Growing battery sector catching the eyes of financial investors

04 June 2024 3 min. read
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With the energy transition at the top of agendas worldwide, the battery sector is growing rapidly. Estimates show the industry could quadruple from 2022 to 2030 and M&A activity is increasing as large organizations look to get in on the action, according to report from global M&A advisory firm Oaklins.

The battery market is growing rapidly and forecasted to experience strong double-digit growth up to 2030. That is being driven by sustainability, wider electrification, and supportive governmental policy stimulating a shift towards renewable energy sources.

With a market size of approximately $111 billion worldwide in 2022, the global battery market is expected to reach nearly $452 billion by 2030, growing at a CAGR of 19%. That remarkable growth will be accompanied by growing interest from consolidators and investors.

Growing battery sector catching the eyes of financial investors

The market is mainly split between lead-acid and lithium-ion batteries, with both likely to see increased demand and market adoption. The global lead-acid market demand reached approximately $26 billion in 2022 and is expected to grow to $49 billion in 2030, reflecting a CAGR of 8%.

On the other side, the global lithium-ion market demand reached around $85 billion in 2022 and is expected to grow to $403 billion in 2030, at a CAGR of 21%. Lithium-ion batteries are significantly more important in the industry, mainly because of their greater energy density, superior performance, and customizable features.

The Oaklins report highlights that the outlook is triggering a drive among industry players to more scale in production. “The battery market presents a significant opportunity for consolidation, as manufacturers continue to focus on production and seek partners capable of providing value-added services or customized solutions to support volume growth,” said to Frank de Hek, energy transition specialist at Oaklins.

“Differentiation among battery-based energy solution providers lies in the quality of products and the depth of services offered.”

Growing battery sector catching the eyes of financial investors

There is enormous demand for lithium-ion and other types of batteries for electric vehicles, with battery-powered cars and public transport vehicles set to largely replace combustion engine vehicles.

Besides vehicles, batteries are also an integral part of any future energy transition where renewable energy plays a role. Wind, solar, and other installations that generate renewable energy are nothing if that energy cannot be stored effectively.

Investors on the horizon

The appeal of the sector is quickly catching the eyes of financial investors, who are seeing a clear opportunity value-driven consolidation, also known as platform building.

The battery market is still rather new and marked by rapid technological advancement, as well as a lot of diversity when it comes to customer needs. Those are some of the reasons why there are many new entrants and the industry is overall quite fragmented and ripe for consolidation.

“As the battery industry gains importance and popularity, competition in the industry is also growing significantly,” said De Hek.

“On one hand, startups are rapidly emerging, each aiming to pioneer new and innovative technology. On the other hand, larger, more established players are looking to maintain market share amongst the growing competition. The result of this dynamic has been a significant number of mergers and acquisitions, a trend we anticipate will continue to rise in the foreseeable future.”

With offices all around the world, and a practice that specializes in the energy transition and sub-segments such as batteries, De Hek said that Oaklins is well positioned to support deal activity in the space. Recent testimonials include advising on the sale of Top Systems and Wetac to private equity firms.