Batteries Included? Providing the Juice for a Range of Growth Stories

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Bottom Line

AI, electrification and reindustrialisation have a common trait: reliance on batteries. EVs dominate the modern battery industry and still account for more than 70% of battery demand, however the power grid has become its second engine of growth.¹ Grid-scale battery energy storage systems (BESS), which store electricity for utilities and grid operators, make up around 80% of new storage capacity.²

Critically for investors, the companies that make EV batteries increasingly supply grid batteries in parallel. CATL, which produces around 40% of EV batteries is also the largest supplier of grid storage cells.³ Battery makers are therefore no longer pure EV plays: two end markets diversify their revenue and reduce dependence on any one demand cycle.

Innovation needs scale to reach the market, so new chemistries like sodium-ion and solid-state are strengthening the largest battery makers, rather than displacing them. With AI, electrification and reindustrialisation all running on batteries, the companies that make them, and the miners that supply the materials, sit at the centre of three of the decade’s biggest growth stories.

Annual battery storage additions went from 10GW to over 100GW in just 4 years, a scale-up that took solar 8 years and wind 15.⁴ The battery is now part of the grid, and therefore downstream of the investment flowing into it. US utilities plan $1.4 trillion of investment through 2030, with $239 billion of that coming in 2026, up 17% on a record 2025.⁵

Figure 1: US Electric Utility Capex, with Consensus Estimates

Two engines of growth

Categorising battery demand as a purely EV story is now an oversimplification. While EV adoption still carries momentum, the high-velocity growth in batteries is now coming from:

• Electrification: EVs still buy more than seven in every ten batteries made, and the growth has moved to Europe and emerging markets.⁶ ⁷
• Grid expansion: storage additions rose 48% in 2025 to a record 112GW, extending a run of annual records that began in 2014.⁸
• AI: utilities and data centre developers are leaning on batteries to connect new load faster than the grid can be rebuilt.
• Reindustrialisation: idle EV cells in the US are being converted to make grid batteries.⁹

The result is a demand base with two legs instead of one. The car base is large, growing but policy-sensitive, whilst the grid is smaller but tied to long-life infrastructure. Both have benefitted in 2026 from a combination of geopolitical & energy shocks, innovation and improved battery economics.¹⁰

The car still pays the bills

EVs remain the anchor of battery demand: they accounted for more than 70% of global battery deployment in 2025, down from almost 80% in 2024 and are rising incrementally in 2026, especially in Europe.¹¹ EV registrations across the EU, EFTA and UK rose 29% in the first 8 months of 2026.¹²

European Countries’ EV Demand Growth in 2026

Rest of world and Europe 2025 EV Demand Growth

The battery became grid infrastructure

Energy storage is now the incremental buyer of batteries. Global additions excluding pumped hydro are up 48% in 2025, reaching 112GW.¹³ No major power technology has scaled faster.

Storage took four years to go from 10GW to 100GW a year. Solar took eight; wind took fifteen.

Albemarle reported that global lithium consumption grew 45% from January to May 2026, above its own 15% to 40% forecast range, with stationary storage driving the beat and inventories near historic lows.¹⁴ The IEA calls battery storage the fastest-growing power technology today; installed capacity is 11x its 2021 level.¹⁵

Annual Energy Storage Additions*

*Additions excluding pumped hydro

This grid demand emanates from utilities and grid operators against multi-year plans, for assets that run 15-20 years alongside shorter-term projects to fill acute power needs. Currently, China accounts for 96% of long-duration additions, with that number projected to fall to 76% by 2036 as the US, Europe and India scale their projects.¹⁶

Long Duration Storage by Region/Country

Battery Innovation: scale decides who wins

Battery innovation only becomes impactful once it can be produced at scale, and that is where the industry’s largest players are indispensable. Commercial viability demands vast manufacturing plants, secure supply chains and a customer base ready to buy in volume.

Increasingly, battery buyers are partnering with their suppliers to diversify battery applications. For example, Ford is entering grid storage under licence from CATL¹⁷, whilst Samsung SDI has partnered with BMW to test solid-state cells in their EVs.¹⁸

LFP (Lithium Iron Phosphate), today’s dominant storage chemistry, became the market leader through manufacturing scale rather than a single breakthrough.¹⁹

With sodium-ion capacity at about 6% of lithium-ion’s²⁶ and solid-state mass adoption not expected before 2030,²⁷ lithium-ion’s existing scale and supply chain depth leave it unchallenged in most current applications.

Battery Chemistry Mix: Lithium Forecast to be Displaced only at the edges.³⁸

This document is not intended to be, or does not constitute, investment research as defined by the Financial Conduct Authority.