The rapid expansion of the global lithium-ion battery market is reinforcing both the scale of future demand and the strategic opportunity for Australia to move further up the value chain.
A new report from the International Energy Agency (IEA) shows global lithium-ion battery demand rose 20 per cent between 2024 and 2025, pushing the market beyond $US150 billion. Deployment in 2025 is now six times higher than in 2020, underlining the accelerating role of batteries across transport and energy systems.
Electric vehicles (EVs) remain the dominant demand driver, accounting for more than 70 per cent of total lithium-ion battery deployment. Global EV sales reached a record level in 2025, with one in four new cars sold worldwide now electric. Battery energy storage systems account for more than 15 per cent of demand, reflecting the growing role of storage in stabilising renewable-heavy power grids.
The IEA noted how dramatically the market has shifted over the past decade.
“In 2015, nearly half of global battery demand came from portable electronics; by 2025, this share had fallen to below 5 per cent,” the report said.
The findings come amid renewed scrutiny of downstream processing economics in Australia following US-based lithium producer Albemarle’s decision to place its Kemerton lithium hydroxide refinery in Western Australia into care and maintenance.
The move highlighted the competitive pressures facing non-Chinese refiners, particularly as China continues to dominate global battery manufacturing. According to the IEA, Chinese, Korean and Japanese companies account for nearly all lithium-ion battery cell production, with China manufacturing well over 80 per cent of global output in 2025. The European Union and the United States account for most of the remaining supply.
“As batteries become more central to energy systems and the wider economy, strategic risks across their supply chains are becoming more pronounced,” the IEA said.
In response, Western nations are pursuing alternative supply chains and critical minerals partnerships aimed at reducing reliance on China.
For Australia, which remains the world’s leading supplier of hard-rock lithium, the challenge is shifting from simply supplying spodumene concentrate to building a sustainable downstream industry. Greater vertical integration, disciplined capital allocation, long-term offtake agreements and policy stability are likely to be central to that ambition.
With electrification trends expected to underpin long-term lithium demand growth, the latest market data reinforces that the opportunity remains significant – even as the pathway to competitive domestic processing continues to evolve.
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