh by 2040 from nearly 400GWh in 2025.

"While next-generation technologies have the potential to displace current lithium-based technologies, substantial research, investment and scale-up will be needed for them to reach mass-market deployment," the report says.

In another scenario, labelled "gradual transition", carmakers adopt new technologies more slowly, leading to a higher market share for proven battery chemistries such as LFP and NCM. Based on current trends in the battery market, the FI expects NCM market share to fall to 38pc by 2040, giving way to increased usage of LFP cathodes, which grow to about 32pc of the total EU market. Next-generation batteries make up a smaller volume overall, only reaching about 14pc of the market.

"NMC-type cathodes are still likely to continue to take the lion's share of the European EV [electric vehicle] market, but lower-cost chemistries such as LFP and LMO [lactate mono-oxygenase] derivatives are now expected to take a much greater share of the market than previously expected," the report says.

Argus' own analysis estimates that the market share of LFP batteries will grow rapidly in the coming years, up to 28pc in 2033 from just 3pc this year. NCM cathodes comprise about 84pc of the market this year, but this proportion is estimated to fall to just 35pc in 2033, mostly made up of higher-nickel cathode chemistries.

By Thomas Kavanagh

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Next-gen batteries could dominate Europe by 2040

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