Battery Technology: Innovative, Sustainable, and Circular

The battery industry’s evolution has reshaped the global power dynamics. Essential and ubiquitous, the industry has become a cornerstone of the global economy. As a vital part of the global energy system, it’s the fastest growing energy technology on the market. The demand for batteries is expected to surge, reaching USD $322.2 billion by 2030.¹

CHALLENGES AFFECTING THE BATTERY INDUSTRY

Over the last few years, the battery industry has undergone significant technological and structural shifts along with an array of difficult challenges like:

• Alternative Sources
• Competition
• Compliance
• Consumer Demand
• Environmental Concerns
• Innovation
• Navigating the Geopolitical Spectrum
• Safety Risks
• Supply Chain Issues

Alternative sources

With key developments like the rise of lithium iron phosphate (LFP) batteries that offer cost advantages and enhanced safety for EVs and grid storage, researchers are exploring sodium-ion technology as a potential alternative to lithium-ion. Solid-state batteries have also garnered attention, with manufacturers rushing to commercialize higher energy density designs.

Competition

The U.S. battery industry has fallen behind the global leaders. Over the past decade China is dominating the industry across every stage of the value chain—from current generation lithium-ion battery technologies, mineral extraction and processing, to battery manufacturing. China dominates the battery supply chain with nearly 85% of global battery cell production capacity.²

Consumer demand

Lack of charging infrastructure is presenting challenges as many EV owners are citing concerns about the availability and reliability of charging stations, which presents a critical barrier to a broader EV adoption. Portable electronics powered by lithium-ion batteries are also in high demand, especially for smartphones, laptops, and energy storage systems. With the demand for lithium-ion batteries, the battery industry is exploring more cost-effective options such as sodium-ion, solid-state, and lithium-sulfur batteries.

Environmental concerns: transitioning to a circular economy

Recycling has gained traction as supply chain challenges highlight the need for sustainable material sourcing, sparking innovations in recovering lithium, cobalt, and nickel from end-of-life (EOL) batteries.

As demand increases for EVs, the role of battery recycling is essential. Recyclers break down scrapped EV batteries into a light powder without losing the mineral composition. Black mass, as it’s called, is processed into new precursor cathode active materials (pCAM) and cathode active materials (CAM) at large facilities. Recycling makes the EV supply chain more sustainable and economical.

The lead battery leads in creating a circular economy. In comparing sustainable practices across all lifecycle stages, no other battery chemistry equals the lead battery’s closed-loop and remanufacturing success.

Another component of a lead battery’s circular economy model involves designing for recycling, efficiency, and remanufacture. As lead battery manufacturers innovate and design new batteries, they collaborate with others to design batteries for recycling and resource efficiency. This helps streamline the recycling of the battery’s key components (lead, plastic, acid) for reuse.

Safety risks

Fire safety is also a major challenge and danger, especially with lithium-ion batteries. For instance, in 2024, the Gateway Energy Storage Facility in Otay Mesa, San Diego caught fire and remained ablaze for several days because the fire repeatedly reignited due to a thermal runaway chain reaction—a phenomenon where overheating lithium-ion batteries catch fire and cause other batteries to do the same.³

Supply chain

The supply chain plays a crucial role in the battery industry by affecting the availability and cost of essential raw materials like lithium, cobalt, and nickel. These minerals are vital for battery production. Supply chain disruptions are a significant concern due to the geographic concentration of these minerals in a few countries. Such disruptions can lead to price volatility and shortages if issues arise in mining, refining, or transportation stages. This directly impacts battery manufacturing and the overall cost of finished products, such as electric vehicles, consumer electronics, and batteries used in industrial or medical settings.

Compliance regulations for Europe

Digital product passport for batteries

Aside from the challenges of operations, the industry has been tasked by the European Commission’s (EC) recent mandate requiring a digital product passport (DPP). The EC-wide sustainability requirements call for all types of batteries entering the European market—electric vehicle batteries (EVBs), waste portable batteries, battery energy storage systems (BESS), industrial batteries, batteries for light means of transport (LMT) such as electric bikes, and starting, lighting, and ignition (SLI) batteries to have a digital passport tag.

The industry, along with other heavy carbon footprint industries, will be required to provide a wide range of important product information about the battery’s lifecycle—from materials, technical specifications, traceability details, and much more to meet passport compliance.

Arena’s Practical Guide to Digital Product Passport can help you prepare for DPP mandates and understand the need for more circular and sustainable batteries programs while driving innovation and faster time to market.

