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Battery supply chains are becoming one of the most important topics of our time. Why? Because without a stable supply of the right materials, there are no batteries – and without batteries, there are no electric cars. Batteries make up 30 to 40% of the total cost of an electric vehicle. By 2030, the global battery industry is expected to be worth over $400 billion per year (McKinsey, 2023). The race for the minerals needed is already in full swing.
A supply chain is the full journey of a product – from raw material in the ground to the finished item in your hands. Think of it like a relay race: miners dig up lithium, factories turn it into battery cells, and car manufacturers assemble the final vehicle. Every step depends on the one before it. If one link in the chain breaks, the whole system slows down.
In smart supply chains, old products don’t just get thrown away. Used materials – like lithium or cobalt from an old battery – can re-enter the chain at almost any point. This is called a circular economy. It saves money, reduces mining, and is better for the planet. The EU now legally requires that new batteries contain a minimum share of recycled materials (EU Battery Regulation, 2023). Supply chains are also a link between value chains. Suppliers are often organized by “tiers”: first-tier suppliers deliver directly to manufacturers, second-tier suppliers deliver to the first tier, and so on.
Battery supply chains are one of the hottest topics in the energy world right now. The shift to electric vehicles is happening faster than most experts predicted. And every electric car needs a battery. Every battery needs lithium, cobalt, nickel, and graphite. Getting all of these materials – safely, sustainably, and affordably – is the challenge of the decade.
Electric vehicles are selling like never before. In 2024, over 17 million electric cars were sold worldwide – that’s more than 1 in 5 of all new cars (IEA, Global EV Outlook 2025). China leads the way with around 11 million EVs sold. Europe follows with 3 million, and North America with 1.6 million. There are now more than 40 million electric cars on the road globally.
By 2035, demand for battery materials will be many times higher than today. Scientists warn that even if the US and Europe build as many factories as planned, they still won’t be able to produce enough cobalt, graphite, and nickel domestically. International supply chains will remain essential (Lu et al., Nature Energy, 2026).
Today’s (2026) supply chains for lithium-ion batteries and battery minerals are mainly in China.
Battery demand already exceeded 1,000 GWh in 2024 – and it could grow to 3,500 to 4,700 GWh by 2030. That’s 4 to 5 times today’s level (IEA, 2025; McKinsey, 2023). To keep up, the world needs at least 120 to 150 new gigafactories – massive battery production plants – by 2030.
Europe is involved in the supply chain for more than a quarter of global EV assembly, apart from cobalt processing at 20%. The United States plays an even smaller role in the global EV battery supply chain, with only 10% of EV production and 7% of battery production capacity.
It’s not just China. Korea and Japan play a major role too – especially in producing the most technically demanding battery components. Korea makes about 14% of the world’s cathode materials – the part of the battery that stores the energy. Japan also contributes around 14% of cathode capacity, and leads globally in separator and electrolyte technology (IEA, 2022).
Most minerals are mined in resource-rich countries such as Australia, Chile and the Democratic Republic of Congo and supplied by a few large companies.
Governments in Europe and the United States have launched bold public sector initiatives to develop domestic battery supply chains, but most of the EV battery supply chain is expected to remain in China through 2030. For example, 71% of the battery production capacity announced for the period through 2030 is in China.
Diversified battery supply chains based on a sophisticated circular economy strategy will become increasingly important. Batteries typically account for 30 to 40% of the value of an electric vehicle (EV), and the race to net-zero 2050 will focus attention on the security of supply of the metal minerals needed to make the batteries and manufacturing of the batteries.
In May 2022, lithium prices were more than seven times higher than in early 2021, reflecting unprecedented demand for batteries and a lack of sufficient investment in new supply capacity. Meanwhile, Russia supplies 20% of the world’s high-purity nickel. Average battery prices fell 6% to $132 per kilowatt-hour in 2021, a slower decline than the 13% drop the year before. If metal prices in 2022 remain as high as in the first quarter of
quarter, battery packs would become 15% more expensive than they were in 2021, if all other factors remain the same. However, the relative competitiveness of e-vehicles remains unaffected given the current oil price environment.
Pressure on the supply of critical materials will continue to increase as the electrification of road transport continues to achieve net-zero intentions.
EV battery demand will increase from around 340 GWh today, to over 3500 GWh by 2030 in the announced commitments scenario. Cell components and their supply will also have to increase by the same amount.
In the short term, additional investment is needed, particularly in mining, where lead times are much longer than for other parts of the supply chain.
In some cases, it takes more than a decade from initial feasibility studies to production and then several more years to reach nominal production capacity.
The IEA projects that demand for lithium could increase 6-fold by 2035 under current climate policies, and up to 10-fold in a net-zero scenario. Cobalt demand may double, nickel triple. Current mine development pipelines fall short: without new projects coming online before 2028, supply gaps of 30–50% are possible for lithium and cobalt by 2030 (IEA, 2025; USGS, 2024).
Other variables are affecting mineral demand. If current high commodity prices continue, cathode types could shift to less mineral-intensive variants. For example, lithium iron phosphate (LFP) alternative cathode material does not require nickel or cobalt, but has a lower energy density and is therefore better suited for shorter range vehicles.
The share of LFP batteries in global EV has more than doubled since 2020, driven by high mineral prices and technological innovation predominantly driven by the increasing in China
Sodium-ion batteries (Na-ion) are also emerging as a promising option – no lithium needed at all. They are being developed especially for shorter-range and lower-cost vehicles. However, scientists note that their cost competitiveness compared to LFP is still uncertain (Yao, Benson & Chueh, Nature Energy, 2025). Recycling is another key tool. Old batteries can be broken down and their lithium, cobalt, and nickel reused.
The EU Battery Regulation (2023) now legally requires minimum recycled content in all new batteries from 2031 onwards. By 2040, battery recycling alone could generate a $6 billion profit pool globally (McKinsey, 2023). Research confirms: enhanced recycling combined with chemistry shifts is the most powerful way to reduce critical material shortfalls through 2035 (Lu et al., Nature Energy, 2026; Ma et al., Nature Reviews Clean Technology, 2025).
The bottom line is simple: no supply chain, no batteries – no batteries, no electric cars. Governments, companies, and researchers around the world are racing to secure access to the minerals, factories, and recycling systems needed to power the energy transition. This is not just an economic challenge – it is a strategic one.
The IEA projects that demand for lithium could increase 6-fold by 2035 under current climate policies, and up to 10-fold in a net-zero scenario. Cobalt demand may double, nickel triple. Current mine development pipelines fall short: without new projects coming online before 2028, supply gaps of 30–50% are possible for lithium and cobalt by 2030 (IEA, 2025; USGS, 2024).
One often overlooked solution is simple: build smaller cars. A compact electric car needs a much smaller battery than an SUV. Smaller batteries use fewer critical minerals, cost less, and charge faster. Policy incentives that reward smaller vehicles could significantly reduce pressure on the entire battery supply chain – without slowing down the shift to electric mobility. Governments should also strengthen cooperation between producer and consumer countries to ensure socially and environmentally sustainable practices at every stage of the supply chain.
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