In 2025, the global lithium-ion battery market surpassed USD 150 billion, marking a more than 20 percent increase from 2024. While market size highlights its rapid expansion, batteries are now central to electric vehicles, power system flexibility, and back-up power for data centers and digital infrastructure. Industrial and strategic applications—from portable electronics and unmanned defense systems to emerging robotics—are also driving demand, underscoring batteries’ growing role across modern economies.
IEA Battery Market Highlights (2025)
| Topic | Metric | Value | Year / Note |
|---|---|---|---|
| Market size | Li-ion market value | > USD 150B | 2025 |
| Market growth | YoY growth vs 2024 | > 20% | 2025 vs 2024 |
| Deployment | Li-ion deployment multiple | 6× | 2025 vs 2020 |
| Demand mix | EV share of deployment | > 70% | 2025 |
| Demand mix | BESS share of deployment | > 15% | 2025 |
| Portable electronics | Share of global battery demand | ~50% → <5% | 2015 → 2025 |
| Prices | Average battery prices | −8% | 2025 |
| BESS prices | Price level vs 2020 | ~1/3 | 2025 vs 2020 |
| Regional prices | China vs US / Europe | China 30% lower than US; 35% lower than EU | 2025 |
| Chemistry prices | LFP vs NMC price change | LFP >−15%; NMC <−5% | 2025 |
| Chemistry cost gap | LFP cheaper than NMC | >40% cheaper | Average |
| Chemistry adoption | LFP share in EV / BESS | >50% EV; >90% BESS | Global |
| Storage growth | Installations growth | >20× | past 5 years |
| Manufacturing concentration | China share of battery manufacturing | well over 80% | 2025 |
| Competitiveness | Production costs vs China | up to +50% | EU/US vs China |
| Manufacturing yields | China average yields | >90% | Benchmark |
Deployment of lithium-ion batteries in 2025 was six times higher than in 2020. Electric vehicles accounted for over 70 percent of that deployment, with sales hitting fresh records and representing one in every four cars sold globally. Battery energy storage systems contributed just over 15 percent, reflecting their key function in balancing variable renewable generation. By contrast, portable electronics—which comprised nearly half of battery demand in 2015—fell below 5 percent by 2025.
Falling prices have fueled these trends. Average battery pack costs declined by 8 percent in 2025, driven by manufacturing advances, improved chemistries, and intensified global competition. Storage-focused systems saw the steepest declines, with prices dropping to one-third of 2020 levels. Regional price gaps widened: Chinese battery packs were about 30 percent cheaper than those in the United States and 35 percent cheaper than in Europe.
Record-low lithium iron phosphate (LFP) prices led overall cost reductions. LFP costs fell over 15 percent compared with under 5 percent for nickel-manganese-cobalt (NMC) cells, making LFP batteries more than 40 percent less expensive on average. LFP now represents over half of EV battery capacity and more than 90 percent of grid storage deployments. However, many LFP producers are operating at a loss, raising concerns about future market consolidation.
Supply chains remain highly concentrated. China produced well over 80 percent of global lithium-ion cells in 2025, with Korea and Japan supplying most of the remainder. Europe and the United States rely heavily on imported components, posing supply-security risks. Diversification efforts will require substantial investment, long-term demand signals, and international cooperation. Emerging chemistries such as sodium-ion could open new avenues, though current project pipelines remain focused in China.
As batteries become more strategically important to energy systems and the wider economy, addressing supply-chain vulnerabilities and sustaining cost competitiveness will be critical. Ongoing technology innovation, patient investment, and coordinated policy support will shape the next phase of battery market growth.
Source: IEA Commentary
