Electric Vehicle Battery Formation and Testing Market - A Global and Regional Analysis: Focus on Vehicle Type, Application, Battery Chemistry, Deployment Method, Sourcing, Testing Type, and Country-Level Analysis - Analysis and Forecast, 2023-2032

Dec 2023| BIS846A| BIS Research

Report Highlights

Global Electric Vehicle Battery Formation and Testing Market Expected to Reach $6.46 Billion by 2032

Electric Vehicle Battery Formation and Testing Market Overview

The electric vehicle battery formation and testing market was valued at $1.42 billion in 2022, and it is expected to grow at a CAGR of 16.59% and reach $6.46 billion by 2032. The growth in the electric vehicle battery formation and testing market is expected to be driven by growing demand for EVs and the need to ensure the safety, reliability, and performance of EV batteries. As EV adoption accelerates, battery manufacturers are under pressure to produce high-quality batteries that meet stringent safety standards.

Introduction of Electric Vehicle Battery Formation and Testing

Electric vehicle battery formation and testing are crucial steps in ensuring the safety, reliability, and performance of EV batteries. These processes involve a series of precisely controlled charge and discharge cycles that activate the battery's chemistry and identify any potential defects. Battery formation is a critical step in establishing a stable and uniform solid electrolyte interphase (SEI) layer on the anode and the cathode electrolyte interface (CEI) layer on the cathode, which are essential for efficient and safe battery operation. Testing, on the other hand, evaluates various battery parameters, such as capacity, voltage, current, and internal resistance, to ensure that the battery meets the required performance specifications.

The battery formation and testing process typically involves multiple charge and discharge cycles, often at varying rates, and can take several days or even weeks to complete. The specific parameters and duration of the process depend on the type of battery chemistry and the desired performance characteristics. Advanced battery formation and testing equipment and software are employed to precisely control the charging and discharging cycles and monitor critical battery parameters. These systems play a vital role in ensuring the consistency and quality of EV batteries.

Market Introduction

The electric vehicle battery formation and testing market is currently in the growth stage of its life cycle. This means that the market is experiencing rapid growth, driven by several factors, including:

Increasing Demand for EVs: The demand for EVs is growing rapidly as governments around the world implement policies to reduce greenhouse gas emissions from transportation. This is leading to increased production of EVs, which in turn drives demand for EV battery formation and testing services.
Need for Advanced Technology: As battery technology continues to evolve, the need for advanced battery formation and testing equipment and services is also growing. This is because newer battery chemistries and technologies require more sophisticated testing procedures to ensure their safety and reliability.
Regulatory Requirements: Governments are increasingly imposing stringent safety and performance standards on EV batteries. This is leading to increased demand for battery formation and testing services that can help manufacturers comply with these regulations.

The growth stage of the electric vehicle battery formation and testing market is expected to continue for several years as EV adoption accelerates and battery technology continues to evolve. However, as the market matures, it is likely to enter the consolidation stage, where competition among testing service providers intensifies and pricing pressure increases.

Industrial Impact

The electric vehicle battery formation and testing market is having a transformative impact on various industries, including automotive manufacturing, electronics manufacturing, chemical manufacturing, and recycling and waste management. As the demand for EVs surges, the need for reliable and high-performance batteries intensifies, driving advancements in battery formation and testing technologies. This, in turn, creates opportunities for companies in these industries to develop innovative solutions and expand their operations. Additionally, the growing EV market fosters job creation and economic growth across the value chain.

The key players operating in the electric vehicle battery formation and testing market include Siemens AG, Dassault Systems, SAP SE, and TUV SUD, among others. These companies are focusing on strategic partnerships, collaborations, and acquisitions to enhance their product offerings and expand their market presence. In conclusion, the market for electric vehicle battery formation and testing is growing and evolving significantly because of factors such as rising safety and efficiency concerns, technological breakthroughs, and the increasing demand for EV batteries.

Market Segmentation:

Segmentation 1: by Application

  • Manufacturing
  • Testing

Testing to Dominate the Electric Vehicle Battery Formation and Testing Market (by Application)

Electric vehicle batteries require rigorous safety checks for safe installation and integration with systems. A wide range of testing is required after the actual battery formation process, right from a charging infrastructure to the battery of the vehicle, and to make sure the battery is in line with the industry standards. Therefore, testing is the largest application within the electric vehicle battery formation and testing market and is anticipated to maintain its dominance during the forecast period 2023-2033.

