EV Batteries
The battery is the vehicle's cost, its range, and its economics. Demand compounds off two engines at once — new vehicles and, increasingly, replacement packs — but the winners are decided by chemistry: who is positioned on the curve the market is actually migrating toward.
Adoption follows total cost of ownership, segment by segment. The investment question is chemistry positioning — LFP is taking the volume, NMC is ceding share, and sodium-ion and solid-state sit on the horizon.
Two demand engines, uneven by segment.
Battery demand grows off new EV sales and a rising replacement-pack pool as the installed base ages. But adoption is not uniform — it tracks total cost of ownership, which crosses over earliest in high-utilisation, small-format use cases.
Leading on TCO (2023)
- E-4W (Fleet) — high utilisation
- E-3W (High Speed)
- E-2W
Lagging on TCO
- E-4W (Passenger)
- E-Bus
- E-LCV
- E-MHCV (heavy)
The cell cost, and the chemistry race.
Cell cost breakdown
- Cathode~32% — the single largest cost and the chemistry battleground.
- Current collectors~18%
- Separator~18%
- Electrolytes~10–15% — a meaningful cost line and a lever on cell performance.
- Anode~11%
- Other~6%
The chemistry landscape is mid-transition. Lead-acid dominated in 2022 on the back of low-speed scooters and e-rickshaws. Advanced Cell Chemistry (ACC) — LFP (lithium ferro phosphate) and NMC (nickel manganese cobalt) — is now the deployed standard in EVs. LMFP is in pilot evaluation, and sodium-ion is expected to enter between 2025 and 2027. Solid-state (SSB) sits further out.
The roadmap favours LFP. LFP's cycle life is expected to rise from ~2,000 to ~3,500 (a 75% gain) and energy density from ~170 to ~200 Wh/kg — and it is projected to reach ~80% market share by 2032. NMC, higher-density (270→300 Wh/kg) but costlier, is expected to slip from ~20% to ~15% as LMFP and sodium-ion arrive.
Chemistry, cost, and segment fit.
On the right curve
Positioning on the chemistry the market is migrating to — LFP for volume, with optionality on LMFP and sodium-ion — beats being stranded on lead-acid or cost-heavy NMC.
Cost-down & localisation
Cell cost is the product. Progress down the cost curve — and localisation of cells, cathode and materials against an import-heavy base — is what protects margin as prices fall.
Segment fit
Exposure to the segments where TCO already works — fleet 4W, high-speed 3W, 2W — plus the coming replacement-pack pool, rather than the still-uneconomic heavy end.
What to answer before underwriting.
- →Chemistry exposure. Which chemistries does the company make or use (LFP / NMC / LMFP / sodium-ion / lead-acid), and how future-proof is that position to 2032?
- →Value-chain position. Cell maker, pack assembler, cathode/material supplier, or integrator? Margin and moat differ sharply along the chain.
- →Cost curve. Cell/pack cost today and the trajectory. Where is the cost-down coming from, and is it enough to hold margin as prices fall?
- →Localisation vs imports. Share of cells, cathode and key materials imported, and any FX/supply exposure to that.
- →Segment mix. Exposure to TCO-positive segments (fleet 4W, HS 3W, 2W) vs the lagging heavy end.
- →Replacement demand. Positioning for the second wave — replacement packs for the ageing installed base.
- →Technology optionality. R&D or partnerships in LMFP, sodium-ion or solid-state to avoid single-chemistry obsolescence.
- →Customer concentration. Dependence on a few OEMs or fleet operators, and the durability of those offtake arrangements.
What to monitor, quarter by quarter.
| KPI | Calculation / source | Benchmark or read-through |
|---|---|---|
| Cell / pack cost per kWh | COGS ÷ kWh shipped | The product is the cost curve; falling faster than price is the whole game |
| Chemistry mix | Revenue or GWh by LFP / NMC / other | LFP heading to ~80% share by 2032 — position against that, not behind it |
| Realisation per kWh | Revenue ÷ kWh shipped | Structural deflation; the spread over cost is what matters |
| Gross margin per kWh | (Realisation − cell cost) ÷ realisation | Compression here means cost-down is lagging price |
| Localisation % | Domestic value ÷ total input value | Import dependence is the FX, tariff and supply-shock exposure |
| Capacity & utilisation | GWh installed vs GWh shipped | Low utilisation on a heavy asset base destroys returns quickly |
| Segment mix | Revenue by E-2W / E-3W / fleet 4W / bus / LCV | Weight toward TCO-positive segments; the heavy end is still early |
| Replacement vs OE mix | Aftermarket packs ÷ total | The second demand wave as the installed base ages — higher margin |
| Energy density shipped | Wh/kg, weighted by volume | Against the LFP 170→200 and NMC 270→300 roadmaps |
| Warranty provision % | Warranty cost ÷ revenue | Cycle-life claims meeting reality; a rising provision is an early red flag |
| Customer concentration | Revenue from top 5 OEMs / fleets | Offtake durability matters more than headline order books |
| R&D ÷ revenue | P&L disclosure | The price of optionality on LMFP, sodium-ion and solid-state |
How the thesis breaks.
- !Chemistry obsolescence. A single-chemistry bet on the wrong curve (lead-acid, or cost-heavy NMC) is a structural decline risk as LFP and next-gen chemistries take share.
- !Import dependence. Reliance on imported cells and materials exposes cost and supply to geopolitics, FX and a concentrated upstream.
- !Price deflation outrunning cost-down. Cell prices fall structurally; a producer whose cost curve lags gets squeezed regardless of volume growth.
- !TCO still negative in heavy segments. Over-exposure to E-Bus / LCV / MHCV, where the economics have not yet crossed over, delays demand.
- !Subsidy dependence. Adoption partly policy-driven; changes to incentives can move the TCO crossover and demand curve sharply.
- !Technology leap risk. An earlier-than-expected sodium-ion or solid-state arrival could reset competitive positions and strand recent capacity.
The figures, and where they stand.
| Metric | Value | Note | Basis |
|---|---|---|---|
| Cell cost — cathode | ~32% | Largest component | Research note |
| Current collectors / separator | ~18% / 18% | Of cell cost | Research note |
| Electrolytes | 10–15% | Of cell cost | Research note |
| Anode / other | ~11% / 6% | Of cell cost | Research note |
| LFP cycle life | 2,000 → 3,500 | +75% expected | Est. |
| LFP energy density | 170 → 200 Wh/kg | Expected | Est. |
| LFP market share by 2032 | ~80% | Projected dominant chemistry | Est. |
| NMC cycle life / density | 1,200→2,000 / 270→300 | +66% life; Wh/kg | Est. |
| NMC share shift | 20% → 15% | Ceding to LMFP / Na-ion | Est. |
| Sodium-ion market entry | 2025–2027 | Expected window | Scheduled |
| EV share of stock by 2047 | ~85% | Base case; ~17.5% CAGR | Scenario |
| 2047 segment leaders | E-4W ~54%, E-Truck ~38% | Heavy-duty ~50% of sales BEV | Scenario |