Battery Contract Manufacturing Market Size, Share & Trends Analysis Report By Product (Lithium-ion, Lithium Polymer, LFP, Alkaline), By Application, By Region, And Segment Forecasts, 2023 - 2030

Market Size & Trends

The global battery contract manufacturing market size was valued at USD 4.59 billion in 2022 and is projected to grow at a compound annual growth rate (CAGR) of 15.7% from 2023 to 2030. Battery contract manufacturing refers to the practice of outsourcing the production of batteries to third-party manufacturers. This is often done by companies that require large quantities of batteries for their products, but do not have the resources or expertise to manufacture them in-house. The electric vehicle application is expected to witness significant growth owing to the low cost of lithium-ion batteries for contract manufacturing.

In 2022, the U.S. constituted as the largest market for battery contract manufacturing in North America. Rising EV sales in the country owing to supportive government regulations along with the presence of key players in the U.S. market are expected to drive the demand for battery contract manufacturing.

The advantages of battery contract manufacturing include lower costs, faster production times, and access to specialized expertise. By outsourcing battery production, companies can focus on their core competencies and leave the manufacturing process to the experts. These reasons are attributed to the growth of the battery contract manufacturing industry in the U.S. over the forecast period.

The federal policies include the American Recovery and Reinvestment Act of 2009, which established tax credits for purchasing electric vehicles. The new CAFE standards (Corporate Average Fuel Economy) mandated fuel economy standards for passenger cars and light commercial vehicles resulting in the expansion of electric drive technologies.

Increasing demand for lithium-ion batteries in smartphones owing to their extended shelf life and enhanced efficiency is expected to drive the market. In addition, increasing demand for electric vehicles owing to growing consumer awareness about reducing global carbon emissions is expected to fuel market growth.

However, companies may have less control over the quality of the batteries produced and may face supply chain risks if their manufacturing partner experiences disruptions and may pose a threat to market growth.  

COVID-19 has been a major restraint in the market for battery contract manufacturing due to factors such as lower operating costs for end-users and interruptions in the availability of battery components due to slow manufacturing activities and logistical issues.

Product Insights

Based on product, the market is segregated into Lithium-ion, Lithium polymer, Lithium iron phosphate (LFP), Alkaline, Nickel Metal Hydride, and Nickel Cadmium. In terms of revenue, the lithium-ion segment accounted for the largest share of 37.81% in the global market in 2022. Several advantages to lithium-ion battery contract manufacturing is that it can provide flexibility in terms of production volume. A company can increase or decrease the number of batteries it requires without having to make significant changes to its production processes. Additionally, it can reduce the cost of production since the manufacturer can take advantage of economies of scale and reduce the cost of raw materials by purchasing them in bulk.

LFP batteries offer excellent safety and a long life span to the product. Rising demand for lithium iron phosphate batteries in portable and stationary applications as they require high load currents and endurance is expected to augment the market growth.

Rising demand for nickel cadmium batteries on account of its high specific energy, specific power, and long-life span is expected to augment the market growth over the forecast period. Nickel cadmium finds use in EV vehicles, medical devices, and industrial applications.

Application Insights

Based on application, the market has been segmented into electric vehicles, consumer electronics, defense/military, telecom towers, energy storage systems, mining, space, marine and sub-marines, and others. In terms of revenue, the electric vehicles segment led the market in 2022 by accounting for a share of 28.93% of the market. Battery contract manufacturing is also used in the production of consumer electronics such as smartphones, tablets, laptops, and other portable devices that use lithium-ion batteries as a product.

The energy storage system application in the battery contract manufacturing market is expected to be the fastest-growing application segment during the forecast period. Growing awareness of the benefits of energy storage systems, especially in emerging economies such as Asia Pacific, Europe, and North America, is expected to favor the growth of the application segment.

In addition, lithium-ion batteries are used in many industrial applications such as power tools, cordless tools, marine equipment and machinery, agricultural machinery, industrial automation systems, aviation, military and defense, electronics, civil infrastructure, and oil and gas. These factors are expected to witness the market growth over the forecast period.

Regional Insights

Asia Pacific is expected to account for the largest market share of 51.93% over the forecast period in terms of revenue in 2022. Contract manufacturing of batteries in this region is also becoming increasingly popular, as it provides a cost-effective and efficient way for companies to meet their battery production needs. Many companies in the Asia Pacific region offer contract manufacturing services for batteries. These companies can produce batteries for a wide range of applications, including consumer electronics, electric vehicles, and energy storage systems.

Germany market for battery contract manufacturing is expected to witness reasonable growth over the forecast period owing to the increasing use of lithium-ion batteries in energy storage systems, electric vehicles, and consumer electronics. Germany is the world’s leading market for energy storage systems as well as the development of renewable energies.

The growing electric vehicle market in Asia-Pacific countries such as India and China is one of the major factors positively impacting the demand for battery contract manufacturing. Moreover, rising environmental concerns have led China to ban traditional fossil fuel-powered scooters in all its major cities to reduce emissions, leading to increased sales of electric scooters.  

Key Companies & Market Share Insights

The market is consolidated with key participants involved in R&D and constant product innovation. Key manufacturers include Rose Batteries, Ttek Assemblies Inc., PH2, Johnson Controls, Valmet Automotive, among others.

Several companies are engaged in new product development to improve their global market share. For instance, in October 2022, Neoen completed its financing for its 100 MW/200 MWh battery contract located near Canberra, Australia. The battery is still under construction and is expected to be operational by mid-2023.   Some prominent players in the global battery contract manufacturing market include:

• Rose Batteries

• Ttek Assemblies Inc.

• PH2

• Johnson Controls

• Valmet Automotive

• Tiger Electronics, Inc.

• Coulometrics, LLC

Battery Contract Manufacturing Market Report Scope

Global Battery Contract Manufacturing Market Report Segmentation

This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2018 to 2030. For this study, Grand View Research has segmented the global battery contract manufacturing market report based on product, application, and region:

• Product Outlook (Revenue, USD Million, 2018 - 2030)

  • Lithium Ion

  • Lithium-polymer

  • Lithium iron phosphate

  • Alkaline

  • Nickel Metal Hydride

  • Nickel Cadmium

• Application Outlook (Revenue, USD Million, 2018 - 2030)

  • Electric vehicles

  • Consumer Electronics

  • Defense / Military

  • Telecom Towers

  • Energy Storage System

  • Mining

  • Space

  • Marine and sub-marines

  • Others

• Regional Outlook (Revenue, USD Million, 2018 - 2030)

  • North America

    • U.S.

    • Canada

    • Mexico

  • Europe

    • Germany

    • UK

    • France

    • Spain

    • Italy

    • Netherlands

  • Asia Pacific

    • China

    • Japan

    • India

    • South Korea

    • Australia

    • Thailand

    • Malaysia

  • Central and South America

    • Brazil

    • Argentina

    • Chile

  • Middle East and Africa

    • Saudi Arabia

    • UAE

    • South Africa