Traction Battery Market – Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented By Product 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 Region, and By Competition 2021-2031F

Forecast Period	2027-2031
Market Size (2025)	USD 41.70 Billion
CAGR (2026-2031)	15.49%
Fastest Growing Segment	Electric Vehicle (EV)
Largest Market	Asia Pacific
Market Size (2031)	USD 98.96 Billion

Market Overview

The Global Traction Battery Market will grow from USD 41.70 Billion in 2025 to USD 98.96 Billion by 2031 at a 15.49% CAGR. Traction batteries are high-capacity rechargeable energy storage systems designed to power the electric motors of electric vehicles and industrial machinery. The market is primarily propelled by stringent government emissions regulations and substantial financial incentives promoting e-mobility adoption, which compel automotive manufacturers to transition toward electrified powertrains. This regulatory pressure secures sustained demand for energy storage technologies as nations strive to meet decarbonization targets. According to the China Automotive Power Battery Industry Innovation Alliance, in 2024, cumulative power battery installations in China reached 548.4 GWh, representing a year-on-year increase of 41.5%.

Despite this robust growth, the sector faces a significant impediment regarding the volatility and scarcity of critical raw materials required for cell production. The supply chains for essential minerals such as lithium, cobalt, and nickel are frequently concentrated in specific geopolitical regions, creating potential bottlenecks that disrupt manufacturing schedules and inflate production costs. This supply-demand imbalance poses a serious risk to market expansion as manufacturers struggle to secure consistent and affordable inputs to meet the escalating global requirements for vehicle electrification.

Key Market Drivers

The rapid expansion of the electric vehicle (EV) market serves as the primary catalyst driving the global traction battery sector. As consumer adoption shifts toward cleaner transportation, automotive manufacturers are compelled to scale production to meet the rising uptake of battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs). This consumption trend directly necessitates higher volumes of high-capacity energy storage units to populate new vehicle architectures. According to the International Energy Agency, April 2024, in the 'Global EV Outlook 2024', almost 14 million new electric cars were registered globally in 2023, representing a 35% year-on-year increase.

Simultaneously, a surge in strategic investments by automotive Original Equipment Manufacturers (OEMs) is reshaping the manufacturing landscape. Legacy automakers are aggressively establishing joint ventures and vertically integrating battery production to mitigate supply risks and reduce reliance on external suppliers. This capital influx is critical for establishing a resilient supply chain capable of sustaining long-term electrification goals. According to Honda Motor Co., Ltd., April 2024, in a 'News Release', the company plans to build a comprehensive electric vehicle value chain in Canada with an approximate investment of CAD 15 billion. This private sector momentum is further supported by public funding. According to the U.S. Department of Energy, in 2024, the administration announced over $3 billion in funding to boost the domestic production of advanced batteries and battery materials.

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Key Market Challenges

The volatility and scarcity of critical raw materials constitute a formidable obstacle to the expansion of the Global Traction Battery Market. As demand for electric vehicles accelerates, the upstream supply chain frequently struggles to provide sufficient volumes of lithium, cobalt, and nickel, creating a severe supply-demand imbalance. This scarcity drives up material costs, which manufacturers must either absorb, reducing their margins, or pass on to consumers, thereby hindering efforts to achieve price parity with internal combustion engines. Furthermore, the reliance on specific regions for processing renders the global supply chain fragile, where localized geopolitical disruptions can cause widespread production delays.

This dependency on concentrated supply sources exposes the market to significant vulnerability and hampers diversification efforts. According to the Alliance for Automotive Innovation, in 2024, China controlled approximately 85 percent of global lithium-ion battery cell production and 65 percent of lithium refining. Such intense centralization means that manufacturers outside this region face constant risks regarding supply security and price instability. Consequently, automotive companies may be forced to revise their electrification timelines, directly impeding the sustained growth of the traction battery sector.

Key Market Trends

The Accelerated Shift Toward Lithium Iron Phosphate (LFP) Chemistries is reshaping the market landscape as manufacturers prioritize cost efficiency and thermal stability over maximizing energy density for standard-range vehicles. This trends stems from the urgent need to decouple production from volatile cobalt and nickel supply chains, making LFP the preferred choice for entry-level and mid-market electric vehicle segments. The chemistry's resistance to thermal runaway and its longer cycle life have accelerated its adoption beyond commercial fleets into the passenger vehicle mainstream. According to the China Automotive Power Battery Industry Innovation Alliance, January 2025, in the 'December 2024 Power Battery Monthly Data', cumulative LFP battery installations in China reached 409.0 GWh for the full year of 2024, accounting for 74.6% of the total installed capacity.

Simultaneously, the Advancement of Solid-State Battery Technology is progressing from laboratory concepts to viable pre-production roadmaps, addressing the critical industry demand for significantly higher energy densities and safety. These next-generation cells utilize solid electrolytes to eliminate the flammability risks associated with liquid-based equivalents while enabling faster charging speeds and extended driving ranges. Leading battery developers are now confirming precise timelines for commercialization, targeting premium automotive applications to initially offset higher manufacturing costs. According to Samsung SDI, March 2024, in the press release 'Samsung SDI to Present Essence of Super-Gap Battery Technology at InterBattery 2024', the company unveiled its roadmap to commence mass production of all-solid-state batteries by 2027, targeting an industry-leading energy density of 900 watt-hours per liter.

