Lithium-ion batteries have evolved from laboratory research during the 1970s oil crisis into one of the most important technologies supporting the global energy transition. The technology now plays a central role in electric vehicles, renewable energy storage, consumer electronics, data centers, robotics and other applications.
The development of lithium-ion batteries was driven initially by efforts to reduce dependence on imported oil. Researchers at universities and laboratories in Europe, the United States and Japan established the scientific foundations of rechargeable lithium-based battery technology. Japanese electronics companies later became the first to commercialize lithium-ion batteries in the late 1980s and early 1990s, primarily for portable electronic devices.
The growing demand for mobile electronics created an important early market for the technology. Korean manufacturers subsequently introduced flatter and more flexible battery designs for smartphones and other consumer devices. As manufacturing volumes increased, battery costs declined significantly, helping lithium-ion technology become more widely accessible.
The industry’s largest expansion came with the rapid growth of electric vehicles. Between 2000 and 2025, global annual battery demand increased nearly 1,000 times, while average battery cell prices fell by about 97 percent. Improvements in energy density, manufacturing efficiency and production scale helped address some of the early challenges associated with electric vehicles, including limited driving range and high purchase costs.
China emerged as the largest force in the global lithium-ion battery industry during this transformation. Chinese policymakers identified electric mobility as an opportunity to strengthen the domestic automotive industry while reducing dependence on imported oil. Electric vehicles and battery manufacturing were incorporated into national industrial strategies, including successive Five-Year Plans and programs such as Made in China 2025.
Government support helped create a large domestic market through vehicle subsidies, tax exemptions, demonstration programs and preferential policies. At an early stage, domestic incentives were also linked to the use of locally produced batteries, giving Chinese battery manufacturers an opportunity to expand production and compete with established Japanese and Korean companies.
China also focused heavily on developing the wider battery supply chain. Investments in mineral processing and refining helped the country establish a strong position in critical materials, including lithium and graphite. Chinese companies also expanded their presence overseas through investments and partnerships in resource-rich countries.
These policies contributed to the development of an integrated ecosystem covering raw materials, battery chemicals, components, cells, electric vehicles and recycling. According to the figures cited in the source material, China now accounts for more than 70 percent of global electric-car production and about 85 percent of lithium-ion battery production. The country’s two largest battery manufacturers together account for more than half of global supply.
The development of the lithium-ion battery industry demonstrates that technological leadership depends on more than scientific breakthroughs. Large-scale manufacturing capabilities, supply-chain security, access to capital and consistent industrial policies have also played major roles.
As demand for energy storage and electric mobility continues to increase, countries are seeking to develop domestic battery capabilities and reduce dependence on concentrated supply chains. For emerging battery markets, regional partnerships, investment in manufacturing and research, and long-term policy support could help create more diversified and resilient battery supply chains.
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