Traction Battery Market Growth Driven by Electric Vehicle Adoption

According to a new report published by Allied Market Research, the global traction battery market size was valued at $31.6 billion in 2020 and is projected to reach $69.2 billion by 2030, growing at a CAGR of 8.2% from 2021 to 2030. The rapid expansion of electric and hybrid vehicles, along with strong government support for clean transportation, continues to drive demand for traction batteries worldwide.

Traction batteries, also known as electric vehicle batteries, are rechargeable energy storage systems designed to power electric motors in electric vehicles (EVs) and hybrid electric vehicles (HEVs). These batteries are engineered for high ampere-hour capacities, long cycle life, and reliable performance under demanding operating conditions.

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Government Regulations and Incentives Fuel Market Growth

One of the primary growth drivers of the traction battery market is the global push to reduce carbon emissions from the automotive and transportation sector. Governments across developed and developing economies have introduced stringent emission regulations to curb greenhouse gas emissions caused by internal combustion engine vehicles.

Regulatory authorities such as the U.S. Environmental Protection Agency (EPA) and the European Union (EU) have implemented policies aimed at accelerating the adoption of electric vehicles. In addition, governments are offering attractive incentives, tax benefits, and subsidies to both manufacturers and consumers to promote EV adoption.

For instance, according to the U.S. Department of Energy, consumers purchasing a new electric vehicle equipped with a traction battery of at least 5 kWh capacity can avail a federal tax credit starting at $2,500, which can go up to $7,500. Such incentives significantly improve EV affordability and directly contribute to the growth of the traction battery market.

Infrastructure Challenges Restraining Market Expansion

Despite favorable policies, the traction battery market faces challenges related to the limited availability of electric vehicle charging infrastructure. Many countries lack sufficient charging stations due to constraints such as high installation costs, limited urban space, and inadequate grid infrastructure.

According to a Forbes report, the U.S. is expected to sell around 35 million electric vehicles by 2030, which would require approximately 50,000 DC fast charging stations and 1.2 million Level 2 charging ports. This translates to the installation of nearly 380 charging ports per day over the next decade. However, between 2010 and 2020, the U.S. installed an average of only 30 Level 2 ports per day, highlighting a significant infrastructure gap that could hamper traction battery market growth.

Asia-Pacific Emerges as a High-Growth Region

The Asia-Pacific traction battery market is expected to grow at the highest CAGR during the forecast period. Countries such as China and India are witnessing a sharp rise in energy demand due to population growth, urbanization, and industrial expansion.

China remains a global leader in electric vehicle production and battery manufacturing, supported by strong government backing and large-scale investments. India, although previously constrained by inconsistent policies, is now experiencing rising investments in traction battery projects due to favorable reforms and increased focus on localized energy procurement.

The growing demand for electric mobility, forklifts, railways, and industrial vehicles in the region is further accelerating the adoption of traction batteries across multiple sectors.

Technological Advancements Creating New Opportunities

Rising demand for electric vehicles has significantly boosted R&D activities in the traction battery market. Manufacturers are focusing on improving charge cycles, enhancing energy density, and reducing energy consumption per charge to increase vehicle range and efficiency.

Lithium-ion batteries are gaining strong traction due to their lightweight nature, longer lifespan, and superior energy density compared to traditional lead-acid batteries. For example, Ecovolta recently introduced its evoTraction lithium-ion battery, which can replace lead-acid batteries and reduce cost per charge cycle by up to 50%.

Such technological innovations are intensifying competition among battery manufacturers and opening new growth opportunities across electric and hybrid vehicle applications.

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Market Segmentation Overview

The traction battery market is segmented based on product type, capacity, application, and region.

By Product Type

Lead acid based

Nickel based

Lithium-ion based

Others

The lead-acid segment dominated the market in 2020, accounting for over two-fifths of total revenue, due to low cost, high cyclability, and strong vibration resistance.

By Capacity

Less than 100 Ah

100-200 Ah

200-300 Ah

300-400 Ah

400 Ah & above

The less than 100 Ah segment held the largest share in 2020. These batteries are lightweight, affordable, and easy to swap, making them ideal for improving vehicle mileage.

By Application

Electric vehicles

Industrial

Locomotives

Others

The electric vehicle segment dominated the market in 2020, supported by rising fuel prices and attractive EV incentives worldwide.

Regional Analysis

Region-wise, the traction battery market is analyzed across North America, Europe, Asia-Pacific, and LAMEA. Asia-Pacific accounted for 54.5% of global market share in 2020 and is projected to grow at a CAGR of 8.9%. Rapid growth in automotive manufacturing, transportation, and industrial sectors is a key driver in the region.

Impact of COVID-19 on the Traction Battery Market

The COVID-19 pandemic negatively impacted the traction battery market due to disruptions in transportation, manufacturing, and supply chains. According to the International Energy Agency, global road transport activity declined by nearly 50% by March 2020 compared to the previous year.

Manufacturing shutdowns, workforce shortages, and reduced EV sales significantly affected battery production. In China, manufacturing output declined by 20%, while profits dropped by 66% in early 2020. However, post-pandemic recovery and renewed investments in clean energy are expected to restore market momentum.

Competitive Landscape

Key players operating in the global traction battery market include Exide Industries Ltd., ECOVOLTA, GS Yuasa International Ltd., HOPPECKE Carl Zoellner & Sohn GmbH, Banner Batteries, Toshiba Corporation, INTILION GmbH, Leoch International Technology, and Inci GS Yuasa. These companies focus on innovation, strategic partnerships, and capacity expansion to strengthen their market position.

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Conclusion

The traction battery market is poised for strong growth, driven by rapid EV adoption, supportive government policies, and technological advancements. While infrastructure challenges remain, increasing investments and innovation are expected to create long-term growth opportunities worldwide.

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Allied Market Research (AMR) is a full-service market research and business-consulting wing of Allied Analytics LLP based in Portland, Oregon. Allied Market Research provides global enterprises as well as medium and small businesses with unmatched quality of "Market Research Reports" and "Business Intelligence Solutions." AMR has a targeted view to provide business insights and consulting to assist its clients to make strategic business decisions and achieve sustainable growth in their respective market domain.

Pawan Kumar, the CEO of Allied Market Research, is leading the organization toward providing high-quality data and insights. We are in professional corporate relations with various companies and this helps us in digging out market data that helps us generate accurate research data tables and confirms utmost accuracy in our market forecasting. Each and every data presented in the reports published by us is extracted through primary interviews with top officials from leading companies of domain concerned. Our secondary data procurement methodology includes deep online and offline research and discussion with knowledgeable professionals and analysts in the industry.

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