Capgemini Research Shows Battery Industry Faces Dual Production and Innovation Challenges

The battery industry must simultaneously tackle production scale-up challenges while developing next-generation battery technologies, according to a new report released today by the Capgemini Research Institute.

The report, titled "The battery revolution: Shaping tomorrow's mobility and energy," reveals that manufacturers face significant hurdles across the battery value chain despite growing demand for electric vehicles (EVs) and energy storage solutions.

According to the report, 76% of manufacturers will need to upgrade or build new production lines to support future battery cell generations, highlighting the scale of industrial transformation required.

While lithium-ion batteries currently dominate the market, with 98% of manufacturers surveyed producing them, the industry is actively exploring alternatives to improve performance and address limitations.

Solid-state batteries represent one of the most promising technological shifts, particularly for EVs. These batteries offer potentially higher energy densities, faster charging times, and improved safety compared to traditional lithium-ion batteries with liquid electrolytes.

The survey indicates that batteries are enabling novel business models in the mobility sector. Approximately 64% of mobility companies are exploring battery swapping, while nearly two-thirds of automotive organisations are considering battery-leasing options.

Over half are looking at Battery-as-a-Service (BaaS) models that allow EV owners to lease or rent batteries rather than purchasing them outright. However, the success of these approaches depends on standardisation, battery longevity, infrastructure development, and achieving economies of scale.

In the energy sector, 40% of organisations report integrating batteries with renewable energy systems. Most (69%) are either offering or planning to offer BaaS solutions, though challenges remain. The report notes that while batteries are expensive assets, the electricity they store is relatively inexpensive, creating profitability challenges.

The influence of battery technology extends beyond cars and energy grids. Three in five organisations surveyed believe battery innovation will significantly impact fleet operators and heavy transportation within the next decade.

Aviation and shipping industries are also experiencing transformation through innovations like battery-powered electric vertical takeoff and landing (eVTOL) aircraft, heavy-duty electric vehicles, and electric ships designed for short sea routes.

The report identifies several obstacles facing the industry. Over half of battery manufacturers cite lengthy timeframes for building and ramping up gigafactories (59%) and supply chain instability for components and materials (53%) as major challenges.

Talent shortages represent another significant barrier, with 60% of organisations struggling to find workers skilled in both battery technology and manufacturing. The expertise gap extends to data scientists and manufacturing engineers capable of correlating production data with battery performance.

Despite batteries' role in decarbonisation, only one-third of manufacturers surveyed have taken meaningful steps toward establishing a circular economy for battery materials.

While 67% of respondents acknowledge the importance of data and digital technologies for the industry's future, current digitalisation among battery manufacturers remains low at just 17%. In Europe, the upcoming requirement for "battery passports" will set environmental standards for production and recycling, enabling more informed decision-making throughout the battery lifecycle.

The Capgemini Research Institute surveyed 750 senior executives across 15 countries in North America, Europe, and Asia-Pacific and conducted in-depth discussions with 22 industry experts to compile the report. The global survey was conducted in September-October 2024.