The electric vehicle (EV) revolution is at a crossroads. Once hailed as the inevitable future of sustainable transport, EVs and their batteries now face a complex web of challenges that threaten to slow their momentum. From raw material shortages and supply chain shocks to geopolitical tensions, environmental concerns, and technological disruption, the industry’s rapid growth is colliding with stark realities. Are batteries and EVs truly under threat, or is this just another phase in the evolution of a transformative technology?

This comprehensive analysis examines the state of EV batteries in 2025, the risks and bottlenecks confronting the sector, the environmental and economic stakes, and the innovations and policy shifts that could shape the next decade of electric mobility.

The EV Battery Boom—and Its Growing Pains

Unprecedented Demand, Unprecedented Pressure

Global EV sales continue to surge, with 2024 seeing a 25% jump to 17 million units and annual battery demand surpassing 1 terawatt-hour for the first time. The EV battery market is projected to soar from $91.93 billion in 2024 to $251.33 billion by 2035. This growth is driven by consumer demand for cleaner transportation, government policies supporting decarbonisation, and a technological race for longer-range, faster-charging batteries.

Yet, this boom brings its own set of challenges. The industry’s appetite for lithium, cobalt, nickel, and graphite—the essential ingredients of modern batteries—has exposed vulnerabilities in global supply chains. As automakers and battery manufacturers scramble to secure resources, costs have soared and new risks have emerged.

Supply Chain Shocks: The Raw Material Crunch

Lithium: The White Gold Crisis

Lithium is the lifeblood of today’s EV batteries. But demand has outstripped supply, with prices rising by nearly 500% in a single year at the height of the crisis. Although prices have stabilised somewhat, they remain far above pre-2021 levels. China, which produces about 80% of the world’s lithium-ion batteries and controls over 80% of battery-grade lithium hydroxide processing, has become the epicentre of this global supply web.

The environmental cost is also high: mining a tonne of lithium emits 15 tonnes of CO₂, uses enormous amounts of water (often in arid regions), and leaves behind toxic waste. Chile’s Salar de Atacama, for example, has seen 65% of its scarce water resources diverted to lithium mining, with consequences for local communities and ecosystems.

Nickel and Cobalt: Geopolitical and Environmental Risks

Nickel prices spiked by 250% in early 2022, driven by supply constraints and geopolitical tensions—especially with Russia, a major nickel producer. Battery-grade nickel is in short supply, and the battery market’s share of global demand is rising fast.

Cobalt, another critical material, is even more problematic. Over 70% of global cobalt comes from the Democratic Republic of Congo, where mining is linked to hazardous working conditions and environmental degradation. By 2030, cobalt production is expected to fall short by 20% of projected demand.

Graphite: The Next Chokepoint

Graphite is essential for battery anodes, and China controls nearly 70% of global supply. When China restricted graphite exports in late 2023, the shockwaves were immediate—automakers scrambled for alternatives, and battery production slowed.

The Strategic Chokehold

The concentration of battery material processing in a handful of countries, especially China, has created a strategic chokehold on the industry. Geopolitical tensions, trade wars, and resource nationalism all threaten to disrupt supply chains. The US and EU have responded with tariffs, subsidies, and efforts to “friend-shore” supply chains—securing raw materials from allies and building domestic processing capacity. But these moves come with higher costs and new uncertainties.

Rising Costs and Industry Response

Inflation and Production Delays

By 2025, battery production costs are expected to rise by up to 40% due to raw material inflation. Automakers face production delays, higher prices, and the risk of passing costs to consumers. Some, like Ford and General Motors, have shifted focus to hybrid models or delayed the launch of new all-electric vehicles. In Europe, Mercedes-Benz and Stellantis have paused battery plant projects and reconsidered investments in electric technologies.

Innovation and Vertical Integration

To mitigate risks, automakers are investing in vertical integration—building their own battery plants, securing long-term contracts with miners, and investing in recycling. Companies like Tesla are pushing to integrate dry coating technology into battery production, aiming to reduce costs and emissions.

