As demand for electric vehicles (EVs) and energy storage surges, the global battery industry is at a crossroads. A new report, Shaping Tomorrow’s Mobility and Energy, by Capgemini Research Institute, reveals that while batteries are driving decarbonization and creating new business models, the industry faces critical hurdles—from securing raw materials to scaling production. Digitalization, innovation, and collaboration will be key to overcoming these challenges and unlocking the full potential of battery technology.
Inflection Point
Batteries are no longer just a component of modern technology; they are at the core of a global shift towards sustainable energy and mobility. The latest report highlights that as the demand for EVs and renewable energy storage accelerates, the industry is grappling with supply chain constraints, manufacturing challenges, and the need for a sustainable battery lifecycle.
According to the report, 98% of battery manufacturers still rely on lithium-ion technology, but a major transformation is underway. Solid-state batteries, which offer higher energy density, faster charging times, and enhanced safety, are emerging as the next-generation solution, particularly for EVs. While technological advancements drive progress, cost reduction, sustainability, and infrastructure development remain critical to ensuring long-term viability.
Scaling Battery Production
As EV adoption skyrockets and industries pivot towards battery-powered solutions, gigafactories are essential to meeting demand. However, ramping up production comes with significant challenges. More than half (59%) of battery manufacturers cite long factory setup times, while 53% struggle with securing raw materials like lithium, cobalt, and nickel—a situation exacerbated by geopolitical uncertainties and trade restrictions.
Additionally, the economic viability of battery production is a growing concern. With battery costs still high and profitability uncertain, manufacturers must find cost-efficient and scalable production methods. A lack of skilled talent is another major hurdle, with 60% of organizations reporting shortages in battery technology, manufacturing expertise, and data analytics—skills critical for optimizing production and improving efficiency.
To address these challenges, the industry must embrace digitalization. While 67% of executives recognize the importance of data and digital technologies, only 17% have made substantial progress in digital adoption. Solutions like AI-driven process optimization, predictive maintenance, and digital battery passports—which track a battery’s lifecycle from production to recycling—could be game-changers in ensuring efficiency and sustainability.
Battery-Powered Business Models
Beyond EVs, batteries are reshaping business models in the mobility sector. The report reveals that:
- 64% of mobility players are exploring battery swapping, allowing EVs to replace depleted batteries instantly rather than waiting for a charge.
- Nearly two-thirds of automakers are considering battery leasing, reducing upfront costs for consumers and making EVs more accessible.
- Over 50% are working on Battery-as-a-Service (BaaS) models, where customers can rent batteries rather than owning them, aligning cost structures with actual usage.
However, the success of these models hinges on standardization, longevity, and infrastructure development. Without interoperable battery standards, manufacturers risk creating fragmented ecosystems where swapping and leasing are impractical across different brands. Moreover, extending battery lifespan and improving charging infrastructure will be vital for these models to gain mainstream adoption.
Beyond Mobility
The energy and utilities sector is also experiencing a battery-driven transformation. The report highlights that 40% of energy companies are integrating batteries with renewable energy systems, enabling efficient storage and distribution of solar and wind power.
Despite these advancements, major obstacles remain:
- 65% of energy firms cite weak grid infrastructure as a barrier to large-scale battery adoption.
- 61% emphasize the need for multiple battery types to support both short-term and long-term storage solutions.
- 59% stress the importance of open performance standards to enhance reliability and transparency.
As more industries—from aviation and heavy transportation to maritime shipping—embrace battery technology, addressing these challenges will be crucial to ensuring the long-term sustainability of global energy ecosystems.
Building Sustainable Battery Economy
While batteries are key to decarbonization, their sustainability credentials remain under scrutiny. Only one in three battery manufacturers have taken concrete steps toward a circular economy, where battery materials are reused, recycled, or repurposed. This lack of progress poses risks to the industry’s long-term viability, as the environmental impact of battery waste could offset the gains from reducing fossil fuel dependence.
The European Union’s digital battery passport initiative is a potential solution. By setting high environmental standards for battery production and recycling, this framework ensures that OEMs and suppliers make informed decisions based on the entire battery lifecycle. If widely adopted, such measures could drive global improvements in sustainable battery management.
The Future of Batteries: A Roadmap for Innovation
The battery industry is at a turning point. As mobility, energy, and industrial sectors rapidly transition to battery-driven solutions, overcoming current challenges will require:
- Scaling gigafactories efficiently, with digital tools enhancing production speed and cost-effectiveness.
- Investing in alternative battery chemistries, like solid-state batteries, to improve performance and longevity.
- Developing robust battery infrastructure, including universal standards for swapping, leasing, and energy storage.
- Advancing sustainability efforts, focusing on recycling, second-life applications, and ethical sourcing of raw materials.
- Bridging the talent gap, by training the next generation of engineers, data scientists, and manufacturing experts.
As the report suggests, collaboration between industry players, policymakers, and technology leaders will be essential. A connected innovation ecosystem, powered by digital transformation, can unlock the full potential of batteries—ensuring they remain the cornerstone of a cleaner, more sustainable future.
Final Thoughts
The battery revolution is well underway, but scaling this transformation will require more than just technological advancements. Infrastructure, regulations, sustainability, and talent development will all play a crucial role in shaping the future of energy storage and electric mobility. With the right strategies in place, batteries can drive the world towards a carbon-neutral economy, unlocking a new era of innovation and sustainability.
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