IEA: Electric Vehicle Battery Demand Accounts for 90% of Global Demand, Supply Chain Sustainability Becomes Focus
In December 2024, the International Energy Agency (IEA) released the report "EV Battery Supply Chain Sustainability - Lifecycle Impacts and the Role of Recycling". The report mentions that driven by the global trend towards electrification, the demand for power batteries continues to grow rapidly, placing higher demands on supply chain sustainability and circular economy. This report conducts an analysis of demand growth, battery recycling, and policy recommendations, revealing key challenges and opportunities for the future battery supply chain and proposing policy recommendations.
Global battery demand is growing strongly, with electric vehicles becoming the main driver
From 2017 to 2023, there has been a significant increase in global demand for batteries. In 2023, global battery demand will reach 850GWh, an increase of over 40% year-on-year. Among them, the demand for electric vehicle batteries accounts for 90% of the total demand, which is the main driving force for growth.
By 2030, under the current policy scenario, the demand for batteries will be 4.5 times that of 2023, and will increase to over 7 times by 2035; With each country fully fulfilling its climate and energy commitments, demand will grow even faster, reaching 5 times and 9 times respectively.
Figure 1 Battery demand by application field (left) and region (again) from 2017 to 2023
Annotation: LDV (light duty vehicle) refers to light vehicles, including sedans and vans; EMDEs (ext. China) refer to emerging markets and developing economies (excluding China); AEs refer to developed economies. Battery storage refers to the demand brought about by the installation of new energy storage devices.
Source: IEA(2024), Global EV Outlook 2024.
From a regional distribution perspective, China is the dominant market for battery demand, accounting for 55% of global demand, followed by the European Union and the United States (15% each) and emerging markets and developing economies (EMDEs). Among emerging markets and developing economies, demand from emerging markets such as India and Southeast Asia is growing rapidly, and their global share is expected to increase to 10% by 2030.
In the field of battery applications, light-duty vehicles (LDVs) account for the vast majority of demand. Although the battery demand for electric two/three wheelers is relatively small. But in specific regions, the importance is relatively high. For example, in 2023, 25% of the demand for electric vehicle batteries in emerging markets and developing economies (excluding China) will come from electric two wheelers and tricycles, much higher than China (3%) and Europe and America (less than 0.5%). Electric two wheelers and tricycles account for about half of the road travel mileage in these areas, while electrification requires only 30% of the battery capacity for its entire fleet compared to car electrification.
Battery recycling can reduce the demand for key minerals and enhance sustainability
Battery recycling is expected to reduce mining demand and battery lifecycle emissions, and enhance supply chain security and diversification, providing new domestic supply sources for regions such as Europe and North America where battery raw materials are scarce. However, whether countries can fully utilize the advantages of recycling will depend on their recycling capacity and the availability of raw material supply.
At present, China accounts for the majority of global battery recycling capacity, with battery pretreatment capacity reaching 80% and material recycling capacity approaching 85%. Assuming that all announced battery recycling projects can be achieved, by 2030, the recycling capacity of North America and Europe will account for 10% and 5% of the global total, respectively. South Korea will also play an important role this year, accounting for over 5% of the global total. In emerging markets and developing economies, India's material recycling capacity accounts for approximately 2% of the global total, while Southeast Asia and Morocco are expected to reach nearly 2% and 1% respectively. It is expected that by 2030, China will still maintain 80% of the world's battery pre-treatment capacity and 75% of its material recycling capacity.
Figure 2: Battery Recycling Capacity Based on Published Projects (2021-2030)
Annotation: Left: "Preprocessing" (such as front-end processing such as disassembly, crushing, sorting, etc.); Right: "Material Recycling" (extracting and reusing key materials such as lithium, nickel, cobalt, etc.); The production capacity is calculated in million tons based on the total amount of recyclable materials (equivalent to the quality of battery cells).
Source: IEA (2024), Recycling of Critical Minerals.
It is expected that by 2035, scrapped electric vehicles and energy storage batteries will become the main recycled raw materials, and global raw material supply will increase significantly by 2040, reaching an estimated 5.5TWh to 9TWh by 2050. By 2050, in the announced commitment scenarios, the demand for lithium, nickel, and cobalt can be reduced by 25%, 25%, and 40% respectively through battery recycling. Especially after 2035, with the significant increase in the recycling of used electric vehicle batteries, recycling will become the main source of critical resources, enhancing the resilience of the battery material supply chain.
Report policy recommendations
The report proposes three policy recommendations for the sustainable development of the global electric vehicle battery supply chain.
1. Adopt a holistic approach.
Synchronize the construction of recycling facilities. The expansion of electric vehicle and battery production capacity will bring more manufacturing process waste. Synchronized layout of recycling infrastructure with battery production capacity can help reduce environmental impact and lower final production costs, while also preparing for the recycling and disposal of large-scale retired batteries in the future.
Clean energy supply. Reducing carbon emissions throughout the entire battery production process requires a cleaner energy structure. For economies that rely on coal, priority should be given to shifting towards low-carbon electricity to reduce emissions; In countries with critical mineral resources, potential hazards to water, air, and biodiversity from mineral extraction and smelting should be further controlled, and lifecycle emissions should be reduced through clean energy supply.
2. Enhance transparency, traceability, and ESG performance.
Supply chain traceability system. Adopting internationally recognized standards and platforms such as the Global Battery Passport, we ensure transparency and reliability of data throughout the entire process from mineral extraction to battery production, use, and recycling, promoting higher levels of environmental, social, and governance (ESG).
Improve battery recycling rate. By 2035, recycling will become one of the main sources of key minerals. By legislating or regulating (such as EU battery regulations) to clarify the proportion of recycled materials used and increase battery recycling rates, it helps to build a compliant and efficient recycling system. Strengthening battery traceability can also curb informal recycling and illegal dismantling.
3. Strengthen cooperation and promote the trade of second-hand electric vehicles.
The international second-hand car market. Exporting second-hand electric vehicles to emerging markets can increase the popularity and affordability of electric vehicles. But it is necessary to ensure that vehicles and batteries are properly disposed of at the end of their lives, such as ensuring a sound recycling process or transporting waste batteries back to their original registered location for proper disposal.
Unified classification and cross-border recycling. For retired batteries and "black mass" (usually referring to the concentrated material of key battery materials obtained after disassembly and crushing) Establishing unified standards and classification criteria can reduce trade barriers and expand the scale of the recycling market. Strengthen supervision, avoid informal recycling and illegal import and export of waste materials, and reduce environmental and health risks.