Hybrid and EV Battery Market Size & Share Analysis - Key Trends, Future Opportunities, Growth Strategies, and Forecasts (2025 - 2032)

Hybrid and EV Battery Market Emerging Trends & Growth Drivers

Government Support for EV Adoption Is Biggest Driver for Market

• The foremost driver for the market is the strong government support around the world for the adoption of electric vehicles.
• According to the European Union’s EDGAR, GHG emissions around the world rose by 1.9% in 2023 from 2022, reaching 53.0 Gigatonnes of CO₂e.
• Transportation activities account for almost 15% of these emissions; hence, for over a decade now, governments around the world have been offering strong support to people to replace their fossil-fuel-driven vehicles with electric variants.
• The International Energy Agency (IEA)’s Electric Vehicles Initiative (EVI) Global EV Pilot City Programme (EVI-PCP) aims to modify 100 cities over the first five years in a way to drive EV adoption.
• The Commonwealth Fleet Vehicle Selection Policy of Australia targets 75% of the passenger vehicles purchased or leased to be electric by 2025.
• The aim is to reduce GHG emissions by 43% by 2030 from 2005 levels and reach net-zero by 2050.
• The Greening Government Strategy of Canada targets 75% of all vehicle purchases to be ZEVs by 2025.
• Moreover, from 2025 onward, 100% of light-duty commercial and passenger vehicles purchased for fleet operations must be ZEVs, while the target for medium- and heavy-duty commercial vehicles is 40% by 2030.
• Germany’s Programme of Sustainability Measures mandate 100% of new vehicle purchases by 2030 to have eco-friendly drive technologies, aiming to have 50% of all vehicles in the country to be electric by 2025.
• Israel’s Governmental Vehicle Administration has been purchasing only HEVs since 2022, and it will only purchase BEVs from 2025 onward.
• The Dutch government targets its entire fleet to be electric by 2028, all buses and municipal vehicles to be electric by 2030, and 50% of the taxi fleet to be ZEVs by 2025.
• New Zealand’s Carbon Neutral Government Programme (CNGP) aims to transition the entire fleet of public sector organizations to ZEVs by 2025.
• Norway wants all passenger cars to be electric all city buses to be electric or run on biogas by 2025.
• Electrification targets for 2030 are for all heavy-duty vans, 50% of new trucks, and 75% of inter-city buses.
• The U.S. wants to purchase only EVs for the federal government’s fleet by 2035 and targets all light-duty vehicle purchases to be ZEVs by 2027.
• India targets all vehicles on the roads to be electric by 2030, announcing an investment of INR 10,000 crore under the FAME-II scheme to accomplish it.
• The IEA had forecast 17 million electric car sales for 2024 and said that 60% of all EV sales in 2023 were in China.

Battery-as-a-Service Model Offers Market Opportunities

• The EV domain is flourishing, and companies are developing business models to meet consumer demands, such as battery swapping, which allows consumers to swap EV batteries after they have been exhausted.
• This saves customers time in recharging batteries and enhancing customer needs.
• In response to a lucrative industry, numerous automobile producers have adopted the battery-as-a-service (BaaS) model, which separates batteries from vehicles.
• Instead of purchasing a battery with an EV, the BaaS model allows owners of EVs to rent batteries on a monthly basis.
• Consumers may save the upfront cost of battery by choosing this model, and do not worry about battery degeneration.

Hybrid and EV Battery Market Segmentation and Category Analysis

Type Analysis

Lithium-ion batteries accounted for the larger revenue share, of 85%, in 2024, and this category is also witnessing the faster growth. These batteries are perfect for hybrid and electric vehicles because of their advantages such as excellent energy efficiency, long cycle life, no memory effects, and their fast-falling prices. Moreover, the adoption of LIBs has increased, as a result of the growing use of EVs and plug-in hybrid electric vehicles (PHEVs), and it is projected that this trend will continue in the coming years as well.

Additionally, the EPA’s restrictions on lead contamination and the ensuing environmental dangers, along with regulations on lead-acid battery storage, disposal, and recycling, have reduced the demand for lead-acid batteries. This has increased the need for lithium-ion batteries in automobiles.

Greater economies of scale for lithium-ion cells are the result of expanding activities across the industrial landscape. With the rising concentration on electric mobility and the use of LIBs, reducing costs of batteries, and changing dynamics, planners, politicians, regulators, and investors are taking a number of steps to regulate the market. In addition, in order to diversify their revenue streams, battery manufacturers are offering more aggressive pricing and expanding into the stationary storage sector, as a result of the significant investment made by the car industry in pack assembly.

These types are covered:

• Nickel Metal Hydride (NiMH)
• Lithium-Ion (Li-Ion) (Larger and Faser-Growing Category)

Propulsion Analysis

The BEVs are the largest category, with revenue share of 35% in 2024, and they also expected to be the fastest-growing category in the market. In order to combat air pollution, policymakers in various nations are focused on public transportation infrastructure that emits no or very little pollution, particularly in highly populated cities. Air pollution from fossil-fuel-powered vehicles has become a serious global issue. As a result, policymakers have been obliged to explore alternatives, such as low-emission automobiles.

