Global battery investments expected to decline in 2024

Global battery investments are expected to decline this year for the first time since 2020, mainly due to a drop in battery infrastructure spending in mainland China, according to a Rystad Energy research, announced on Wednesday.

China, a leading player in lithium-ion battery (LIB) development, experienced rapid production growth in 2021 and 2022, with annual expansion slowing from 2022 onwards, which the research firm attributes to maturity and sustained capacity expansion. Having achieved self-sufficiency in battery supply, China has turned its attention towards Europe and the US.

In Europe, investment declines this year are mainly driven by diminishing electric vehicle ( EV) market demand, which in turn could lead to project delays and cancellations in EV infrastructure, according to the analysis.

In contrast, the US has experienced a rapid rise in lithium demand due to concerns over secure supply chains.

"China's dominance in battery investment and lithium trade seems unshakeable for the foreseeable future, given their control over key resources. However, building a battery factory from scratch takes years and navigating local regulations adds even more time. This means the market two years from now remains unpredictable," said Duo Fu, vice president, battery market research, at Rystad Energy.

In China, the industry is undergoing consolidation. A slowdown in demand has prompted some companies, especially those from non-traditional sectors unable to compete on price, to exit the market, Rystad says.

As the LIB sector enters a period of adjustment, technological innovation becomes key to its future development, the firm adds.

Alternative battery technologies are gaining traction, with cost-effective solutions such as lithium iron phosphate (LFP) batteries becoming attractive options, it notes.

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