Thought Leadership

Battery trends for the year ahead

In recent years the battery market has expanded rapidly from a high demand for electric vehicles, government incentive programs to incubate emerging technologies, and regulations meant to localize manufacturing capacity in regions around the world.  While the demand for electric vehicles has subsided in some markets and may have some uncertainty for year to come, at least from government actions around the world, the need to battery technologies is still a relevant one. That does not mean there won’t be changes to the status quo, but it does bring an opportunity to diversify and build a stronger business – through the manufacture of innovative cell architectures, new product segments, and reinvestment in manufacturing efficiencies.

New cell architectures

A perfect example of the value in new cell architectures came just before the Consumer Electronics Show (CES) this year that China and Korea were set to overtake Japan in commercialized all-solid-state batteries (as reported by evertiq.com). This continued investment in new battery technologies in the face of market uncertainty could pay off for manufacturers in these regions. But the value is not just in continued government incentive, it is the investment in a possibly revolutionary step in battery architectures. High volume commercialization is expensive, even with the best tools. Building out the technology with a backstop could help bring down the manufacturing costs and investment for use in the next generation of products. Solid state battery could begin to compete on price in addition to their potential benefits technologically.

A new customer base

Another avenue for manufacturers facing an uncertain future in the automotive sector is looking at a different customer base. Perhaps the largest opportunity being in the realm of grid-scale energy storage with battery energy storage systems (BESS). While many of the fundamentals are similar enough, there are some distinctions that need to be made for BESS installations and products compared to batteries in consumer vehicles. Most notably is the complexity of such products, a 1GWh BESS is likely to have 7-9 million parts and over a million cells. That bill of materials complexity rivals the Boeing 787 aircraft. But these products also need to operate over long lifetimes (20-25 years). 

Digitalization as found in Siemens’ solutions for the battery industry help reduce the strain of this transition. Using the digital twin, manufacturers can more accurately set quality constraints, create thermal management strategies, and design robust battery management systems to keep field operations running. 

Removing inefficiencies

Whichever path battery manufacturers set out on in the next few years, one of the largest challenges is making the production process more efficient. Scrap rates for even the best factories can reach 15%, with many new lines going as high as 40% or more. Reducing scrap by even a few percentage points can save billions of dollars in material costs, operational expenses, and opportunity costs of bad cells taking up space on the factory floor. The best path that we see is in data-driven manufacturing – combining industrial knowledge, data analytics, and battery specialization. Much of this is built on the digital twin and a greater use integration of IT and OT, but it also requires partnerships to fill in where we might not have all the answers. 

The future of the industry

There are many paths that lay ahead for battery manufacturers and the value chains that support them, but with the right understanding of the business and wider market, the best path can be plotted. And doing so starts in the digital twin, relying on comprehensive simulation technologies, traceable data flows, and reliable communication pathways with partners and suppliers. To learn more about how to stake a future in the battery industry, check out our website siemens.com/battery.

Nicholas Finberg

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This article first appeared on the Siemens Digital Industries Software blog at https://blogs.sw.siemens.com/thought-leadership/2025/01/21/battery-trends-for-the-year-ahead/