Exponential growth in battery demand
The battery industry is on the brink of significant expansion. By 2040, demand for batteries is projected to increase ninefold. To accommodate this surge, the industry’s total capex is expected to nearly triple, growing from $567 billion in 2030 to $1,6 trillion by 2040. This vast investment will be distributed across various stages of the battery supply chain, from the extraction of raw materials to the assembly and integration of battery packs into final products.
Upstream investments: Securing critical resources
A substantial portion of this investment will be directed towards the upstream segment, which involves the extraction and processing of raw materials essential for battery production. Companies are expected to focus primarily on securing lithium, nickel, copper, and aluminum. For instance, investment in lithium, a key component in batteries, is forecasted to nearly double, increasing from $94 billion in 2030 to $188 billion in 2040. Similarly, capex in nickel and copper is projected to more than double, reflecting their critical roles in the battery supply chain.
One of the most significant areas of growth is in recycling. With a 26-fold increase in demand for recycled materials expected by 2040, the sector’s capex is predicted to rise from $26 billion in 2030 to $157 billion. This shift underscores the growing emphasis on sustainability and the need for efficient recycling processes to meet future battery demand.
Midstream focus: Enhancing battery component efficiency
In the midstream segment, where raw materials are processed into battery components, significant investments will be necessary to improve the performance and efficiency of key elements, particularly the cathode. The cathode, which serves as the positive electrode during battery discharge, is anticipated to see the most substantial investment, with capex projected to increase from $48 billion in 2030 to $157 billion by 2040.
Other crucial components, such as separators and anodes, are also expected to attract considerable investment, with the goal of enhancing battery safety and performance. The investment in separators, for example, is expected to rise sharply, reaching $92 billion by 2040, while anode investment is set to increase to $43 billion.
Downstream: The future of battery investment
Although much of the current focus is on raw materials and battery technologies, the downstream segment of the battery industry is expected to receive the largest share of future investments. This segment includes battery pack assembly, integration into products, distribution, and the recycling or disposal of batteries. By 2040, downstream capex is expected to surge from $222 billion in 2030 to $686 billion, reflecting the growing complexity and scale of battery applications across various industries.
Conclusion: A massive financial commitment for a sustainable future
The projected $1,6 trillion investment by 2040 highlights the scale of the transformation required to meet the future demand for batteries. This significant financial commitment is crucial not only for the growth of the battery industry but also for advancing global efforts to transition to clean energy and reduce carbon emissions. As the world moves toward a more electrified and sustainable future, the investments made today will be pivotal in shaping the energy landscape for decades to come.
Source: Visual Capitalist, Benchmark