Focus on CRMA

The Critical Raw Materials Act (CRMA) enacted by the European Union (EU) is designed to secure a sustainable and reliable supply of critical raw materials for European industries such as batteries. The new act’s goals are to strengthen the production, processing, and recycling of strategic raw materials with the EU.

The CRMA aims to bolster the EU’s strategic autonomy by reducing reliance on external suppliers for CRMs. These materials, including lithium, cobalt, and nickel, are essential to producing batteries, renewable energy technologies, and various high-tech applications. Additionally, the Act mandates that no more than 65% of any strategic raw material should be sourced from a single third country, consequently reducing the risk of supply chain disruptions.⁴

Compliance regulations for Malaysia, Singapore, and Thailand

In Southeast Asia, battery compliance regulations vary by country, generally focusing on environmental protection, safety, and sustainability.

Malaysia

The Electric Vehicle and Battery Management (EVBM) Guidelines are a set of industry self-regulating standards designed to ensure the safe, efficient, and sustainable management of EVBs throughout their lifecycle as well as storage, transportation, disposal, and recycling, with the primary goal of prioritizing public safety and environmental protection within the growing EV ecosystem.

Thailand

Currently, Thailand lacks specific regulations governing the management of EV batteries, instead relying on existing environmental laws that may not be sufficient to handle the unique challenges posed by battery waste. The National Economic and Social Development Council (NESDC) in Thailand has demanded immediate action to manage the impending surge in EV battery waste, particularly lithium batteries, projected to reach 7.8 million tons annually by 2040

As Thailand strives to become the Association of Southeast Asian Nations (ASEANs) hub for EV manufacturing, it has implemented policies aiming for 30% of total vehicle production to be electric by 2030. This goal is expected to lead to an increase in production capacity, reaching up to 400,000 units per year.⁵

HOW ARENA PLM HELPS BATTERY TECHNOLOGY COMPANIES

While the demand for more power continues—PLM helps you manage product lifecycle processes, aggregate compliance information faster and accurately, and accelerate product and quality processes.

The role of Arena PLM in battery innovation

To manage complex product development processes such as batteries, Arena PLM brings product information, people, and processes together into a single cloud platform to speed product design and development.

Arena PLM helps design and get products to market faster by:

• Driving innovation with cross-functional, connected requirements management
• Enhancing visibility and traceability with a centralized product record
• Increasing transparency in the supply chains for faster decision-making
• Managing the bill of materials (BOM)—from customer information to suppliers
• Providing revision-controlled designs and audit history

Connect Arena with the solutions you use every day

Arena easily integrates with upstream and downstream systems such as enterprise resource planning (ERP), manufacturing execution systems (MES), and lifecycle assessment (LCA) to ensure seamless data flow and consistency across all stages of a product’s lifecycle. This integration helps maintain accurate and up-to-date information, which is essential for reducing errors, reworks, and compliance risks.

Future trends in battery innovation

With key developments like the rise of LFP batteries and the emergence of sodium-ion technology as a potential alternative to lithium-ion chemistry, the industry is expected to keep moving at a swift pace.

Progressive carbon footprint thresholds and mineral recovery rates have the potential to reshape how lithium, graphite, and other minerals are sourced and processed for energy storage, EVs, and e-mobility devices. The new regulations will significantly affect manufacturers as well as the battery industry.

Due to its ambitious scaling and environmental, social, and governance (ESG) transformations, the industry is on track to become not only a circular global battery value chain but also achieve sustainable inclusive growth. Companies using PLM solutions are better positioned to manage ongoing changes and shifts in regulations while staying competitive and getting their products to market faster.

Sources cited:

1. https://www.globenewswire.com/news-release/2025/02/04/3020360/0/en/Battery-Market-Outlook-2025-2030-Insights-on-Electric-Vehicles-Energy-Storage-and-Consumer-Electronics-Growth.html#:~:text=Dublin%2C%20Feb.,14.3%25%20from%202024%20to%202030
2. https://www.iea.org/reports/batteries-and-secure-energy-transitions
3. https://fox5sandiego.com/news/local-news/is-the-battery-storage-facility-still-on-fire-in-otay-mesa/
4. https://single-market-economy.ec.europa.eu/sectors/raw-materials/areas-specific-interest/critical-raw-materials/critical-raw-materials-act_en
5. https://www.nationthailand.com/news/general/40043753