Industry and government efforts to transition away from fossil fuels are driving a sharp increase in demand for electric vehicle (EV) batteries.
However, several challenges remain. These include concerns about battery reliability, supply chain limitations, environmental risks tied to raw materials, and high production costs. This article outlines key issues and recent developments in the EV battery sector.
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Key Technological Limitations
Energy density is a critical factor for powering vehicles. Conventional gasoline engines have much higher energy density compared to batteries used in EVs.
Petroleum-based fuels typically have an energy density of around 13,000 Wh/kg. In contrast, lithium-ion batteries (LIBs), commonly used in EVs, offer about 150–180 Wh/kg.
Long charging times are another major concern for consumers. Current EV batteries often take 8 to 10 hours to charge fully. Researchers are working to reduce this time, which could improve user trust and adoption.2
There is also no widely adopted end-of-life (EoL) strategy for EV batteries. Developing industry standards for recycling and reusing spent batteries could help reduce costs and minimize environmental impact. It would also reduce raw material demand and improve supply chain resilience.
Supply Chain and Cost Challenges
Key metals such as lithium, cobalt, and nickel are required to manufacture EV batteries, including LIBs. The availability of these materials depends on global mining capacity and geographic distribution.
Demand for high-purity nickel and cobalt has grown rapidly in recent years. However, limited availability and production challenges have driven up prices. Lithium costs also rose sharply in 2022, partly due to pandemic-related disruptions and slower output growth.3
While lithium itself is not considered scarce, scaling up production to meet the growing needs of the EV and grid storage markets remains a challenge. The mining sector must expand capacity and improve technology to meet future demand.
The extraction of lithium also requires large volumes of water, which can impact water availability in agricultural regions. Additionally, small-scale cobalt mining in some areas has raised concerns about labor conditions and safety practices.
In the U.S., supply chain issues are compounded by reliance on imported materials. Many cobalt and copper mining operations that supply the U.S. market are owned by companies based outside the country. This dependence can lead to higher costs and delays, particularly when sourcing raw materials from international suppliers.4
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Policy and Trade Dynamics Impacting the EV Battery Supply Chain
Analysts at the Oxford Institute for Energy Studies have noted that recent trade policies and tariffs have introduced additional uncertainty into the EV battery supply chain. These trade measures may affect the pace of battery production and supply chain development in North America.
Policy shifts, including modifications to U.S. trade and industrial legislation, have created uncertainty across various parts of the battery value chain. Inconsistent domestic standards and changing regulatory conditions may affect manufacturing and investment decisions in different sectors. While the outlook for EV adoption in the U.S. remains mixed, demand for grid-scale battery storage continues to grow.
Broader geopolitical factors—such as regulatory misalignment across countries, sanctions, and trade barriers—also affect the availability and distribution of EV batteries and materials. The Inflation Reduction Act (IRA) of 2022 introduced a $7,500 tax credit for domestically purchased EVs starting in 2024. This influenced investment decisions, including the withdrawal of a planned battery factory in North America by a major manufacturer.
Governments globally are responding to supply chain concerns by promoting domestic production. Since 2018, regions such as Japan, South Korea, and the European Union have implemented subsidies and regulations aimed at strengthening local battery manufacturing. These efforts have contributed to reshaping the global EV battery landscape.6
How China Has Addressed EV Battery Supply Chain Challenges
Over the past year, China has strengthened its position as a global leader in the EV battery sector. In October 2024, CATL introduced the Freevoy battery, which combines lithium-ion and sodium-ion technologies. Around the same time, competitor BYD announced the commercial availability of sodium-ion batteries for energy storage applications. BYD reported that the cost of these batteries has reached parity with its lithium-iron-phosphate (LFP) batteries and could fall further (by up to 70 %).7
China’s progress in the EV industry can be traced back to early government decisions that emphasized technology development as a pathway to strengthen domestic capabilities. While the joint venture policy brought foreign automotive manufacturing to China, it initially had limited impact on improving local brand quality.
Though subsidies and industrial targets have supported the sector, much of China’s advancement in EV and battery technologies has come from its private sector.5 Government support for both automakers and battery producers has helped scale investment and manufacturing, contributing to the country’s rapid growth in this field.
To learn more about how China's leading EV manufacturer BYD is shaping global competition, watch:
How Chinese EV Giant BYD Is Taking On Tesla
What Role Will Policy and Circular Economy Play in the Future of EV Batteries?
Advancing the circular economy for EV batteries will require policies that support comprehensive recycling and reuse. These policies should aim to improve energy efficiency in material recovery while encouraging low-emission operations.
To address issues of data accuracy and supply chain transparency, the International Energy Agency of the EU has introduced the “Global Battery Passport” initiative. This program aims to establish a standardized global reporting framework, providing detailed information on battery history, environmental and social performance, and manufacturing data.8
Click to learn more about what the Battery Passport means for researchers and material suppliers.
References and Further Reading
- Ding, Y., et. al. (2019). Automotive Li-ion batteries: current status and future perspectives. Electrochemical Energy Reviews. Available at: https://doi.org/10.1007/s41918-018-0022-z
- Skeete, J., et. al. (2020). Beyond the EVent horizon: Battery waste, recycling, and sustainability in the United Kingdom electric vehicle transition. Energy Research & Social Science. Available at: https://doi.org/10.1016/j.erss.2020.101581
- Barman, P., et. al. (2023). Electric Vehicle Battery Supply Chain and Critical Materials: A Brief Survey of State of the Art. Energies. Available at: https://doi.org/10.3390/en16083369
- Rajaeifar, M., et. al. (2022). Challenges and recent developments in supply and value chains of electric vehicle batteries: A sustainability perspective. Resources, Conservation and Recycling. https://doi.org/10.1016/j.resconrec.2021.106144
- Hove, A. et. al. (2025). 2025 EVS AND BATTERY SUPPLY CHAINS ISSUES AND IMPACTS. The Oxford Institute for Energy Studies. Oxford Energy Forum. https://www.oxfordenergy.org/wpcms/wp-content/uploads/2025/04/OEF-144.pdf
- Ren, H., et. al. (2024). Vulnerability to geopolitical disruptions of the global electric vehicle lithium-ion battery supply chain network. Computers & Industrial Engineering. https://doi.org/10.1016/j.cie.2024.109919
- Lu, H., et al. (2022). China’s Electrification Pathways: Findings from the China Energy Outlook 2022. [Online] Lawrence Berkeley National Laboratory Available at: https://eta-publications.lbl.gov/sites/default/files/lbnl_china_electrification_report-final-rev2.pdf [Accessed on: June 3, 2025].
- The International Energy Agency. (2024). EV Battery Supply Chain Sustainability: Life cycle impacts and the role of recycling. [Online] The International Energy Agency. Available at: https://iea.blob.core.windows.net/assets/e75c9a13-3753-4677-933fc7f9ae38cfdb/EVBatterySupplyChainSustainability.pdf [Accessed on: June 5, 2025].
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