How Can Battery Manufacturing Companies Combat the Supply Chain Risks for EV Batteries

24 Jan 2024

As the world transitions toward a greener future, electric vehicles (EVs) have become pivotal in reducing carbon emissions and revolutionizing transportation. At the heart of these zero-emission vehicles lies the crucial component that powers them, i.e., the electric vehicle battery.  

However, the intricate web of suppliers, manufacturers, and distributors that form the supply chain for EV batteries brings forth a host of risks that battery manufacturing companies must confront. 

According to the BIS Research report, the global battery manufacturing equipment market is projected to reach $88.09 billion by 2031 from $9.43 billion in 2021, growing at a CAGR of 27.12% during the forecast period 2022-2031.  

From raw material sourcing to production and distribution, this blog will explore the multifaceted challenges that arise at each stage of the supply chain of electric vehicle batteries and provide strategic insights and solutions to mitigate those risks. 

How Automotive Segment is Dominating the Battery Manufacturing Equipment Market? 

In 2021, the automotive sector emerged as the leading segment in the battery manufacturing equipment market, primarily driven by the increasing global sales of electric vehicles. The dominant growth in the automotive lithium-ion battery market can be attributed to favorable government regulations. 

Governments from various countries are collaborating with automobile manufacturers to address the pressing concerns of ecological sustainability and the need for a clean energy balance. 

The increasing adoption of electric vehicles is one of the primary drivers behind the dominance of the automotive segment in the battery manufacturing equipment market. As governments worldwide prioritize sustainable transportation and strive to reduce greenhouse gas emissions, the demand for EVs has skyrocketed. Electric vehicles rely on advanced battery technologies, such as lithium-ion batteries, which require specialized manufacturing equipment for efficient production. 

The automotive industry's push for electric vehicles has accelerated technological advancements in battery manufacturing equipment. Manufacturers continuously develop innovative equipment to improve battery performance, increase production capacity, and reduce costs. This includes advances in electrode coating, cell stacking, electrolyte filling, and cell testing processes. 

What are the Potential Supply Chain Risks Battery Manufacturing Companies Face?

Battery manufacturing companies face several potential supply chain risks that can impact their operations and overall business performance. The following are some key risks: 

Raw Material Availability: The availability and pricing of raw materials, such as lithium, cobalt, nickel, and other critical minerals, can pose a significant risk. These materials are essential for battery production, and any disruption in their supply can lead to production delays and increased costs. Fluctuating prices, geopolitical tensions, trade restrictions, and environmental regulations can all impact the availability of raw materials. 

Supply Chain Disruptions: Disruptions in the supply chain can occur due to various factors such as natural disasters, transportation issues, labor disputes, supplier bankruptcies, and political instability. Any disruption in the supply chain can lead to delays in receiving essential components and equipment, affecting production schedules and customer commitments. 

Quality Control and Product Defects: Maintaining stringent quality control throughout the supply chain is crucial for battery manufacturing companies. Defects in battery components, substandard materials, or faulty manufacturing processes can lead to product recalls, customer dissatisfaction, and damage to the company's reputation. Ensuring quality standards across all suppliers and manufacturing processes mitigates such risks. 

Dependence on Single Suppliers: Overreliance on a single supplier for critical components or raw materials can pose a significant risk. If a sole supplier faces disruptions, such as production issues, financial difficulties, or capacity constraints, it can impact the battery manufacturing company's ability to meet demand. Diversifying the supplier base and establishing strategic partnerships with multiple suppliers can help mitigate this risk. 

Intellectual Property (IP) Theft and Counterfeiting: Battery manufacturing companies invest significant resources in research and development to develop innovative battery technologies. The risk of intellectual property theft, including unauthorized use or duplication of proprietary technology, is a concern. Additionally, counterfeiting of batteries and components can impact product performance and brand reputation. Protecting intellectual property rights and implementing robust anti-counterfeiting measures are essential to mitigate these risks. 

Regulatory Compliance: Battery manufacturing companies operate in a highly regulated industry. Compliance with environmental, health, and safety regulations, as well as labor standards, is crucial. Non-compliance can lead to legal issues, fines, reputational damage, and disruptions in operations. Staying updated with regulatory changes and implementing robust compliance programs are necessary to manage this risk. 

Cybersecurity Threats: As manufacturing processes become more digitized and connected, the risk of cybersecurity threats increases. Cyberattacks targeting critical infrastructure, data breaches, and intellectual property can disrupt operations, impact business continuity, and compromise sensitive information. Implementing robust cybersecurity measures, including regular assessments, network monitoring, and employee training, is vital to mitigate these risks. 

To manage these supply chain risks effectively, battery manufacturing companies should focus on building resilient supply chains, diversifying suppliers, conducting risk assessments, implementing contingency plans, fostering collaboration with stakeholders, and adapting to changing market conditions. 

What are the Measures to Mitigate these Risks?

Battery producers must adapt their supply chain to effectively cope with the significant surge in electric vehicle (EV) demand. The existing processes, primarily developed over a decade ago for smaller batteries utilized in consumer electronics, are no longer sufficient for EV batteries' current scale and requirements. 

Several solutions can be implemented to mitigate battery manufacturing companies' various supply chain risks. 

By 2030, the battery market is projected to witness a compound annual growth rate (CAGR) of 30%, leading to an annual capacity surpassing 3,000 GWh. Besides focusing on cell chemistry and design, additional methods exist to decrease costs. These include enhancing manufacturing technology to reduce capital expenditure (CAPEX) and operating expenditure (OPEX) and increasing module size to decrease the number of modules required per pack. 


From a strategic standpoint, it is crucial for original equipment manufacturers (OEMs) and cell manufacturers to proactively enhance their engagement in the upstream supply chain as a risk mitigation measure. This can encompass various approaches, such as establishing long-term supply agreements, forging partnerships, or investing. Prominent EV OEMs, cell manufacturers, and computer-aided manufacturing (CAM) producers are already pursuing extensive vertical integration, actively participating in the supply chain up to the mining stage.   

Interested to know more about the developing technologies in your industry vertical? Get the latest market studies and insights from BIS Research. Connect with us at [email protected] to learn and understand more.