With the current changes in the automotive market, the demand for electric vehicle (EV) batteries has resulted in unprecedented growth. Recent projections indicate that the global EV battery market is expected to grow from $21.9 billion in 2020 to $154.9 billion in 2028.
According to a recent McKinsey & Co. report, by 2030, ninety percent of automotive demand will be for mobility applications, particularly in electric vehicles. As a result, the EV battery market offers numerous opportunities for investors to consider.
Several factors have contributed to the surge in demand for EV batteries. Increased advocacy for carbon footprint reduction is one factor contributing to soaring demand. With the global climate change crisis, there have been calls to reduce carbon footprints by embracing environmentally friendly energy, such as replacing fossil fuels with electricity.
Similarly, governments have been at the forefront of initiatives to support the transition to EVs by implementing incentives. President Biden, for example, recently announced a $2.8 billion grant to support EV battery manufacturing. This incentive is expected to boost EV battery production and demand.
The falling cost of lithium-ion batteries allows for the mass production of EV batteries at a lower cost. Similarly, automobile manufacturers’ competitive strategy for expanding their global footprint is critical.
To increase their global presence, most automotive brands have resorted to developing cutting-edge products. One of the products that have improved their value proposition is the EV battery.
The increase in EV battery demand opens up a window of opportunity for investors. The first opportunity is in the advancement of software and digitalization. An EV’s architecture technically includes the smart cockpit system, control system, and autonomous driving system. To function, this architecture is dependent on algorithms, chips, and software. As a result, investing in hardware and software development is a profitable venture.
The EV battery market has also shifted the automotive ecosystem. EV drivers need to charge or swap batteries as opposed to refueling. The new ecosystem ushers several opportunities, including battery recycling, EV charging piles, and battery swapping stations.
The maturation of autonomous driving is another opportunity presented by the growth of EV batteries. While electric vehicles have been a game changer in the automotive industry, this is only the beginning.
The ultimate goal will be to make driving autonomous via self-driving vehicles. Aside from improving traffic efficiency, self-driving vehicles will significantly reduce social costs such as time and labor.
Lastly, the energy storage sector is gaining importance with the shift to EV vehicles. The pressure to meet the energy demands has seen some battery companies offshoring. Investors can either partner with EV battery manufacturers to establish multinational battery companies or venture into mining minerals such as cobalt, nickel and the manufacturing of liquid electrolytes.
Finally, growth in the EV battery market is likely to spread to other areas and sectors. As a result, investors have a wide range of opportunities at their disposal.
Exploring such ventures provides a lucrative opportunity in an untapped market with excellent growth potential. It is also a long-term opportunity because the transition to EVs aligns with environmental goals.
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