The demand for electric vehicle (EV) batteries is expected to surge significantly in the coming years, driven by increasing EV sales in major markets such as China, Europe, and the United States, as well as their expansion into other countries. In a net zero pathway, battery demand for EVs is projected to grow tenfold over the next decade. Under the Stated Policies Scenario (STEPS), EV battery demand is anticipated to increase four and a half times by 2030 and nearly seven times by 2035 compared to 2023 levels. In more ambitious scenarios like the Announced Pledges Scenario (APS) and the Net Zero Emissions by 2050 (NZE) Scenario, demand could rise five to seven times by 2030 and nine to twelve times by 2035. To put this into perspective, the weekly EV battery demand in 2035 could equal the entire demand for the year 2019.
Cars remain the primary driver of this demand, accounting for about 75% in 2035 under the APS, though this is a decrease from 90% in 2023 due to the rapid growth in battery demand from other types of EVs. Battery requirements vary across different vehicle modes; for example, two- and three-wheelers (2/3W) need batteries approximately 20 times smaller than those required by battery electric vehicles (BEVs), while buses and trucks require batteries two to five times larger than those for BEVs.
As EVs penetrate new markets, the demand for batteries outside today’s major markets will rise. In the STEPS, China, Europe, and the United States will make up just under 85% of the market in 2030, decreasing to just over 80% by 2035, down from 90% today. In the APS, almost 25% of the battery demand in 2030 will be from regions outside these major markets, including India, Southeast Asia, South America, Mexico, and Japan. This share is expected to increase to 30% by 2035.
Battery production is ramping up to meet this growing demand. In 2023, global battery manufacturing reached 2.5 TWh, with an additional 780 GWh of capacity added compared to 2022. By 2030, global battery manufacturing capacity could exceed 9 TWh if all planned expansions are completed. This level of production would be sufficient to meet global deployment needs in the APS and cover over 90% of the needs in the NZE Scenario. Most announced manufacturing capacity is concentrated in current major EV markets. For instance, in China, committed battery manufacturing capacity is more than twice the domestic demand by 2030, creating opportunities for exports but also financial risks due to increased competition.
Battery recycling is also gearing up for the future. In 2023, global recycling capacity was over 300 GWh/year, with more than 80% of this capacity located in China. By 2030, recycling capacity could exceed 1,500 GWh, with significant expansions announced in China, Europe, and the United States. However, the supply of recyclable materials may initially fall short of this capacity, leading to potential overcapacity and financial challenges for recycling companies.
The transition to EVs will also impact electricity demand. By 2035, EVs could account for 6-8% of total electricity demand, up from 0.5% today. In 2023, the global EV fleet consumed about 130 TWh of electricity, comparable to Norway’s total electricity demand. By 2035, EV electricity demand could reach nearly 2,200 TWh in the STEPS and about 2,700 TWh in the APS, representing significant increases.
The rise of EVs will reduce the need for oil, with global EV fleets expected to displace 6 million barrels per day of diesel and gasoline by 2030, and 11-12 million barrels per day by 2035. This reduction in oil demand is expected to peak around 2025. However, governments will need to reform tax systems to offset the loss of fuel tax revenues due to the shift to EVs.
EVs offer substantial emissions benefits. A battery electric car sold in 2023 will emit half as much as a conventional car over its lifetime. As power grids decarbonize, these benefits will increase, making EVs a key component in reducing global greenhouse gas emissions and achieving long-term climate goals.
