Despite continued adoption hurdles, global automotive battery demand is forecasted to pass the 4TWh mark by 2035.
2024 was the first year that European automotive battery demand surpassed 1TWh, and whilst a positive trend is noted, figures do show a slight dip when compared to those released in the prior report. This can be attributed to a shift in the types of vehicles being produced over the next decade.
The UK, while seeing a slower rate of growth, has significant opportunities to produce for export markets, with an expectation of 80 percent of production making its way overseas.
“We are in a period of transition and there remain many obstacles to overcome such as affordability, regulatory frameworks and infrastructure – which is to be expected” said Julian Hetherington, Automotive Transformation Director at the APC. “However, transition is often accompanied by varying levels of uncertainty, and this is just what we currently see. We review the industry outlook for the automotive sector on a quarterly basis and there is substantial change in the global context from the last period to this. It is not unexpected at this stage in our transitional journey, but what remains consistent is the outlook to 2035, with BEV production figures expected to double.”
Mr Hetherington added that it’s exciting to see a strong focus on recycling and materials circularity, which will be a key part of the sustainability and full life cycle story for BEVs. He said that there is increasing momentum surrounding this and new opportunities for partnerships at both supply chain level and Tier 1 original equipment manufacturers (OEMs).
For the UK specifically, this latest report details the importance of investment, the impact new OEMs and BEV models could have on the market, and the need to onshore and secure the battery chemistry supply chain if the country is to achieve the 2035 predicted figures.
The impacts of what is happening in the industry at a global and European level will also have an effect.
“The upstream materials supply chain is a key part of the analysis we undertake as this is a segment that plays a vital role in driving forward the art-of-the-possible” said Dr Hadi Moztarzadeh, Head of Technology Trends at the APC. “Across Europe we are seeing a continued deficit of anode and cathode active material, and this looks set to be the case right up until 2035 with localising production the key challenge. The UK will have to localise the battery value chain to comply with regulatory frameworks, like Rule of Origin by 2027. There is huge opportunity to build on materials refining and processing capabilities in the UK to make that happen. Another key implication for Europe is the recently launched ‘Industrial Action Plan for the European Automotive Sector.’ We may see OEMs split their focus on powertrain production as the plan offers more flexibility on compliance with CO2 emission targets, meaning a wider reach for powertrain technologies. An example could be a renewed look at hybrid powertrains for LDVs and hydrogen internal combustion engines (ICE) for HDVs. Whilst these do not deliver zero-tailpipe emissions, they still provide significant gains in decarbonisation efforts.”
The opportunities for the UK lie in being prepared to respond to Europe’s wider powertrain flexibility, with 40 percent of exports directed here. With a wealth of innovation and R&D, it is likely this can be achieved with the right combination of investment and partnerships driving this forward.
The APC’s quarterly demand reports are prepared by a team of expert analysts. They are forward-looking documents produced to assess the current state-of-play of the UK automotive market, its supply chain and external influencing factors that impact production volumes and battery demand to 2035.
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