Segmentation 2: by Vehicle Type

  • Passenger Vehicle
  • Commercial Vehicle

Passenger Vehicle to Dominate the Electric Vehicle Battery Formation and Testing Market (by Vehicle Type)

Passenger vehicles are the most common mode of conveyance in developed countries, and they are increasing in numbers in developing countries as well due to increasing per capita income. EV manufacturers are frequently launching new passage vehicle models, and increasing disposable income in emerging economies is supporting the adoption of EVs in the passenger vehicle industry.

Segmentation 3: by Battery Chemistry

  • Lithium-Ion
  • Others

Lithium-Ion to Dominate the Electric Vehicle Battery Formation and Testing Market (by Battery Chemistry)

Lithium-ion batteries lead the electric vehicle battery formation and testing market due to their superior energy density, which enables longer ranges without significant increases in weight or size. They are lighter, more compact, and offer better performance and charge/discharge efficiency than nickel-metal hydride batteries. Lithium-ion batteries also boast a longer lifespan, contributing to the overall durability and cost-effectiveness of electric vehicles. Ongoing advancements in lithium-ion technology, including improvements in safety and cost, further solidify their position as the preferred choice for electric vehicle manufacturers.

Segmentation 4: by Sourcing Type

  • In-house
  • Outsourcing

In-house to Dominate the Electric Vehicle Battery Formation and Testing Market (by Sourcing Type)

The in-house sourcing type is anticipated to attain the biggest market share over the forecast period 2023-2032 as a result of businesses' experience in carrying out in-house battery testing activities under total control. Additionally, in-house sourcing's cost-effective assessment strategy guarantees higher levels of customer satisfaction and aids government organizations in being more productive.

Segmentation 5: by Deployment Method

  • Cloud-Based
  • On-Premises

Cloud-Based Segment to Garner the Highest Growth in the Electric Vehicle Battery Formation and Testing Market (by Deployment Method)

Cloud-based testing is poised to lead the electric vehicle battery formation and testing market over on-premises testing due to several key advantages. Cloud-based testing offers greater scalability, allowing manufacturers to access and utilize testing resources dynamically based on demand, thereby optimizing efficiency and reducing costs. The flexibility and accessibility of cloud-based solutions enable collaboration among geographically dispersed teams and facilitate real-time data sharing. Additionally, cloud platforms provide advanced analytics and machine learning capabilities, enhancing the analysis of complex battery testing data and aiding in predictive maintenance. As the electric vehicle industry continues to evolve rapidly, the agility and innovation offered by cloud-based testing solutions make them more adaptable and responsive to the dynamic needs of battery development and quality assurance processes.

Segmentation 6: by Testing Type

  • Mechanical Tests
  • Thermal Tests
  • Electrical Tests
  • Others

Mechanical Tests to Dominate the Electric Vehicle Battery Formation and Testing Market (by Testing Type)

Mechanical tests are leading the electric vehicle battery formation and testing market because they are crucial for ensuring the structural integrity and safety of batteries. As electric vehicle batteries need to withstand various stresses during operation, mechanical testing assesses factors such as vibration, impact, and structural durability. These tests are fundamental for mitigating the risk of physical damage or failure in real-world driving conditions. While thermal, electrical, chemical, and performance tests are vital for evaluating specific functional aspects and efficiency, mechanical tests serve as a foundational step in guaranteeing the overall robustness and reliability of electric vehicle batteries. As safety remains a top priority, a comprehensive approach that emphasizes mechanical testing is essential to instill confidence in the durability of electric vehicle batteries, especially in a market where reliability and safety are paramount concerns for both manufacturers and consumers. However, over the forecast period 2023 to 2032, thermal testing is expected to lead the electric vehicle battery formation and testing market.

