Capgemini on Scaling Battery Production and Innovation

The battery industry stands at a crucial juncture as it strives to balance two pressing challenges: rapidly scaling production while pioneering next-generation chemistries.

According to the Capgemini Research Institute's latest report, 'The Battery Revolution: Shaping Tomorrow's Mobility and Energy,' batteries are transforming existing industries and driving new business models.

However, despite the surging demand for EVs and energy-storage solutions, manufacturers face hurdles across the entire value chain, from securing sustainable raw materials to advancing recycling capabilities.

The need for innovation in battery chemistry

Lithium-ion batteries dominate the market due to their proven performance, scalability and well-established supply chains.

However, the industry is actively exploring alternatives such as solid-state batteries, which promise higher energy densities, faster charging times and enhanced safety.

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

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

Scaling production: A major industry challenge

The need for production expansion is evident, with 76% of manufacturers stating they must upgrade or build new production lines to accommodate emerging battery technologies.

Despite this, significant challenges remain. More than half of battery manufacturers cite the extended time required to build and ramp up gigafactories (59%) and difficulties securing a stable supply chain for battery components and materials (53%).

Furthermore, uncertainty around economic viability and profitability continues to hinder large-scale investments. The industry faces a talent gap, with 60% of organisations struggling to find skilled professionals in battery technology and manufacturing processes. Beyond technical expertise, manufacturers require data scientists and engineers who can optimise production efficiency by analysing performance metrics and identifying defects.

Enabling new business models in mobility and energy

Battery innovation is not only reshaping manufacturing but enabling new business models.

Within the mobility sector, nearly two-thirds of automotive organisations are exploring battery leasing and battery-as-a-service (BaaS) models, allowing EV owners to rent batteries rather than purchase them outright. Around 64% of mobility companies are investigating battery-swapping solutions, potentially making EVs more accessible to a wider range of consumers.

However, these new models depend on industry-wide standardisation, battery longevity and adequate infrastructure development.

The energy and utilities sector embraces battery integration, with 69% of organisations offering or planning to offer BaaS solutions. Two in five companies are integrating batteries into renewable energy systems to enhance storage and efficiency.

Yet, critical obstacles remain, including inadequate grid infrastructure (65%) and the need for multiple battery types to support short- and long-term storage solutions (61%).

Expanding battery use across industries

Beyond mobility and energy, the influence of battery innovation extends into aviation, shipping and heavy transportation. Three in five industry respondents believe that battery-powered solutions will transform fleet operations and heavy transport within the next 5 to 10 years.

Innovations such as battery-powered eVTOLs (Electric Vertical Take-off and Landing aircraft), electric ships for short-sea transport and heavy-duty battery-powered vehicles are already gaining traction.

The role of digitalisation in scaling battery production

Despite batteries' critical role in the renewable energy transition, only one in three manufacturers has made substantial progress towards a circular economy. Digitalisation, however, could hold the key to optimising the industry.

While around two-thirds (67%) of respondents recognise the importance of data and digital technologies, actual adoption remains low, with only 17% of battery manufacturers currently employing digital solutions at scale.

A significant European initiative, the digital battery passport, aims to enhance sustainability by tracking the environmental impact of battery production and recycling. The system will enable suppliers and manufacturers to make informed decisions based on complete lifecycle data, promoting responsible sourcing and recycling practices.

The transition to next-generation batteries is inevitable, but the industry must address critical challenges related to supply chain stability, production scalability and economic viability. While lithium-ion batteries will continue to dominate in the short term, solid-state and alternative chemistries hold great promise for the future.

With a strong focus on digitalisation, industry collaboration and sustainability, battery manufacturers can navigate these complexities and drive the next wave of innovation.

As demand for EVs and energy storage solutions grows, overcoming these challenges will be crucial in shaping a battery-powered, sustainable future.

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