The Green Paradox

EVs are marketed as environmentally friendly, but the production of their batteries is resource- and carbon-intensive. It takes 8–10 metric tonnes of CO₂ to produce an EV, largely due to battery manufacturing. The extraction of lithium, cobalt, and nickel is linked to water scarcity, pollution, deforestation, and hazardous waste.

If not managed responsibly, the environmental footprint of battery production could undermine the climate benefits of electrifying transport.

Battery Degradation and End-of-Life

All batteries degrade over time, losing capacity and eventually requiring replacement. Factors such as charging habits, thermal management, and exposure to extreme temperatures affect battery lifespan. The looming question: what happens to millions of spent batteries?

Recycling and the Circular Economy

The Promise and Challenge of Battery Recycling

Recycling is crucial for reducing the environmental impact of EV batteries and securing critical materials. By 2035, recycling could provide up to 20% of the battery materials supply. However, recycling rates remain low due to technical, economic, and logistical barriers:

Complex battery designs and varying chemistries complicate disassembly.
Recycling processes are costly and require specialised facilities.
Fluctuating prices for recycled materials make mining new materials more attractive.

Despite these challenges, the global battery recycling industry is expanding. Capacity is expected to surpass 3 million tonnes per year by 2030, driven by tighter regulations, extended producer responsibility schemes, and industry collaboration.

Second-Life Applications

Spent EV batteries can be repurposed for energy storage, supporting renewable energy integration and grid stability. This “second life” extends the value of batteries and reduces waste.

Technology Trends: Solid-State and Beyond

The Solid-State Revolution

Solid-state batteries, which use a solid electrolyte instead of a liquid one, promise higher energy density, faster charging, and improved safety. Major automakers and battery companies are racing to commercialise solid-state technology, with prototypes boasting energy densities up to 1,000 Wh/L—more than double current lithium-ion batteries.

Honda, Samsung SDI, and TDK have all announced breakthroughs, and Honda plans to launch a solid-state EV battery with up to 1,000 kilometres of range by 2026. However, mass production remains challenging due to cost, manufacturing complexity, and durability concerns.

Cobalt-Free and Alternative Chemistries

To reduce reliance on scarce and controversial materials, manufacturers are shifting to cobalt-free chemistries like lithium iron phosphate (LFP) and exploring sodium-ion and manganese-based batteries. These alternatives offer lower costs, improved sustainability, and less exposure to supply chain shocks.

Fast-Charging and Range Gains

Advancements in battery management systems, silicon anodes, and high-voltage platforms are enabling faster charging and longer ranges. BYD’s 1,000-volt platform delivers nearly 500 kilometres of range in just five minutes of charging, while Toyota’s latest models offer over 600 kilometres per charge.

Policy and Geopolitics: The New Battleground

Tariffs, Subsidies, and Industrial Policy

The US and EU are reshaping the global battery industry through tariffs, subsidies, and industrial policy. The US Inflation Reduction Act (IRA) provides generous incentives for domestic battery production but imposes steep tariffs on Chinese imports—up to 100% in some cases. The EU is considering similar measures, aiming to force Chinese manufacturers to build plants in Europe and create local jobs.

These policies are double-edged swords: they support local industry and reduce strategic vulnerabilities, but they also raise costs and risk trade retaliation.

Friend-Shoring and Regionalisation

To reduce dependence on China, Western countries are pursuing “friend-shoring”—securing raw materials and manufacturing capacity from allies like Australia and African states. Automakers are signing long-term contracts, investing in local processing, and lobbying for favourable regulations.

Regulatory Uncertainty

Policy can make or break battery projects. Shifting political winds—such as changes in clean energy credits or environmental standards—create uncertainty for investors and manufacturers. Companies are hedging their bets by diversifying investments across regions.

