Overview

Overview

Industry Executive Summary 2025 marked a year of resilience and recalibration in the global battery industry. Global xEV sales surged 22% to 21.6M units, with BEV demand up 28% while PHEV demand

climbed 12%. For the first time, xEVs account for >50% of new car sales in China. This milestone comes as China continues to lead the world in EV market penetration, while Europe returned to growth and the US EV market remained comparatively stagnant. Automakers are adapting their market-entry strategies: Chinese OEMs accelerated their push into Europe by transitioning from exports to local manufacturing and by increasing emphasis on hybrids and PHEVs to navigate anti-subsidy tariffs and market access constraints. In parallel, the “BESS decade” continued apace: deployments surpassed 100 GW added in 2025, driven by dramatically falling costs (31% year-on-year decline), storage-friendly policies, and new markets, while BESS product performance (energy density, efficiency, warranties) continued to improve. New BESS installations reached 104 GW / 257 GWh in 2025, taking cumulative global capacity to 267 GW / 610 GWh; in other words, roughly 40% of today’s cumulative BESS capacity was installed in 2025 alone, underscoring BESS’s significance as one of the most promising and fast-growing sectors in the battery industry landscape. Global battery prices at the pack level decreased 9% to a record low of $108/kWh, with China LFP pack costs around $84/kWh (down 13% year-on-year), while pack costs remained materially higher in the US (+44%) and Europe (+56%) due to localization costs, manufacturing inefficiencies, and tariffs. The industry grappled with overcapacity, particularly in China where operating capacity reached 4x current market demand, eroding margins and catalyzing a wave of “involutionary” consolidation, forcing manufacturers to prioritize cost-down execution, vertical integration, and overseas market expansion into Southeast Asia and Europe to bypass trade barriers and to improve margins. The investment landscape in 2025 shifted decisively from venture capital to infrastructure. Climate-related investment funds raised $101 billion, up 40% year-on-year, driven largely by infrastructure funds focused on scaling mature assets like BESS and data centers. Conversely, early-stage and growth equity VC funding tightened to $14 billion in 2025 (-50% vs 2023), contributing to high-profile insolvencies, most notably Northvolt’s wind-down and Powin’s Chapter 11 filing (both June 2025) sent shockwaves through the ex-China battery ecosystem and reinforced investor risk sensitivity. Public markets reflected this bifurcation, with established Asian battery giants gaining market value (eg. CATL reported net profit of $6.8 billion Q1-Q3) while many Western startups and SPAC-era companies struggled to maintain valuations. Emerging technology trends in 2025 include an aggressive pivot toward LFP, which now accounts for nearly 50% of global EV battery sales and dominates the stationary storage market. Innovation accelerated in high-compaction-density LFP and ultra-fast charging cells. Sodium-ion had a breakout year in stationary storage with grid-scale deployments, while solid-state development transitioned from lab breakthroughs to industrial pilot lines, with OEMs targeting 2027–2030 for integration. Artificial Intelligence (AI) solidified its role as a critical enabler, embedding itself into manufacturing quality control, materials discovery, and the management of booming power demands from AI data centers. Novel use cases such as robotics, drones, satellites, specialized industrial and heavy equipment, and virtual power plants (VPPs) are achieving higher levels of technical readiness and commercialization. Opportunities tied to AI datacenters including BESS, UPS, BBUs, and other layers of the power stack to enable speed-to-power and operational resilience are emerging as a new focus for commercial R&D and entrepreneurial energy in the space.

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