Electric vehicle (EV) sales continue to grow across a range of segments and regions. Lithium-ion batteries are the fundamental technology enabling electrification in the automotive sector. This article explores the batteries driving electric vehicle adoption, from chemistry and design trends to regulations and the battery supply chain.
The market for Li-ion batteries in electric vehicles (EVs) is set to grow from US$170 billion in 2026 to US$320 billion in 2036, representing a CAGR of 6.5%. This is driven predominantly by growth in battery electric (BEV) cars, especially in China; however, Europe is also seeing increasing adoption, and while the US is experiencing a slowdown due to recent policy changes, electrification efforts are expected to pick up again in the next decade. While cars are the largest market segment, commercial vehicles are expected to see higher growth rates due to enabling lower total cost of ownership (TCO). In total, electric vehicle Li-ion demand is expected to exceed 4500 GWh in 2036, according to IDTechEx's new report "Li-ion Batteries and Battery Management Systems for Electric Vehicles 2026-2036".
Cell chemistry trends - growing share for LFP and early deployments of LMFP and Li-Mn-rich
There are a large range of cell chemistries that fall under the Li-ion umbrella, offering different electrochemical profiles. Chemistry and form factor choices are highly dependent on application area. Electric cars, the largest EV segment, have shifted towards lithium iron phosphate (LFP) cathodes, which enable lower costs and higher cycle life. However, LFP has more limited energy density compared to ternary oxide cells (e.g. NMC and NCA), especially volumetrically, making NMC/NCA better positioned for premium BEVs. IDTechEx's analysis indicates a trend towards higher energy density in both mass-market LFP and premium NMC/NCA markets, with integration of manganese in LFP (LMFP) beginning in 2026, in other cathodes (Li-Mn-rich) in 2027/2028 through GM, and a trend towards higher nickel content in NMC and NCA.
Beyond passenger cars, both chemistry and form factor choices are more diverse. NMC offers higher power and gravimetric energy density which is important for heavy-duty applications. Cylindrical and pouch cells offer higher gravimetric energy density than prismatic cells, which also makes them better suited to heavy duty applications. However, cycle life is especially important for commercial vehicles. In cars, a cycle life of ~1000 cycles is generally acceptable, however for commercial vehicles, 3000-5000 cycles are required. This allows mid-nickel NMC to maintain a niche even as it is phased out in the car market. A full forecast for battery chemistries in the EV market can be found in IDTechEx's recent report.
Global Electric Car Battery Chemistry Market Share 2015-2025. Source: IDTechEx
US regulations - downturn in electric car sales, cell supply localizing
One of the major drivers of electric vehicle adoption, and therefore the EV battery materials market, is regulation. Tax credits and government subsidies/investment were significant factors in the rapid development of the electric vehicle market in China, for example. Meanwhile, in Europe the focus has been on gradual increasing of carbon emissions regulations, which will drive regulation in the medium-term. Expiry of EV tax credits and tailpipe emissions mandates in the US has resulted in slowdown in EV sales in the short-term, though in IDTechEx's assessment in the medium and long term, EV demand is expected to pick back up in the US. Meanwhile, tariffs on Chinese battery cells and continued support of American cell production through the 45X credit has led to increasing focus on localizing American cell supply. IDTechEx provides coverage on regulatory trends and industry action to localize supply chains in the US.
Pack developers - opportunities in non-car segments
As electric car manufacturers increasingly develop pack assembly in-house, to reduce costs for volume production, turnkey pack developers have turned to the fast-growing non-car market. This includes players such as Microvast, Forsee Power, the BMZ Group, Webasto, Proventia and BorgWarner. There is a trend towards increasing vertical integration for turnkey pack manufacturers, whether by developing cells in house or developing thermal management systems in-house. However, the market remains fraught with several major acquisitions, liquidations and bankruptcies since 2020, as reported by IDTechEx.
Battery Management Systems - enabling fast charging and advanced diagnostics
Battery management systems (BMS) act as the brain of the battery pack, performing diagnostics, cell balancing and charging. Improvements to BMS hardware and software can enable improved battery pack safety, faster charging and longer lifetimes. IDTechEx recently conducted a patent analysis for BMS-related patents and found that interest in this area has grown significantly over the past decade. An in-depth analysis of patent trends, including assignees, topics and regions can be found in IDTechEx's recent report.
In the new market report, "Li-ion Batteries and Battery Management Systems for Electric Vehicles 2026-2036", IDTechEx provides analysis of Li-ion batteries in EVs including:
Market forecasts and analysis
- Granular 10-year forecast of the Li-ion market (GWh, US$B) across application markets and chemistries. A forecast for cathode market share in the BEV car market by GWh up to 2036 is also included.
- Analysis of market shares for EV battery cell suppliers across the three primary regions (by GWh).
- Discussion of regulations across three primary regions and their role in EV adoption and battery trends.
Technology trends
- Qualitative and quantitative assessment of Li-ion chemistry trends and commercial cell specifications, including energy density comparisons by year, listed by chemistry and manufacturer, both commercialized and announced specifications.
- Pack design trends, including cell-to-pack, 800V, thermal management and fire protection materials.
- Benchmarking of turnkey battery packs, including analysis of players, market size, electrochemical property requirements, energy density, cycle life and C-rate comparisons by chemistry and manufacturer, and counts of cooling method and cell form factor in turnkey products.
- Assessment of advanced battery management system technologies and the trends towards advanced diagnostics, including a patent analysis.
Cost and supply chain analysis:
- Estimations of LFP, NMC 811 and NMC 532 material costs in 2026 and forecasting of Li-ion cell costs and BEV car cell and pack costs up to 2036.
- Discussion of the effect of price volatility for critical battery materials such as lithium, cobalt and nickel, is also included, as well as a comparison of lithium supply and demand across different regions.
- Analysis of developments leading to a more localized cell supply chain in the US.
For more information on this report, including downloadable sample pages, please visit www.IDTechEx.com/EVLithium or for the full portfolio of related research available from IDTechEx, see www.IDTechEx.com.
