We are at the beginning of what will be the largest demand surge for energy storage in history so far. This will be a secularly driven structural shift driven by AI data centers, intelligent devices, EVs (and EREVs), grid storage and broader electrification of the economy and life.
Global lithium-ion battery demand grew 29% in 2025 and will grow from 700WWh in 2022 to at least 4.7 TWh around 2030 according to Benchmark Mineral Intelligence. This is driven by battery pack costs falling about 90% since 2010, almost as great as the decline in solar costs. Goldman Sachs projects battery costs will continue to decline at nearly 11% per year and reach cost parity with internal combustion engines by 2030.
EVs were the single largest demand driver in 2025 with sales reaching 20.7 million units, up 20% year-over-year. That is nearly one in five cars sold globally being electric. China led with EVs exceeding 50% of new car sales, followed by Europe, with the United States lagging.
I anticipate the EV to internal combustion equation to flip by about 2030, that is, EVs (including EREVs and plug-in hybrids) reaching about 80% of new car sales versus 20% for internal combustion. The recent war in the Middle East seems to have accelerated timelines once again, despite President Trump’s energy policies.
Grid storage also hit a single-year record in 2025 and are the fastest growing segment. Global battery storage for electrical grids reached 108GW in 2025, about 40% higher than 2024. Utility scale took up 87GW of that total. China was 63GW with the U.S. trailing at 19GW. I believe that gap closes in coming years.
In the U.S. in particular, as local headlines exclaim, AI data centers are starting to use a lot of electricity. Gartner projects that AI data centers consumed about 448 TWh of electricity in 2025 and that will double by 2030. AI data center demand for electricity is projected to grow about four times faster than total demand growth, this will drive battery adoption. Already we are seeing natural gas used to charge batteries. A recent deal by Chevron (CVX) in Texas is the latest example.
Consumer electronics represent over a $12 billion annual battery market at the OEM level. Cell phones using AI with “always-on” neural processing and better displays are demanding better battery sources, i.e. those that work well and do not overheat with use. Other devices, such as watches, health monitors, clothing and glasses are in various early stages of adoption as well.
New drone tech is also demanding more and better technology. And, we are not too many years away from robot technology becoming mainstream, which might become the next demand growth leader as robots deploy to factories, warehouses, construction and our homes.
While solid-state batteries are starting to hit commercial production in coming years, that is more of a 2030s story. The drawback for solid state is that they cost 3x-5x to produce versus comparable capacity lithium-ion cells.
The global lithium-ion battery market crossed $150 billion in 2025 and the range of estimates are for it to reach around a half trillion by 2035. It is not unreasonable to project a trillion dollar battery market sometime around 2040.
The main problem with lithium-ion batteries has been that periodically, they catch fire. That’s a pretty significant risk. There has been more than one headline about container ships catching fire with EVs on board.
Ship fires and Electric Vehicles - The Evolving Risks of the Energy Transition
Now, imagine if your smart glasses or watch caught fire while on your wrist. Or, your home battery storage caught fire. These could be catastrophic.
One small battery company has a new battery architecture that prevents fires and increases battery energy density. It’s about to go to market at scale as it ramps up its production lines.
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