Battery technology is the new bull’s-eye for companies striving to meet the world’s growing appetite for electric vehicles.

What are the major EV battery technologies right now, and what innovations loom on the horizon?

Lithium-ion and lithium-iron phosphate (or LFP) dominate the current EV battery landscape. They have pros and cons in terms of range, raw material prices and more. Tesla (TSLA) uses both lithium-ion and LFP batteries. Emerging archrival BYD (BYDDF) uses a specialized LFP battery.

Battery companies and automakers are investing heavily to build cheaper, denser and lighter batteries. New technologies run the gamut. Some give old battery chemistries a new twist for incremental improvements. Others change the battery form factor or battery assembly for significant gains in performance or costs. In the future, radically different chemistries and other big breakthroughs are expected to emerge.

For its next-gen Ultium batteries, General Motors (GM) tweaked the lithium-ion chemistry to cut costs sharply. Tesla’s new 4680 battery cell claims cost savings and other benefits via a larger size and state-of-the-art engineering. China’s CATL, the world’s largest battery maker, touts even bigger improvements for its new Kirin battery, in part due to how cells are combined into packs.

The most far-reaching battery innovations could come from a variety of players. CATL is working on sodium-ion batteries, while QuantumScape (QS), SES (SES), SolidPower (SLDP) and Toyota Motor (TM) are developing solid-state batteries. Both battery types are potential game changers but face technical hurdles.

“Batteries are the new gold rush as far as automakers are concerned,” said Ram Chandrasekaran, a mobility analyst at Wood Mackenzie who formerly worked for Ford.

Better, more powerful batteries will drive the adoption of electric cars. Entire car platforms are being built around the battery, which not only supplies power but also serves as a critical structural element in EVs today, Chandrasekaran says.

Battery Technology Race
To be sure, the battery technology race isn’t just about electric cars. Batteries power everything from smartphones and laptops to power drills. The utility sector itself is a growing source of battery demand.

But there’s a reason why car companies shot to the lead in this race: EVs make up 80% of lithium-ion battery demand, according to Wood Mackenzie, an energy research and consultancy firm.

Already in 2021, lithium-ion battery supply fell short of demand in a brisk EV market, WoodMac says. The prices of battery raw materials also jumped. That has only intensified in 2022.

Asia, led by China, commanded 90% of the world’s battery manufacturing in 2021. By the end of this decade, Wood Mackenzie expects that share to fall below 70% as the West catches up.

Across the U.S. and Europe, dozens of battery plants will spring up by decade’s end amid fears of lithium shortages. Companies seek both to reduce geopolitical risk and to reduce transportation costs, since heavy EV batteries are costly to ship.

Read more: EV Battery Technology: The Road To A Breakthrough