Alert: The relationship between EV sales and battery demand is changing

Battery demand is decoupling from EV sales, driven by average capacity, product mix, and the electrification of commercial vehicles.

For years, the assessment of battery demand was anchored in electric vehicle (EV) sales. The reasoning was simple: the more EVs sold, the more batteries were needed. This worked when the market was growing rapidly, product structures were simple, and battery demand closely followed vehicle sales.

Today, this relationship is weakening. Evidence suggests that battery demand is no longer determined solely by EV sales. Factors such as average capacity per vehicle, product mix, the electrification of commercial vehicles, and export dynamics are gaining weight.

1. The Vehicle Sales = Battery Demand Formula is Falling Apart

In simple terms, vehicle sales represent units sold, while battery demand expresses the total installed energy. The two metrics move together only when the average capacity per vehicle remains stable.

With the increase in average battery size or changes in the mix between BEVs and PHEVs, between passenger and commercial vehicles, the direct relationship between the number of vehicles sold and battery demand begins to deconstruct.

To understand today's demand, one must answer questions beyond sales volume:

• What is the average battery capacity per vehicle?
• Which segments are driving incremental growth?
• Do exports and regional differences increase demand volatility?

2. Growth in Battery Capacity Per Vehicle: The Main Driver

The decoupling occurs mainly because the capacity per vehicle continues to rise. Three factors help explain this.

• Vehicle upsizing: SUVs, larger trucks, and sedans, in addition to premium models, raise the average capacity per vehicle.
• The pursuit of real-world range: Although the market has passed the most aggressive stage of "range at any cost," consumers still value range, performance, and charging convenience. Automakers maintain larger batteries as a competitive factor.
• Expansion of premium BEVs and heavy-duty commercial applications: Even with more moderate sales growth, battery demand grows faster because each vehicle consumes more energy.

Therefore, assessing demand only by sales variations can underestimate the offsetting effect of greater capacity per vehicle.

3. Product Mix Matters More Than Total Volume

Besides capacity, changes in product mix affect demand. Selling one million EVs with a higher share of BEVs results in greater battery demand than the same volume with more PHEVs, due to different energy requirements.

Globally, divergences are increasing. In Europe, regulatory adjustments have reignited PHEV sales, diluting average capacity. In China, the high share of BEVs and vehicles with larger batteries sustains demand.

Thus, assessing demand requires understanding not only how many vehicles are sold, but which types are driving growth.

4. Electrification of Commercial Vehicles: The Unvalued Growth Engine

If the first layer is capacity per vehicle, the second is the electrification of commercial vehicles. Passenger vehicles typically house batteries in the tens of kWh, while electric trucks and special vehicles may require 300–600 kWh or more.

An electric truck can represent the battery demand of several passenger units. Even with a smaller market, the penetration of commercial EVs tends to significantly expand total demand.

Rising oil prices accelerate this trend, improving the total cost of ownership for fleets and making electrification more attractive in high-use applications.

5. Exports, Inventory Cycles, and Production Planning: The Growing Discrepancy

Beyond the end market, factors such as exports, stock cycles, and production planning widen the gap between vehicle sales and battery demand.

Exports, customer inventories abroad, and changes in trade flows can advance or delay the production of batteries and materials.

Inventory cycles are once again central: automakers adjust inventories based on sales trends and price competition, not just real-time sales.

This makes battery production increasingly dependent on inventory, replenishment, and order visibility.

Comment: do you agree that battery demand will be more sensitive to factors like average capacity and product mix than to EV sales? Leave your opinion in the comments below.