Segmentation 7: by Region

  • North America: U.S., Canada, and Mexico
  • Europe: Germany, Hungary, Poland, Sweden, and Rest-of-Europe
  • U.K.
  • China
  • Asia-Pacific and Japan: Japan, South Korea, India, and Rest-of-Asia-Pacific and Japan
  • Rest-of-the-World

China to Dominate the Electric Vehicle Battery Formation and Testing Market (by Region)

China leads the electric vehicle battery formation and testing market for several reasons. The country has strategically positioned itself as a global leader in electric mobility, fostering an environment conducive to innovation and production. Government policies and incentives, including subsidies and regulations promoting electric vehicle adoption, have accelerated the growth of the electric vehicle market in China. Additionally, robust investment in research and development, coupled with significant advancements in battery technology, has allowed regional companies to stay ahead in the development of electric vehicle batteries. China's dominance is also reflected in the production of key battery materials, such as lithium-ion cells, which are essential for electric vehicles. Furthermore, the presence of a well-established manufacturing infrastructure and a large domestic market for electric vehicles contributes to China's leadership in the electric vehicle battery formation and testing market.

Recent Developments in the Electric Vehicle Battery Formation and Testing Market

  • In October 2023, Siemens AG announced the development of a new battery formation and testing system that uses artificial intelligence (AI) to optimize the formation process and improve battery performance.
  • In September 2023, Yokogawa Electric Corporation announced the launch of its new Battery Test System, which offers high-precision measurement capabilities for evaluating the performance of lithium-ion batteries.
  • In July 2023, Mahindra & Mahindra (M&M) Ltd. announced to set up a new battery test facility in Tamil Nadu, India.

Demand – Drivers, Limitations, and Opportunities

Market Demand Drivers: Improving Electric Vehicle Performance through Accurate Battery Testing

Battery testing involves various assessments such as battery capacity, cycle life, and temperature performance under various conditions. Issues related to electric vehicle batteries can significantly reduce driving range, power output, and even raise safety concerns. To tackle such issues, battery testing plays a very important role in enhancing the performance, safety, and reliability of batteries and ensures the robust performance and durability of electric vehicle batteries.

Temperature fluctuations in the battery may have a significant impact on overall battery capacity and charging speeds. Therefore, meeting temperature regulations is crucial for consistent and efficient charging of electric vehicles. For accurate battery testing, it is essential to maintain a constant temperature within the testing chamber. This is because temperature fluctuations can lead to the performance and lifespan of the battery. Industrial chillers maintain a constant and consistent temperature in the battery and ensure that the results of the testing are accurate and reliable.

Thus, rigorous battery resting procedures are essential in establishing the robustness and effectiveness of batteries across a wide array of applications and scenarios. Therefore, battery testing helps manufacturers to ensure that they meet safety standards and provide optimal performance for end users.

Market Challenges: Supply Chain Uncertainties and Lack of Charging Infrastructure

The growing demand for electric vehicles (EVs) is driving a surge in the demand for electric vehicle battery formation and testing market. However, the supply chain for raw materials of EV and critical battery materials is increasingly uncertain due to a number of factors, including:

Geographic Concentration: The production and processing of lithium and other battery materials is geographically concentrated in a few countries, such as Australia, Chile, China, and the Democratic Republic of Congo. This makes the supply chain vulnerable to disruptions caused by political instability, natural disasters, and other unforeseen events.
Geopolitical Tensions: The global supply chain for electric vehicles and other battery materials is also increasingly affected by geopolitical tensions. For example, the U.S.-China trade war has led to tariffs on lithium imports from China, which has increased costs for battery manufacturers.
Rising Demand: The rising demand for lithium-ion batteries is putting a strain on the existing supply chain. This is leading to longer lead times and higher prices for battery materials.

The uncertainty surrounding the supply chain for electric vehicles and other battery materials is impeding and creating uncertainty in the global EV battery testing and formation market, thereby restraining the market growth.

One of the biggest hurdles for electric vehicle adoption is the lack of charging infrastructure. Installing more charging stations not only increases the demand for electric vehicles but will also boost the demand for electric vehicle battery testing and formation.

Market Opportunities: Growing Usage of Emerging Technologies for Battery Testing

Electric vehicle (EV) manufacturers are adopting emerging technological solutions and processes to help them collaborate across the supply chain to meet a variety of challenges, including compliance with safety and environmental regulations and testing requirements.

The automotive industry is changing dramatically because of the integration of artificial intelligence and machine learning in automobiles. The manufacturers of electric vehicles are progressively placing more emphasis on cutting-edge and specialized features in their vehicles, including the Internet of Things (IoT) and advanced driver assistance systems (ADAS).