Infrastructure and Consumer Challenges

Charging Infrastructure: The Achilles’ Heel

Despite government funding and industry investment, charging infrastructure has struggled to keep pace with EV adoption. Permitting delays, supply chain disruptions, and workforce shortages have slowed the rollout of public chargers, especially in the US and Europe. Range anxiety and concerns about charging reliability remain major barriers for consumers.

Upfront Costs and Resale Value

EVs and their batteries are still expensive compared to internal combustion engine vehicles, especially when factoring in the cost of home charging equipment. High upfront costs and uncertainty about battery lifespan and resale value deter some buyers.

Battery Degradation and Replacement

Battery degradation is an inevitable reality. Frequent fast charging, exposure to extreme temperatures, and high usage accelerate wear. While most EV batteries last 8–10 years, replacement is costly. Manufacturers are working to improve battery management systems and offer warranties, but concerns remain.

Scope 3 Emissions and Supply Chain Transparency

As regulators and investors demand greater sustainability, automakers must track emissions across their entire supply chain—including suppliers (Scope 3 emissions). Blockchain and digital twins are being deployed to ensure traceability and compliance, while recycling and circular economy initiatives are gaining traction.

Human Rights and Environmental Justice

The social and environmental impacts of mining—especially in the Global South—are under increasing scrutiny. Companies are under pressure to ensure ethical sourcing, fair labour practices, and community benefits.

New Zealand Perspective: Policy, Innovation, and Local Challenges

Government Support and Policy

New Zealand’s government has implemented incentives such as the Clean Car Discount and investments in charging infrastructure to accelerate EV adoption. However, regional disparities persist, with rural areas lagging behind due to limited charging access. Ongoing collaboration between government, councils, and private companies is needed to expand networks and integrate EVs into public transport.

Local Innovation

New Zealand startups and research institutions are active in battery innovation, including solid-state batteries and vehicle-to-grid (V2G) technology. V2G allows EVs to supply energy back to the grid, supporting renewable integration and grid stability.

Environmental Considerations

As in other countries, the environmental impact of battery production and disposal is a concern. Policies to support recycling, responsible sourcing, and second-life applications are essential for aligning EV adoption with zero-carbon goals.

The Road Ahead: Threats and Opportunities

Are Batteries and EVs Under Threat?

The answer is nuanced. The EV and battery industries face real and growing threats—from raw material shortages and geopolitical risks to environmental and social pressures. Costs are rising, supply chains are fragile, and policy uncertainty clouds the outlook.

Yet, the industry is also responding with innovation, investment, and collaboration. Solid-state batteries, cobalt-free chemistries, recycling, and circular economy models all offer pathways to greater resilience and sustainability. Governments are stepping up with incentives and regulations, while companies are racing to secure resources and build local capacity.

What Needs to Happen Next?

Diversify Supply Chains: Reduce dependence on single countries by investing in friend-shoring, local processing, and recycling.
Accelerate Innovation: Support research and development in next-generation batteries and sustainable production methods.
Expand Infrastructure: Invest in reliable, accessible charging networks and grid integration.
Promote Circularity: Scale up battery recycling and second-life applications to reduce waste and secure materials.
Ensure Social and Environmental Responsibility: Commit to ethical sourcing, fair labour, and community engagement.
Align Policy and Industry: Provide clear, stable policy signals to support investment and innovation.

Summary

Batteries and EVs are at a pivotal moment. The sector’s explosive growth has exposed vulnerabilities—from resource scarcity and supply chain shocks to environmental and social challenges. Rising costs, geopolitical tensions, and infrastructure gaps threaten to slow progress. Yet, the industry’s response—driven by technological innovation, policy support, and a growing focus on sustainability—offers hope for a resilient and sustainable future.

The next decade will determine whether EVs can overcome these threats and deliver on their promise of clean, accessible, and equitable mobility for all. The journey is far from over, but the stakes—and the opportunities—have never been higher.

Author

Tracey Wilson