Segmental Insights

The Electric Vehicle segment is currently positioned as the fastest-growing category within the global traction battery market. This rapid expansion is primarily driven by stringent environmental regulations and government mandates aimed at achieving carbon neutrality. Major policy frameworks, such as the emission standards enforced by the European Union and the United States Environmental Protection Agency, are accelerating the transition from internal combustion engines to electric drivetrains. Consequently, automotive manufacturers are increasing the production of battery-powered vehicles to ensure regulatory compliance, thereby generating substantial demand for traction batteries globally.

Regional Insights

Asia Pacific stands as the dominant force in the Global Traction Battery Market, primarily driven by its status as the world's largest manufacturing hub for electric vehicles. Countries like China, Japan, and South Korea host major battery producers such as CATL and LG Energy Solution, ensuring a robust local supply chain. This leadership is further solidified by aggressive government policies, including China’s New Energy Vehicle mandates and India’s electrification schemes, which actively subsidize adoption. Additionally, the International Energy Agency acknowledges the region's pivotal role in global battery production, supported by easy access to critical raw materials and rising demand for industrial electric machinery.

Recent Developments

• In November 2025, Panasonic Energy signed a multi-year agreement with Zoox, an autonomous vehicle developer, to supply traction batteries for a fleet of robotaxis. The battery maker committed to delivering its advanced cylindrical lithium-ion cells, which are engineered to meet the high durability and safety standards required for intensive commercial mobility services. Deliveries are scheduled to begin in early 2026, with the initial supply originating from Japan before transitioning to a manufacturing facility in the United States. This deal highlights the increasing demand for specialized battery technologies in the autonomous transportation sector and reinforces the company's position as a key supplier for next-generation electric mobility platforms.
• In December 2024, LG Energy Solution and General Motors expanded their existing partnership to include the joint development of prismatic battery cells for the automaker's electric vehicles. This collaboration allows the companies to diversify the form factors used in future traction battery applications, moving beyond the pouch-style cells previously favored. The agreement focuses on optimizing design to reduce weight and production costs while simplifying the integration of battery packs into vehicle platforms. By combining the manufacturer's process expertise with the automotive giant's scale, the partners intend to strengthen their supply chain and accelerate the deployment of cost-effective, high-performance energy storage solutions across a broader range of electric trucks and cars.
• In October 2024, CATL launched the Freevoy Super Hybrid Battery, a new product designed specifically for plug-in hybrid and extended-range electric vehicles. This traction battery solution addresses the performance gap between hybrid and fully electric models by providing a pure electric range exceeding 400 kilometers on a single charge. The manufacturer incorporated sodium-ion technology to improve the battery's efficiency in cold climates, ensuring reliable operation in temperatures as low as minus 40 degrees Celsius. Additionally, the system supports 4C superfast charging, allowing vehicles to replenish energy rapidly. This release aims to accelerate the electrification of the global automotive sector by solving common user concerns regarding range and charging convenience.
• In August 2024, Samsung SDI presented a roadmap for its next-generation battery technologies at an industry event in Seoul, marking a significant development in the traction battery market. The company confirmed that its pilot line for solid-state batteries was fully operational, with mass production scheduled to commence in 2027. These new cells utilize a solid electrolyte instead of the liquid component found in traditional lithium-ion batteries, offering an energy density of approximately 500 watt-hours per kilogram. This advancement is projected to enable electric vehicles to achieve a driving range of roughly 600 miles while supporting a lifespan of twenty years and reducing charging times to nine minutes.

Key Market Players

• Contemporary Amperex Technology Co., Ltd.
• LG Energy Solution
• Panasonic Corporation
• BYD Co., Ltd.
• Samsung SDI Co., Ltd.
• SK Innovation Co., Ltd.
• Guoxuan High-Tech Power Energy Co., Ltd.
• Sunwoda Electronic Co., Ltd.
• Automotive Energy Supply Corporation
• Primearth EV Energy

By Product Type	By Capacity	By Application	By Region
Lead Acid Based Nickel Based Lithium-Ion Based Others	Less than 100 Ah 100-200 Ah 200-300 Ah 300-400 Ah 400 Ah & Above	Electric Vehicle (EV) Industrial Locomotives Others	North America Europe Asia Pacific South America Middle East & Africa

Report Scope:

In this report, the Global Traction Battery Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

• Traction Battery Market, By Product Type:

• Lead Acid Based
• Nickel Based
• Lithium-Ion Based
• Others

• Traction Battery Market, By Capacity:

• Less than 100 Ah
• 100-200 Ah
• 200-300 Ah
• 300-400 Ah
• 400 Ah & Above

• Traction Battery Market, By Application:

• Electric Vehicle (EV)
• Industrial
• Locomotives
• Others

• Traction Battery Market, By Region:

• North America
• United States
• Canada
• Mexico
• Europe
• France
• United Kingdom
• Italy
• Germany
• Spain
• Asia Pacific
• China
• India
• Japan
• Australia
• South Korea
• South America
• Brazil
• Argentina
• Colombia
• Middle East & Africa
• South Africa
• Saudi Arabia
• UAE