In the rapidly growing electric vehicle market, battery testing has become a significant bottleneck, hindering the timely launch and commercialization of EVs. The growing demand for electric vehicles and intense competitive pressure to enhance the range and charging times compound this challenge exponentially. In order to cope with this testing problem, battery manufacturers are adopting artificial intelligence-based testing models. Software developer company Monolith has developed a machine learning artificial intelligence-based approach for the validation and regulatory testing of electrical vehicle batteries. These artificial tools can cut testing of automotive batteries by up to 70%, according to its developer. Thus, the usage of artificial intelligence for battery testing is expected to create lucrative opportunities for the market during the forecast period 2023-2032.

How can this report add value to an organization?

Product/Innovation Strategy: The product/innovation strategy for companies in the electric vehicle battery formation and testing market should focus on continuous improvement, differentiated solutions, collaboration, automation, cost reduction, regulatory compliance, talent acquisition, and intellectual property protection. Companies should continuously invest in research and development to stay ahead of the curve, develop specialized testing equipment, partner with industry stakeholders, leverage automation and data analytics, focus on cost-effective battery chemistries, stay informed on regulatory standards, attract and retain top talent, and protect their intellectual property. By following these key strategies, companies can position themselves for success in this growing and dynamic market.

Growth/Marketing Strategy: The electric vehicle battery formation and testing market has been growing at a rapid pace. The market offers enormous opportunities for existing and emerging market players. Some of the strategies covered in this segment are mergers and acquisitions, product launches, partnerships and collaborations, business expansions, and investments. The strategies preferred by companies to maintain and strengthen their market position primarily include partnerships, agreements, and collaborations.

Competitive Strategy: The competitive strategy for companies in the electric vehicle battery formation and testing market should be focused on differentiation, cost leadership, and customer focus. Companies should differentiate their products and services by developing specialized testing equipment, offering value-added services, and collaborating with industry partners. They should also focus on cost reduction by developing more efficient manufacturing processes and using less expensive materials. Finally, companies should focus on providing excellent customer service and support to build strong customer relationships. By focusing on these three key areas, companies can gain a competitive edge in the electric vehicle battery formation and testing market.

Report Synopsis

Report Metrics Details
Base year considered 2023
Forecast period considered 2023-2032
Base year market size $1.62 Billion in 2023
Market size forecast $6.46 Billion by 2032
Growth rate 16.59%
Units considered $ Billion
Segments covered By Application, By Vehicle Type, By Battery Chemistry, By Sourcing Type, By Deployment Method, By Testing Type, By Region
Industry covered Automotive / Mobility
Regions covered North America, Europe, Asia-Pacific and Japan
Countries covered U.S., Canada, Mexico, Germany, Hungary, Poland, Sweden, Rest-of-Europe, U.K., China, Japan, South Korea, India, Rest-of-Asia-Pacific and Japan, Rest-of-the-World
Companies studied
  • Siemens AG
  • ABB
  • SAP SE
  • Dassault Systemes
  • Rockwell Automation, Inc.
  • General Electric
  • AVEVA Group Limited
  • Tulip Batteries
  • HORIBA, Ltd.
  • Cognex Coporation
  • Emerson Electric Co.
  • Infineon Technologies AG
  • Analog Devices, Inc.
  • Element Materials Technology

Research Methodology

Factors for Data Prediction and Modeling

  • The scope of this report has been focused on the electric vehicle battery formation and testing market.
  • The market shares for the testing types and application types have been calculated based on the global electric vehicle battery formation and testing market.
  • Electric vehicle production data for all countries has been taken for the calculation of the vehicle type segment.
  • The base currency considered for the market analysis is US$. Currencies other than the US$ have been converted to the US$ for all statistical calculations, considering the average conversion rate for that particular year.
  • The currency conversion rate has been taken from the historical exchange rate of the Oanda website.
  • Nearly all the recent developments from January 2019 to November 2023 have been taken into account in this research study.
  • The study of the market includes standard organizations, battery manufacturers, and testing system developers.
  • The study of the data has been limited to passenger and commercial vehicles. Electric two-wheelers and three-wheelers have not been considered under the scope of the study.
  • The information rendered in the report is a result of in-depth primary interviews, surveys, and secondary analysis.
  • Where relevant information was not available, proxy indicators and extrapolation were employed.
  • Any economic downturn in the future has not been taken into consideration in the market estimation and forecast.
  • Technologies currently used are expected to persist through the forecast period with no breakthroughs in technology.

