The Global Traction Battery Market size is predicted to reach $70 billion by 2031, growing at a CAGR of 12.7% during the forecast period 2024-2031, according to the latest market research report published by IndustryARC. The primary factors influencing the market growth are the increasing Electrification, Charging Infrastructure Development, Increasing Electric Vehicle Adoptation, Grid integration and Energy storage, finds IndustryARC in its recent report, titled “Traction Battery Market – By Type (Lead Acid Based, Nickel Based, Lithium-ion Based, Others), By Capacity (Less than 100 Ah, 100-200 Ah, 200-300 Ah, 300-400 Ah, 400 Ah & Above), By Application (Electric Vehicle (EV), Industrial, Locomotives, Others), By Geography – Global Opportunity Analysis & Industry Forecast, 2024-2031.”
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Asia-Pacific to Register Highest Growth:
The Asia-Pacific region emerged as the dominant market for traction batteries in 2023 and is projected to witness the highest compound annual growth rate (CAGR) in the coming years. The increasing demand for consumer goods has played a significant role in the expansion of industrial manufacturing sectors in countries like China, India, and others. These sectors heavily rely on traction batteries to power their industrial equipment systems. As a result, the traction battery market in the Asia-Pacific region is expected to experience substantial growth. Additionally, growing environmental concerns and government initiatives have fueled the development of electric vehicles, which extensively utilize traction batteries to power their electric motors. A study conducted by Business Standard, for instance, has predicted a surge in electric vehicle sales in India between 2020 and 2023. Consequently, there is an anticipated increase in the sales of traction batteries for electric cars, creating a highly lucrative market potential.
Traction Battery Market 2023-2031: Segmentation
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Traction Battery Market Report – Key Takeaways:
The Asia Pacific region exhibits the most rapid growth rate
The growth of industrial manufacturing sectors in countries like China and India is being fueled by the increasing demand for consumer goods. This, in turn, is driving the expansion of the Asia Pacific traction battery market as these batteries are utilized to power industrial machinery systems. Furthermore, the growth of electric vehicles is being propelled by growing environmental initiatives, with traction batteries being widely employed to power electric motors. In India, government-led initiatives promoting e-mobility and the establishment of suitable charging infrastructure present new prospects for industry participants. The European traction battery market, valued at over USD6.8 billion in 2023, is expected to continue its upward trajectory due to the surge in electric vehicle sales and stringent targets for reducing carbon emissions in the automotive sector.
Growth of Electric vehicles
Growing environmental initiatives and the need to reduce carbon emissions are driving the adoption of electric vehicles. Traction batteries are essential components of electric vehicles, as they provide the power needed for electric motors. The increasing popularity of electric vehicles is fueling the demand for traction batteries.
Rising electrification of the transportation industry.
The transportation industry is experiencing a substantial transition towards electric vehicles as a strategy to mitigate greenhouse gas emissions and reduce reliance on fossil fuels. Traction batteries are essential for storing and supplying electrical energy in electric vehicles, leading to a surge in demand for these batteries. Noteworthy advancements in battery technology, including enhanced energy density, extended driving ranges, and accelerated charging times, have significantly improved the practicality of electric vehicles for everyday usage. These technological advancements have instilled greater consumer trust in electric vehicles, resulting in an increased demand for traction batteries.
Manufacturing Cost may stymie industry growth.
The market for traction batteries faces a significant challenge in the form of manufacturing and acquisition costs. The high price of traction batteries, when compared to conventional gasoline-powered vehicles, can be a major deterrent for many potential users. The production of these batteries is costly due to the requirement of expensive raw minerals such as lithium, cobalt, and nickel. Moreover, recent fluctuations in the cost of these materials have further contributed to the elevated price of traction batteries. Consequently, the adoption of electric vehicles is hindered as the demand for traction batteries is constrained by consumer hesitation arising from these cost considerations.
Concerns about Safety and Recycling may impede market expansion.
Meeting rigorous safety standards is imperative for traction batteries to prevent incidents like thermal runaway, fire, or explosion. Ensuring the safety of these batteries throughout their lifecycle, from production to disposal, poses a significant challenge for the industry. Furthermore, the recycling and appropriate disposal of traction batteries at the end of their lifespan are essential for environmental sustainability. The development of efficient recycling methods and the implementation of proper disposal measures continues to be ongoing challenges in the industry.
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Key Opportunity Analysis:
Technological Advancement
The advancement of recycling technologies for recovering valuable materials from old batteries represents a significant opportunity for the traction battery industry. The number of wasted batteries that must be disposed of in the coming years will rise in tandem with the demand for EVs and traction batteries. Recycling these batteries can aid in the recovery of important components such as lithium, cobalt, and nickel, which can then be used to produce new batteries, reducing the demand for new raw materials and the negative environmental effects associated with their extraction and processing. Recycling can help to reduce the cost of producing new batteries as well as the demand for raw materials, making them more accessible and affordable to a wider range of users.
Growing Demand for Electric & Hybrid Cars
The growing awareness of environmentally friendly automobiles, combined with rising volatility in fuel prices, has increased demand for electric vehicles. The growing demand for electric vehicles has fueled R&D efforts to improve battery efficiency by shortening the charging cycle and lowering unit consumption per charge. Furthermore, the introduction of high energy density batteries has intensified competition among traction battery producers to produce highly efficient traction batteries for electric and hybrid vehicles. Many of these aspects are projected to provide chances for future expansion in the global traction battery market.
Recycling and Second-Life Opportunities
Traction batteries have a limited lifespan for EV applications but can still hold value in secondary applications. Developing effective recycling processes and exploring second-life applications for used traction batteries present opportunities for sustainable resource utilization and cost reduction. Traction batteries contain valuable materials such as lithium, cobalt, nickel, and other rare earth elements. Recycling allows for the recovery of these materials, reducing the reliance on mining and promoting resource efficiency. The recycling process involves disassembling the batteries, separating the different components, and extracting the valuable materials for reuse. Recycling traction batteries helps mitigate the environmental impact associated with their production and disposal. It reduces the need for new raw materials extraction, decreases energy consumption, and prevents potentially hazardous materials from entering landfills or being improperly disposed of.
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The Report also covers the following Areas:
Traction Battery Market 2023-2031: Key Highlights
Covid and Ukrainian Crisis Impact:
The traction battery industry is facing a prolonged recovery period due to the impact of the COVID-19 pandemic. The market has been severely affected by both the pandemic and a lack of widespread acceptance of the product. However, there are several factors that are expected to support the market’s recovery, including the relaxation of regulations, increasing demand for electric vehicles, and growing consumer awareness of green energy. During the COVID-19 period, many companies had to temporarily shut down or reduce their operations to mitigate the risk of infection among their workforce. As a result, the manufacturing rates of traction batteries were significantly slowed down.
The growth of the Traction Battery Market has been hindered by the supply chain disruption caused by the Russia-Ukraine war. This disruption has led to increased freight charges, a shortage of containers, and limited availability of warehousing space. Consequently, the aftermarket has experienced inflationary issues.
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The Traction Battery Market is fragmented with several global and regional companies operating with expansive manufacturing capabilities and extensive distribution networks. The key companies profiled are listed below:
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