Cathode Material for Automotive Lithium-Ion Battery Market Size & Share Analysis - Trends, Drivers, Competitive Landscape, and Forecasts (2024-2030)

Cathode Material for Automotive Lithium-Ion Battery Market Trends & Drivers

Advancement in Battery Technology Is a Major Market Trend

• Advancements in battery technology and the electrification of automobiles have contributed enormously to the changing landscape of the market.
• At present, batteries with cobalt (NMC/Nickel–Coal–Aluminium [NCA]) are preferred due to their high energy density.
• The combination of the cathode in a nickel–manganese–cobalt battery contains 1/3 part of nickel, 1/3 part of cobalt, and 1/3 part of manganese, also called 1-1-1. NMC chemistries have become preferred among original equipment manufacturers (OEMs) in the automotive industry in recent years, owing to their 1:1:1 proportion of elements, which results in a lower raw material cost.
• OEMs are eyeing further technological advancements to obtain higher ranges and eradicate safety issues, such as thermal runaways.

Increasing Utilization of Electric Vehicles Drives the Market

• The increasing adoption of electric vehicles across the globe is the most prominent factor, which is majorly contributing to the growth of electric vehicles, and hence, further increasing the demand for electric vehicle batteries.
• Increasing concerns toward environmental protection, primarily due to the surging rate of ozone layer depletion, are driving the growth in electric vehicle sales around the world.
• At present, around 43% of the total amount of greenhouse gases emitted in the world is contributed by the automobile sector.
• The increasing pollution and rising carbon emissions from ICE vehicles are gaining the attention of government bodies to take action to protect the environment. 
• Greenhouse gas emissions from urban vehicles have led to the formulation of stringent environmental policies by governments.
• Countries are taking initiatives to curb emissions by reducing the usage of fuel-based vehicles.
• Electric vehicles are an effective antidote for curbing the impact of pollution on the environment. The increasing use of electric vehicles would facilitate the reduction of the amount of carbon dioxide being emitted into the environment.
• National governments across different countries are actively taking steps to support the adoption of electric vehicles, which, in turn, is driving the growth of their components market, including cathode materials.
• Some of the supportive initiatives include tax exemptions, purchase rebates, and financial incentives for the buyers of electric vehicles.
• The tax credit amount depends on the size of the vehicle and battery capacity. Due to expensive components, the overall price of electric vehicles is higher as compared to conventional vehicles.
• Government incentives, such as financial support, are enhancing the purchasing power of buyers, thus, increasing the adoption of electric vehicles, which, as a result, reduces air pollution by controlling carbon emissions, and boosts the rate of technological innovation.

Lithium-Ion Batteries Have High Costs

• The high price of lithium-ion batteries may restrict the growth of their demand, which, in turn, is obstructing the demand for their components, including cathode materials.
• A factor limiting the widespread adoption of lithium-ion batteries is their cost, which is around 40% higher than Ni–Cd batteries.
• Lithium-ion batteries though superior in performance and lighter in weight, cost is significantly higher than conventional batteries and thus increase the costs of products in which these are used.
• The increased costs of the products not only restrain certain consumers to be able to purchase the products but also make it difficult for manufacturers to produce products that could be profitable due to low cost.
• Thus, the increased costs limit the penetration of lithium-ion batteries in low-income countries, where most of the population cannot afford such products.

Cathode Material for Automotive Lithium-Ion Battery Industry Outlook

Type Insights

• The lithium-ferro phosphate (LFP) category held the largest market share of 35% in 2023, both in terms of value and volume. The dominance of the category is attributed to the higher energy density, as well as the lower self-heating rate of this material as compared to others.
• Moreover, in the long run, this cathode material is also expected to find greater adoption in electric vehicle lithium-ion batteries, owing to its low cost.
• Lithium–nickel–cobalt–aluminum oxide (NCA) is a rapidly growing category with a CAGR of 8.2% from 2024 to 2030. This is because NCA batteries offer a higher energy density than others, and they also have faster charging capabilities.

