CATL expects that by 2030, its energy storage business will account for half of global sales, as the focus of the battery supply chain shifts toward energy storage.

The world's largest battery manufacturer, Contemporary Amperex Technology Co. (CATL), expects that by 2030, energy storage systems will account for half of its global sales, a significant increase from the current 25%. This strategic shift marks an accelerated pivot of the battery industry chain from pure electric vehicles (EVs) to energy storage systems, driven by the urgent need for flexible peak-shaving resources in the global energy transition.

Energy storage business moves from fringe to core

Kevin Tang, Director of European Energy Storage Systems at CATL, disclosed at the SNEC PV Expo that five years ago energy storage accounted for only 2% of the company's battery sales, but has now jumped to 25%. The company initially focused on lithium-ion batteries for EVs, and EV batteries still contribute about three-quarters of revenue. However, the pressure of integrating intermittent renewable energy into the grid is driving explosive growth in energy storage demand. "Once we have more renewable energy, we need storage," Tang said.

In Europe—CATL's third-largest energy storage market (after China and the U.S.)—customers are simultaneously investing in "renewable energy + storage" projects and grid-side storage, depending on local grid congestion points. CATL has set up factories in Germany and Hungary, and recently broke ground on a new factory in Spain in a joint venture with Stellantis.

Industry impact: Reshaping the battery supply chain focus

The increase in the share of energy storage business will profoundly affect all aspects of the battery industry chain. First, battery capacity allocation will tilt toward energy storage, which may ease the tight supply of EV batteries but could also increase competition in energy storage batteries. Second, battery technology pathways need to meet the higher requirements of the energy storage sector for long cycle life, low cost, and safety. The application of lithium iron phosphate (LFP) batteries in energy storage will further expand.

This week, CATL announced an investment of $300 million to build an energy storage testing center, used to simulate grid environments and study the causes of energy storage fires and explosions—a safety concern most critical to customers. This move will promote the establishment of energy storage safety standards and may become a new threshold for industry access.

Challenges and risks

Raw material price volatility is another challenge for energy storage manufacturers. Tang pointed out that the US-Israel-Iran war has pushed up prices of raw materials such as lithium, copper, and aluminum. However, he expects costs to decline in the long term as the supply chain matures. CATL mines lithium in southern China to control its supply chain and operates the world's largest battery recycling plant to recover raw materials.

Notably, the European energy storage industry has not yet faced the same strict demands for localized procurement as the automotive industry, but profitability remains a challenge. Geopolitical risks could affect the layout of overseas factories, especially against the backdrop of escalating global trade frictions.

Outlook: Energy transition and smart mobilityCATL's strategic shift is a microcosm of the accelerated global transportation electrification and energy transition. The synergy between energy storage systems, electric vehicles, and renewable energy will drive the penetration of clean energy across the entire chain of generation, transmission, distribution, and consumption. As battery costs continue to decline and cycle life improves, energy storage is expected to become the second growth pole of the battery industry after EVs. This will not only reshape the geographical distribution of the battery supply chain but also give rise to new business models (such as virtual power plants and V2G), further accelerating the integrated development of smart mobility and smart energy.