Charged with potential: The bright future ahead for batteries

Rising demand for electric vehicles (EVs) and energy storage solutions (ESS) is boosting investment in battery technology and gigafactories, especially in the US and Europe. A recent Capgemini Research Institute report explores the current landscape and future trends of battery tech – and their implications for various industries.

What’s everyone saying?

Batteries are key to decarbonizing the economy and helping countries meet the goals they assigned themselves at the COP28 UN Climate Change Conference in Dubai (2023), where they pledged to accelerate their transition in order to achieve net zero by 2050, which will require raising global renewable energy capacity to 11,000 GW and ESS capacity to 1,500 GW by 2030. Under the Net Zero Emissions by 2050 Scenario, batteries should drive 90% of this rise.

What do we have to say?

• New technological trends will shape the future of batteries. Currently, lithium iron phosphate batteries lead the Chinese EV market, while lithium nickel manganese cobalt oxide dominates in the EU and the US. But the battery industry is set to transform in the coming decades, driven by the need for higher energy density, faster charging, and lower costs.

• Alternative chemistries like sodium-ion and solid-state batteries for better performance and longevity are gaining momentum, with commercialization expected by 2030. Yet conventional lithium-ion batteries should continue to dominate the market even as new technologies become commercially viable, due to their proven performance and mature supply chains.

• Simultaneously, generative artificial intelligence (Gen AI) could significantly help enhance the battery value chain, for example for composing entirely new materials or targeting specific physical properties. In fact, 74% of executives believe Gen AI is the technology with the highest potential for improving battery development, manufacturing, operations, and performance.

• These advancements in battery technology benefit multiple sectors, starting with automotive, where manufacturers are exploring new business models to address EV infrastructure challenges and cost-effectiveness. Among these models, vehicle-to-grid systems draw power from the grid to charge EVs and return stored energy into the grid when needed, allowing owners to earn revenue by providing frequency regulation. Meanwhile, 52% of automotive organizations are exploring “battery-as-a-service” models that let EV owners lease or rent batteries rather than buy them.

• In energy and utilities, growth in renewable energy generation is driving demand for battery storage to manage surplus and stabilize grids. Batteries are also creating new revenue streams for companies operating in the sector. All in all, progress in battery technologies – but also in the AI systems that control them – could usher in a battery storage revolution, which the sector would greatly benefit from.

• But the future of batteries hinges on overcoming multiple value chain challenges, starting with economic viability and profitability of battery production, cited as key issues by 45% of executives, alongside the high up-front capital investment needed to build a first gigafactory. Indeed, at least 18 EV and battery startups that have gone public in recent years risked running out of cash by late 2024.

• Further, the lengthy scale-up process creates substantial cash burn due to high scrappage rates and early production inefficiencies.

• This delays break-even and profitability, making it critical for companies to optimize ramp-up, minimize waste, and enhance process efficiencies early on. Better traceability methods, which can be achieved using AI-driven, data-backed solutions, will be key to identifying potential failure points in production, improving both efficiency and profitability.

• Additionally, 53% of executives cite securing a stable supply chain for components and materials as a scaling obstacle. Rising trade tensions, export limits, and tariffs are all driving up costs, leading the US and Europe to build more localized supply chains, even as gaining planning approval for manufacturing facilities in Europe often remains a long, complex process.

• Talent shortage and upskilling is another key concern for battery actors. 60% of executives report facing skill shortages in battery technology and manufacturing, especially in thermal management and power electronics.

• Finally, batteries come with a significant environmental impact, which organizations are attempting to mitigate, with two-thirds still in the initial phases of sustainability initiatives. This will entail prioritizing responsible sourcing and circular-economy initiatives, ensuring a stable and sustainable energy supply, and developing a circular value chain.

Who’s doing it right?

• Since 2018, aircraft and hybrid electric propulsion solution manufacturer Ascendance has pioneered new solutions for net-zero aviation. After refining its prototype designs, the company wished to accelerate towards industrialization. To this end, Capgemini developed a make-or-buy strategy for batteries, a critical aircraft element. Understanding the components, suppliers, cost drivers, and manufacturing bottlenecks provided clear insights to guide Ascendance’s decisions.

What’s the bottom line?

Organizations can take several actions to accelerate to a battery-driven sustainable future.

• Building a scalable digital foundation with a “digital-first” approach. Creating a comprehensive digital and data foundation through machine learning, big data analytics, or digital twins, followed by an IT/OT master plan can help battery actors improve performance, efficiency, safety, and sustainability.

• Boosting data-driven acceleration and optimization. Battery manufacturers can improve data usage across use cases, from accelerating chemistry research to optimizing production and equipment use.

• Accelerating gigafactory scaling by implementing building information modeling, digitalizing for faster construction and commissioning, and optimizing operations from day one by integrating scalable data and digital levers.

• Bridging the talent gap through collaboration with industry, academia, and R&D. Battery production demands diverse chemical, thermal, electronic, and digital skills, calling for robust R&D initiatives, hands-on training, and a collaborative effort between government, industry leaders, and educational institutions.

• Incubating efficient market platforms for growth through battery-friendly energy markets and marketplaces. Over half of executives support a battery marketplace to ensure competition and battery pack options, while 58% anticipate common standards for cells and charging.

Looking for more?

• To help organizations overcome skill shortages and ensure gigafactories have the skilled talent needed for on-time production, Capgemini has created the Capgemini Battery Academy for hiring, training, and certifying workers.

• Because AI is poised to play a crucial role in battery technology progress, Capgemini and the Chair of Electrical Energy Storage Technology at the Technical University of Munich are collaborating on research to develop AI solutions to optimize sustainable advanced virtual battery design. The goal: to better understand, model, and simulate the physical properties of battery cells to improve their performance and reduce the time and costs associated with sustainable battery research.

• At HANNOVER MESSE, the leading global industrial trade fair (March 31 – April 4), Capgemini will be organizing several battery-related demos and talks, many of them centering on the revolutionary promises of battery passports – a life-changing prospect for battery traceability. Can’t attend? Tune in to the livestream here.

• Curious about how AI can power the rise of batteries? On April 10, the Volta Foundation, the world’s largest network of battery professionals, will host a virtual webinar titled “Beyond the Buzz: How Can AI Create Value in Batteries?,” with our very own Casey McNamara, Practice Lead, Data-Driven Transformation at Capgemini Invent. Register here.

And you, what are you saying?

How is your organization attempting to accelerate towards a battery-driven sustainable future? What obstacles are you facing along the way? Head to the comments section below to share your thoughts and experience!