Market Estimation and Forecast

The market size for the electric vehicle battery formation and testing market has been calculated through a mix of secondary research and primary inputs. A top-bottom approach has been followed to derive the quantitative information. The steps involved in the bottom-up approach are as follows:

  • The reference of automotive production data for each country, such as by vehicle type and battery chemistry, has been taken into consideration.
  • For market share calculations of the testing types and application segment, extensive product mapping has been conducted in addition to primary interviews.
  • Also, all products and applications for each company (product mapping) have been analyzed. From this, the tentative market shares of subsegments were obtained. After this, these market shares were validated by industry experts.
  • A supply-side approach was used to get the market size of the global electric vehicle battery formation and testing market in value ($million) for the year 2022. All leading battery testing companies' revenues for the base year 2022 were tracked down.
  • Based on the segmental and product revenue of the manufacturers, the total product revenue for each testing type market through supply-side calculations was found. To determine the manufacturer's segmental revenue and product revenue for a particular testing type market, the annual reports, websites, and quarterly financial results disclosed by manufacturers were referenced for the calculations.
  • For compound annual growth rate (CAGR) calculations by each country, different electric vehicle battery formation and testing forecasting factors were considered. Some forecasting factors are safety regulations, upcoming battery manufacturing plants, technology readiness, and others.
  • Compound annual growth rate (CAGR) calculations for each country are based on primary and secondary research from associations' disclosed data, forecasting factors, and historical patterns of battery chemistry types from the last ten years (2012-2022).
  • The value for each country to derive the market size of the segments based on vehicle type, application, battery chemistry, deployment method, sourcing type, and testing type was added. For instance, the global electric vehicle battery formation and testing market size in 2022 has been the summation of the market size of all considered regions for the year 2022.

Primary Research

The primary sources involve industry experts from the electric vehicle battery formation and testing market, such as electric vehicle OEMs, battery manufacturers, technology providers, test system integrators, and component suppliers. Respondents such as CEOs, vice presidents, marketing directors, and technology and innovation directors have been interviewed to obtain and verify both qualitative and quantitative aspects of this research study.

The key data points taken from primary sources include:

  • validation and triangulation of all the numbers and graphs
  • validation of report segmentation and key qualitative findings
  • understanding the competitive landscape
  • validation of numbers of various markets based on applications and product chapter
  • percentage split of individual markets for regional analysis

Secondary Research

This research study involves the usage of extensive secondary research, directories, company websites, and annual reports. It also makes use of databases, such as Hoovers, Bloomberg, Businessweek, Factiva, and One-Source, to collect useful and effective information for an extensive, technical, market-oriented, and commercial study of the global market. In addition to the aforementioned data sources, the study has been undertaken with the help of other data sources and websites, such as www.weforum.org and www.trademap.org.

Secondary research was done in order to obtain crucial information about the industry’s value chain, revenue models, the market’s monetary chain, the total pool of key players, and the current and potential use cases and applications.

The key data points taken from secondary research include:

  • segmentations, split-ups, and percentage shares
  • data for market value
  • key industry trends of the top players of the market
  • qualitative insights into various aspects of the market, key trends, and emerging areas of innovation
  • quantitative data for mathematical and statistical calculations

Key Market Players and Competition Synopsis

The companies that are profiled in the electric vehicle battery formation and testing market have been selected based on inputs gathered from primary experts and analyzing company coverage, product portfolio, and market penetration.

Some of the prominent names in the electric vehicle battery formation and testing market are:

  • Siemens AG
  • ABB
  • SAP SE
  • Dassault Systèmes
  • Rockwell Automation, Inc.
  • General Electric
  • AVEVA Group Limited
  • Tulip Batteries
  • Cognex Coporation
  • Emerson Electric Co.
  • Infineon Technologies AG
  • Analog Devices, Inc.
  • HORIBA, Ltd.
  • Element Materials Technology

Companies that are not a part of the aforementioned pool have been well represented across different sections of the report (wherever applicable).

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