The global lithium-ion battery market exceeded USD 150 billion in 2025, an increase of over 20 percent from 2024, but its economic and strategic significance extends far beyond market size, according to International Energy Agency (IEA) report.

Batteries are becoming a cornerstone of the automotive sector, a critical source of flexibility for power systems, and an increasingly important source of back-up power for digital infrastructure, including data centres and artificial intelligence.

Beyond energy, batteries remain indispensable for a wide range of industrial and strategic applications, from portable electronics and unmanned defence systems to emerging technologies such as humanoid robots. As applications diversify and costs continue to fall, batteries are evolving into a foundational component of modern economies. 

This shift carries far-reaching implications for economic competitiveness, supply security and industrial policy, as battery supply chains remain highly concentrated and technologically complex.

These dynamics are already evident in battery deployment trends, as declining costs and expanding applications continue to drive rapid growth of demand for batteries across sectors.

IEA report says global lithium-ion battery deployment in 2025 was six times as high as in 2020. 

Electric vehicles remain the dominant driver of demand, with global sales reaching a new record and accounting for one-in-four cars sold globally. 

Electric vehicles account for more than 70 percent of total lithium-ion battery deployment. This is followed by battery energy storage at over 15 percent, reflecting the growing role of batteries in providing flexibility in power systems.

The situation represents a profound shift from a decade ago. In 2015, nearly half of global battery demand came from portable electronics; by 2025, this share had fallen to below 5 percent.

Falling prices have been instrumental to this expansion. In 2025, average battery prices declined by 8 percent, supported by advances in manufacturing, improvements in battery chemistries and intensifying global market competition. 

Battery energy storage systems (BESS) saw the sharpest price declines, with average global prices in 2025 falling to one-third of levels seen in 2020.

At the same time, regional price disparities have widened. In 2025, battery pack prices in China were 30 percent lower than in the United States, and 35 percent lower than in Europe. 

Record low lithium iron phosphate (LFP) battery prices also contributed significantly to overall cost reductions in 2025. LFP battery prices fell by more than 15 percent, compared with less than 5 percent for lithium nickel cobalt manganese oxide (NMC) batteries – the second most deployed battery chemistry globally. 

This made LFP batteries on average more than 40 percent cheaper than NMC alternatives. As a result, LFP accounted for over half of EV batteries and over 90 percent of battery energy storage systems globally.

While LFP batteries benefit from structurally lower material costs, there are growing concerns about the sustainability of today’s price levels. Many LFP cathode producers are operating at a loss, increasing the possibility of market consolidation.

Deployment remains heavily concentrated in China, but uptake is also expanding rapidly in emerging and developing economies. 

LFP batteries now power well over half of all electric car sales in emerging and developing economies – double the share in 2023 – driven by imports of Chinese-manufactured vehicles and LFP batteries.

Battery energy storage has grown at an exceptional pace, with global installations increasing more than 20-fold in storage capacity over the past five years. 

This growth has been driven by falling battery prices, abundant supply and relatively short project lead times. As variable renewable generation expands in many markets, battery storage is becoming an important source of flexibility and resilience for power systems, while also representing a growing commercial opportunity for battery manufacturers.

However, more than 90 percent of battery storage applications rely on LFP batteries that are almost exclusively supplied from China, which accounts for almost all global manufacturing capacity and the associated technical expertise. 

Korean producers are investing to scale up LFP battery production that can offer an alternative, but they face intense competition from established, lower-cost Chinese producers in an oversupplied market.