April 03, 2021

The market penetration of electric vehicles is increasing rapidly as a result of the accelerating energy transition, and demand for batteries is expected to skyrocket going forward for both transportation and grid storage. Rystad Energy’s latest Energy Transition Report reveals that the share of EVs in global new passenger car sales is set to quadruple in 2026 from 4.6% last year and exceed 50% from 2033 onwards.
New battery electric vehicle (EV) sales, excluding hybrid vehicles, are expected to record consecutive annual growth going forward. In 2021, Rystad Energy expects EVs to take up around 6.2% of global passenger car sales, with the share climbing to 7.7% the following year.
Rystad Energy projects Europe will continue to lead electric vehicle adoption by a wide margin in years to come. Its share of electric vehicle sales is forecast to top 10% already in 2021 and 20% in 2025. North America and Asia will follow suit, albeit at a slower pace. The Middle East and South America are also projected to see increases further in the future, but the adoption rate of EVs will remain lower than rival continents for some time.
Looking at the long term, EV adoption rises steeply towards 2040 and clusters just short of 100% by 2050 in nearly all regions except Africa.
The rise of battery electric passenger cars will also be the prime driver for battery demand in transportation. The combined new battery demand across all transportation segments is expected to grow 15% annually on average between 2020 and 2050, gradually rising from 0.23 terawatt hours (TWh) in 2020 to over 1 TWh already in 2024. From then onwards, growth will speed up and demand for batteries will exceed 4 TWh in 2030, toping 10 TWh around 2040 and plateauing around 14 TWh in 2050.
The demand for batteries for grid storage is at the moment negligible but is expected to rise in the future. In 2025 we expect this segment’s demand to reach 0.4 TWh, and then demand will climb quickly to 2.7 TWh in 2030, gradually rising to its plateau of 10 TWh in the mid-2040s.
Battery cycle life is also important to consider, as a battery will eventually degrades to 80% of its original capacity, which means that range will also decline to 80%. EV batteries are normally designed to have a cycle life equal to the overall life expectancy of the vehicle (around 15 years), at which point they can be repurposed as grid storage.
There will therefore be a 15-year lag before these EV batteries end up in storage, but it is natural to assume that a large share of the future grid storage demand can be met with repurposed EV batteries. Combining the two takes us to a future plateau of 20 TWh of new batteries needed across both sectors.
(Source: Rystad Energy)