Capgemini: What's Shaping the Future of Batteries?

In 2024, we saw AESC UK, Nissan's battery partner announce a £1 billion (US$1.23bn) gigafactory in Sunderland that is set to create over 1,000 new jobs and invigorate the local economy.

Amid such developments, Capgemini’s latest report on the future of battery technology offers critical insights for manufacturers on trends shaping the sector.

The report, based on feedback from 750 senior executives globally, highlights the influence of rising demand for electric vehicles (EVs) and energy storage solutions.

Here we explore the key findings from the report, offering advice to manufacturers reliant on batteries about how to navigate these shifts effectively.

What's driving demand for batteries?

Capgemini’s report highlights that the battery industry is experiencing rapid change due to increasing demand for electric vehicles and energy storage solutions.

Lithium-ion batteries are still the dominant technology, due to their reliability, scalability and well-established supply chain. However, manufacturers are also exploring alternatives, such as solid-state batteries, which promise better energy density, faster charging and improved safety.

As the need for higher performance and lower costs intensifies, 76% of surveyed manufacturers acknowledge the necessity of upgrading or building new production lines to keep pace with the evolving battery landscape.

This shift towards next-generation technologies is expected to require substantial investments in both infrastructure and research.

For manufacturers, it is crucial to stay ahead of these developments by not only scaling up existing production capabilities but also by investing in the innovation of new battery chemistries.

Staying competitive will require focusing on long-term advancements while managing the growing demands for EV and energy storage solutions.

New business models, EV mobility & renewables

Capgemini’s research also reveals that the rise of electric mobility and renewable energy is fostering the creation of new business models.

These include the Battery-as-a-Service (BaaS) model, which allows consumers to lease or swap batteries instead of purchasing them outright.

The emergence of this model aligns with the industry's broader turn to servitisation, shifting away from a focus on products to focusing on tailored, ongoing services.

This model is swiftly gaining traction, with 64% of mobility organisations exploring battery swapping and over half considering battery leasing as a viable option.

The success of the BaaS model and others will be heavily influenced by standardisation, battery performance and the development of supporting infrastructure.

Similarly, the energy and utilities sectors are integrating batteries with renewable energy systems to optimise storage.

Despite this, several obstacles remain.

While batteries are considered a valuable asset, the cost of the electricity they store is often low.

Additionally, the lack of robust grid infrastructure and the need for various types of batteries to accommodate different storage durations complicate the transition to renewable energy.

Manufacturers must be prepared to meet the demand for these new business models, which will require not only technical innovation but also collaboration across industries.

The success of these models depends on the ability to create a seamless integration between battery technologies and supporting infrastructure.

Other critical challenges

Scaling production to match the growth of the battery sector continues to pose challenges for manufacturers. 

According to the report, over half of battery manufacturers cite the time required to build and ramp up gigafactories as a key barrier.

Securing a stable supply chain for raw materials and components is also a significant concern, with 53% of companies reporting difficulties in this area.

Another challenge highlighted in the report is the shortage of skilled workers in both battery technology and manufacturing processes. Nearly 60% of companies report difficulty in recruiting the talent needed to drive innovation and maintain production efficiency.

Manufacturers will need to invest in training and development to fill these skills gaps, particularly in areas such as data science and process engineering, which are critical for optimising production and improving battery performance.

The transition to a more sustainable and circular economy is another pressing issue for the battery industry. While batteries are essential for the decarbonisation of transport and energy systems, only a third of manufacturers have made significant progress in creating sustainable recycling and reuse systems.

Manufacturers should prioritise establishing a circular economy by focusing on the end-of-life management of batteries and ensuring that recycling infrastructure is built to keep pace with growing demand.

The role of digital transformation

Capgemini’s report determines that the future of battery manufacturing will be heavily influenced by digital transformation.

While 67% of surveyed companies recognise the importance of data and digital technologies, only 17% have fully embraced digitalisation in their manufacturing processes.

To remain competitive, battery manufacturers must leverage data analytics to optimise production, enhance battery performance and reduce defects.

Implementing digital tools such as the ‘battery passport’ being developed in Europe, which tracks the environmental impact and lifecycle of batteries, can provide valuable insights for improving sustainability.

Manufacturers must also recognise the importance of adopting advanced digital technologies to streamline operations, reduce costs and improve overall efficiency.

The use of digital tools will be essential in addressing production challenges, such as scaling up manufacturing and meeting demand for next-generation batteries.

“Innovation is driving a sustainable and competitive battery industry, with advancements in technologies and alternative chemistries improving performance and longevity," says Pierre Bagnon, Global Head of Intelligent Industry Accelerator at Capgemini. 

"At this transformative time, while European and North American manufacturers are navigating production ramp-ups and exploring next generation of batteries, a solid and scalable digital foundation will be crucial for the industry’s future.

“Data and digital technologies can enhance the entire battery value chain, optimising lifecycle management from quality control to waste management and recycling.

"Equally, collaboration within an innovation ecosystem that brings together all players and regulators is vital to continue the industry’s journey towards a battery-driven sustainable future.”

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