A significant decline in battery prices in 2023 could act as a major driver for the electric vehicle (EV) market and the broader transition to cleaner energy, according to a forthcoming report from M Capital Group (MCG), a US-based asset manager.
The report, titled “Electric Vehicles – Technology Not Engineering,” highlights that China, the United States, and Europe account for 95% of global EV sales. The market is projected to exceed US$950 billion by 2030, with a compound annual growth rate (CAGR) of over 23%. This growth is attributed to lower battery costs, advances in battery technology, increased environmental awareness, and supportive government policies.
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However, challenges remain. The rising demand for lithium, a critical component in battery production, poses environmental concerns. Demand for lithium is expected to increase by more than 40 times by 2040, while lithium mining contributes approximately 15 tons of CO2 per ton of lithium extracted. Additionally, only 5% of lithium batteries are currently recycled, though emerging trends in recycling are beginning to address this issue.
For consumers, high prices and a shortage of charging stations remain key concerns. The substantial capital investment required to develop charging infrastructure further exacerbates these challenges.
Emerging markets present new opportunities for growth. In the Middle East, countries are exploring alternative energy sources, while Thailand experienced a 690% surge in EV sales in 2023, driven by subsidies and investments from Chinese manufacturers.
China dominates EV battery production, controlling over 70% of the global supply chain for key battery components. The rise of Chinese startups offering competitively priced EVs, coupled with international partnerships, is creating direct competition for established brands. At the same time, the Chinese EV market faces its own challenges, including international tariffs, price wars, and increased supplier competition.
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By GlobalDataIn the US, the EV market is expanding through partnerships between established companies and startups, supported by technological innovation and international expansion efforts. Favourable policies in the US have led to the creation of over 160,000 jobs and new infrastructure. Nonetheless, the sector must still contend with obstacles such as policy inconsistencies between states, initial cost barriers, and managing potential overproduction.
In Europe, a strong emphasis on sustainability has led to increased investment in smart charging solutions, often through partnerships with energy-focused startups. In-wheel motor technology, which could boost EV range by 20% or reduce battery size by a similar margin, is expected to reach mass production by 2025. Meanwhile, the EU is working to diversify its supply chain and reduce its 97% reliance on Chinese imports, with a focus on enhancing domestic sustainability.
The report underscores the shifting nature of the auto industry, which is increasingly driven by technology rather than traditional engineering, according to Christian Mouchbahani, Managing Partner at M Capital Group.