Further, types are classified into:

• Lithium–Ferro Phosphate (LFP) (Largest Category)
• Lithium–Manganese Oxide (LMO)
• Lithium Nickel Cobalt Manganese/Lithium Nickel Manganese Cobalt (NMC)
• Lithium–Titanate Oxide (LTO)
• Lithium–Nickel–Cobalt–Aluminum Oxide (NCA) (Fastest-Growing Category)

Vehicle Type Analysis

• On the basis of vehicle type, the passenger car category dominated the market with a revenue share of 50% in 2023 as well as it is the fastest-growing category.
• This is led by a major push from governments in major automobile-selling countries, such as China and the U.S., for producing new energy cars, and the rising demand for fully electric passenger cars with high-range per charge feature.
• Huge monetary incentives are being provided to both electric car manufacturers and end users to promote the adoption of these passenger cars.

During the study, analyzed vehicle types are listed below:

• Two-Wheeler
• Passenger Car (Largest and Fastest-Growing Category)
• Commercial Vehicle

Vehicle Technology Insights

• The battery electric vehicle (BEV) category dominates the market, with a revenue share of around 55% in 2023, as well as it is the fastest-growing category.
• This is because of the high integration rate of lithium-ion batteries in these vehicles, as the average battery capacity of a BEV is much higher than hybrid electric vehicles (HEV) and plug-in hybrid electric vehicles (PHEV).

Further, the vehicle technology segment is categorized into:

• Hybrid Electric Vehicle (HEV)
• Plug-In Hybrid Electric Vehicle (PHEV)
• Battery Electric Vehicle (BEV) (Largest and Fastest-Growing Category)

Regional Evaluation

• The APAC region has dominated the cathode material for automotive lithium-ion battery market, with a revenue share of 45% in 2023. It is expected to remain the dominant region during the forecast period.
• This is mainly attributed to the high production and sales of electric vehicles in China, which alone account for over half the APAC market share, and it is expected to dominate the regional market during the forecast period as well.
• The sale of lithium-ion-battery-based electric buses and trucks in China has been the highest in the world, which makes the Chinese market the biggest in the world, in terms of the requirement for automotive lithium-ion batteries.
• Whereas, LATAM is the fastest-growing regional market, advancing at a CAGR of 8.0% from 2024 to 2030. This can be due to the increasing demand for electric cars in countries like Brazil and Mexico.
• As part of the global expansion plans, various OEMs are now exploring new markets to produce and sell electric vehicles.
• For instance, Tesla Inc. announced the availability of its Model 3 electric car for sale in Mexico. Additionally, Chinese manufacturer, BYD Co. Ltd. has already supplied electric buses in a few countries, such as Mexico and Brazil.

Further, these regions and countries were analyzed for this report:

• North America
  • U.S. (Larger Country Market)
  • Canada (Faster-Growing Country Market)
• Europe
  • Germany
  • U.K. (Fastest-Growing Country Market)
  • France
  • Norway (Largest Country Market)
  • Italy
  • Spain
  • Rest of Europe
• APAC (Largest Regional Market)
  • China (Largest Country Market)
  • Japan
  • India
  • South Korea (Fastest-Growing Country Market)
  • Australia
  • Rest of APAC
• Latin America (LATAM) (Fastest-Growing Regional Market)
  • Brazil (Fastest-Growing Country Market)
  • Mexico (Largest Country Market)
  • Rest of LATAM
• Middle East and Africa (MEA)
  • Saudi Arabia
  • South Africa (Largest Country Market)
  • U.A.E. (Fastest-Growing Country Market)
  • Rest of MEA

Market Share

The global cathode material for automotive lithium-ion battery market is fragmented in nature, with the presence of a large number of key players such as Panasonic Corporation, 3M Co., L&F Company Limited, NEI Corporation, and BASF SE. In recent years, players in the industry have been launching new products, in order to attain a competitive edge.

Cathode Material for Automotive Lithium-Ion Battery Industry News

• NEI Corporation expanded the selection of materials for lithium-ion and sodium-ion batteries in January 2022.
• BASF collaborated with Prime Planet Energy & Solutions (PPES) in December 2022 to deliver the first batch of nickel-cobalt-manganese (NCM) cathode active materials (CAM) in Japan.
• In February 2023, Umicore announced the industrialization of HLM cathode active materials technology which is enriched in manganese.
• In May 2022, Johnson Matthey announced the sale of its battery materials businesses to EV Metals Group.