These propulsions are covered:

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

Vehicle Type Analysis

Passenger cars are the largest category, with revenue share of 45% in 2024, and they will also witness the highest CAGR, of approx. 25%, during the forecast period. This is attributed to the high sale of cars around the world, which are increasingly being witnessed in EVs. People buy cars to commute to and from work, run errands, visit relatives and friends, or take long trips. Moreover, in developing countries, cars have come to become a marker of one’s social status, which drives their sales even among those who don’t really need them. Hence, with governments banning diesel and gasoline cars or implementing stringent emissions regulations, people are rapidly switching over to electric cars.

These vehicle types are covered:

• Passenger Cars (Largest and Fastest-Growing Category)
• Scooters & Motorcycles
• Three-Wheelers
• Buses & Trucks
• Others

Hybrid and EV Battery Market Regional Market Performance

APAC is the largest revenue contributor to the market, accounting for USD 45 billion in 2024, and it also has the highest CAGR, of approx. 25%, due to the expanding penetration of battery-powered vehicles in the region. The EV sales are projected to expand significantly over the forecast period, as a result of the rising environmental pollution concerns, surging need for fuel-alternative vehicles, and decreasing pieces of batteries.

The main reason for lower battery prices in APAC than in other regions is that there are many battery manufacturers in China, Japan, and South Korea. Additionally, the region's plentiful supply of raw materials, including lithium and cobalt, facilitates the fabrication of batteries in large quantities.

Moreover, hybrid vehicles offer tremendous opportunities to market players in developing nations, due to government initiatives and support, including tax breaks, incentives for manufacturers and purchasers, and an emphasis on the usage of hybrid commercial vehicles, in the region.

The market in North America is expected to grow as a result of the increased government support for research and development (R&D) of lithium-ion batteries, a greater emphasis on hybrid vehicles and EVs, several tax breaks offered by governments, and the affordability of electric passenger cars in the region. Furthermore, the rise in demand for energy security and the rapid depletion of fossil fuels are likely to generate numerous chances for the regional market for H&E batteries during the forecast period.

The U.S. is the leader in the North American market. Increased sales of EVs and HEVs in the country are predicted to drive the demand for lithium-ion batteries over the forecast period. This is also due to the support of federal legislation laws and the presence of major players in the country.

Europe has emerged as a significant contributor to the market. This is because it is one of the top regions for the production and sales of EVs. Governments of many nations in Europe have heavily supported and invested in R&D in the EV industry during the past few years. Moreover, the rapid growth in the demand for lithium-ion batteries, rising use of EVs due to environmental concerns, and significant expenditures are all geared toward the expansion of the hybrid and electric vehicle battery market growth in the region.

Germany is the market leader in the region. This is attributed to the surge in the use of lithium-ion batteries due to the increased adoption of EVs, the huge demand for energy storage devices, and the development of renewable energies in the country.

In LATAM and MEA, the hybrid and electric vehicle battery market demand in Brazil, the U.A.E, and South Africa is projected to grow at rapid rates throughout the projected period. Additionally, Mexico has been the main focus of global automobile businesses and they seek to invest in the nation due to the high demand for EVs.

These regions and countries are covered:

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

Hybrid and EV Battery Market Share Analysis

• The market is consolidated as a few large players hold significant shares.
• Owing to the lucrative nature of the market, the major players continue to acquire smaller ones, to expand their capabilities and portfolios.
• The electric vehicle battery market is dominated by few players currently; however, investments in the field of battery production are rising across various countries, as huge sales of EVs are expected in the near future.
• This is expected to increase the number of electric vehicle battery production facilities by the existing players and also pave the way for the entry of new players.
• In recent years, major players in the hybrid and EV battery market have been actively involved in partnerships and joint ventures, in order to make the most of the latest technology and to stay ahead of their competitors.

Hybrid and EV Battery Market Developments

• In January 2025, Toyota Motor Corporation announced plans to establish an entity in Shanghai, China, that will manufacture Lexus EVs and batteries for this brand. Production is slated to begin in 2027 with 100,000 units initially.
• In January 2025, Panasonic Holdings Corporation announced that its high-density Li-ion batteries will power the upcoming Lucid Gravity Grand Touring SUV.
• In January 2025, LG Energy Solution signed an agreement with CTNS and Aptera Motors Corp. to supply 2170 cylindrical battery cells between 2025 and 2031 for Aptera’s solar EVs. The automobile is set for launch in the U.S. in 2025.
• In September 2024, Panasonic began preparing for the mass production of its high-capacity 4680 lithium-ion EV batteries at the Wakayama plant in Japan. These cells offer five times the capacity of 2170 batteries, boosting EV range and reducing cell count per pack.
• In May 2024, Robert Bosch GmbH led a EUR 55-million investment in cylib and USD 36-million funding in Li Industries; both these companies recycle Li-ion batteries.
• In October 2023, BAK Battery launched its semi-solid lithium battery series with high energy density, long life, and improved safety.
• In September 2023, Envision AESC entered a USD 1.5-billion, 10-year deal with SK Nexilis to supply copper foil starting in 2025.