The global battery market is fast advancing as demand rises and prices decline. According to The International Energy Agency’s (IEA) recent report, the annual battery demand hit a historic milestone last year as it exceeded one terawatt-hour (TWh) in response to a 25% increase in electric car sales to 17 million.
The average price of a battery pack for a battery-enabled electric car, meanwhile, fell under $100 per kilowatt-hour. This level is commonly seen as a key threshold for competing on cost with traditional models. Cheaper battery minerals, especially lithium prices, which dropped over 85% from their peak in 2022, have been an important driver for this.
Interestingly, rapid advancements in the battery industry are supporting the price reduction. As IEA noted, the global battery manufacturing capacity has finally reached 3 TWh and is expected to triple in the next five years, provided all announced projects are built.
What all these trends point to is that the battery industry is entering a new phase of its development. But more importantly, China is currently leading the battery production, accounting for three-quarters of all the batteries that are sold worldwide. The average prices in the region also dropped much faster, by almost 30%, which has made EVs in China far more economical than their current counterparts.
There are several key reasons for this price advantage, including extensive manufacturing expertise. China has produced over 70% of all batteries ever made, which has given rise to giants like CATL and BYD.
Other reasons are supply chain integration supporting faster innovation and a decline in manufacturing costs, prioritizing cheaper battery chemistry i.e. lithium-iron-phosphate (LFP), and fierce domestic competition. While price declines could slow in the near future, China is still expected to remain the largest battery manufacturer in the medium-term.
Despite China’s dominance, Japan and Korea are emerging as major players. These countries have limited domestic battery production but are making significant overseas investments that have helped Korean companies achieve nearly 400 gigawatt-hours (GWh) compared to Japan’s 60 GWh.
Europe, on the other hand, is currently struggling due to the product costs being 50% higher than that in China. However, efforts are being made to produce cheaper LFP batteries. Here, Korean companies are starting to invest in making LFP batteries but Chinese battery makers are still likely to keep expanding.
In the US, meanwhile, tax credits for producers have helped battery manufacturing capacity double since 2022, reaching over 200 GWh in 2024. Nearly 700 GWh of additional capacity is currently under construction. Tesla (TSLA +0.12%), the largest US battery manufacturer, deployed a record-breaking 31.4 GWh of energy storage products in 2024, including Megapack and Powerwall systems.
Developing domestic capacity for manufacturing battery components in the region, however, has been progressing rather slowly with most of the anode and cathode demand being satisfied by imports.
Click here to learn how battery makers are scrambling to meet the future demand.
Disassembling Tesla and BYD Batteries to Find the Best
The global battery market is certainly growing at a fast-pace but the question is just which one of the batteries currently available offer better performance. Well, a new study with financial support from the German Federal Ministry of Education and Research, has tried to answer just that.
The focus of the study is BYD’s Blade battery and Tesla’s 4680 battery, whose internal structures were analyzed in order to compare their design and performance. These two manufacturers, after all, dominate the EV market. BYD is the top EV producer in China while Tesla leads in North America and Europe.
BYD started as a battery cell manufacturer and gained significant market share for sold BEVs worldwide. In fact, BYD’s total BEV sales surpassed that of Tesla last year.
Tesla began producing 4680 cylindrical cells in 2022 by sourcing prismatic cells from Chinese giant CATL. These cells are about five times larger by volume and capacity than their previous ones, which allowed for higher energy densities and cost reductions. Its tabless design further cuts down production costs.
Then there’s BYD’s blade batteries, which utilize a unique cell design to produce long-lasting cells at a low cost and high safety.
Despite capturing a strong market share, there is little information available about the internal design and properties of these battery cells. According to lead study author, Jonas Gorsch, a researcher at Production Engineering of E-Mobility Components at RWTH Aachen University in Germany:
“There is very limited in-depth data and analysis available on state-of-the-art batteries for automotive applications.”
To understand how they work and compare, the research team disassembled the battery packs and published their findings in Cell Reports Physical Science.1 With this, the aim is to provide design guidance for the development of next-gen batteries.
The key findings revealed important differences in Tesla and BYD’s design priorities. The batteries from BYD utilize cost-effective materials and follow the space efficiency objective. In contrast, the focus of Tesla batteries is on providing high energy density and performance.
Most importantly, the study found BYD’s battery design to be offering greater overall efficiency thanks to improved thermal management.
Among other key findings, the study noted that Tesla uses laser welding for electrode connections, while BYD combines laser and ultrasonic methods. Moreover, the BYD Blade cell showed half the energy losses per volume of the Tesla 4680 cell at the same C-rate.
According to Gorsch, the study highlights that batteries from both Tesla and BYD are two “highly innovative” designs that are “fundamentally different” from each other.
“The findings provide both research and industry with a benchmark for large-format cell designs, serving as a baseline for further cell analysis and optimization,” said Gorsch, who believes their data can help other battery-cell developers make better and more informed choices when making a decision on size, format, and active materials.
Still, further studies are required to understand the effect of different mechanical cell-designs on the performance of electrodes in EV batteries and the longevity of BYD and Tesla cells.
Evaluating What Makes a Battery “Better”
When it comes to battery design and selection for EVs, there is a trade-off between factors like cost, energy density, power capability, longevity, and safety.
Now, different cell chemistries suit different applications. For instance, lithium iron phosphate (LFP) batteries are cost-effective and offer longevity, which makes them ideal for affordable vehicle segments. High-nickel chemistries like NMC811, in contrast, provide superior energy density, which makes them apt for higher performance and cost segments.
Choosing between these two chemistries depends on the focus, whether that’s performance, range, or cost.
So, with the aim to provide data on advanced cells used in automotive applications, the study compares the two main commercial lithium-ion batteries — the Tesla 4680 cell, which has a performance-oriented cell design, and the BYD Blade cell, which has a cost-focused cell design.
The engineers analyzed the dimensions and energy densities of cells, mechanical designs as well as electrical and thermal performances of the cells, material distribution across each cell component, and the material compositions of their electrodes. Moreover, they were able to deduce the costs of the materials used and the processes used by the companies to assemble the cells.
As the study investigated the two battery cells’ specific design and performance features, the study mentioned their format as the main difference between the two; the Tesla 4680 cell is a large cylindrical cell with a significantly lower volume while BYD uses a large prismatic cell format, which illustrates the trend of increasing cell sizes and the cell-to-pack approach.
BYD’s cell has threaded side terminals, which allow the cell-to-cell joints to be detached easily. It is only possible thanks to the prismatic cell format. The aluminum housing of the cell is also insulated with an adhesive polyethylene terephthalate (PET) foil whereas Tesla one lacks direct insulation at the cell housing level.
According to the study, Blade cell uses lithium iron phosphate (LFP) as electrode materials, which results in an energy density of 160 Wh/kg and 355.26 Wh/l on the cell level. The Tesla 4680 cell uses NMC811 (nickel, manganese, and cobalt), which results in an energy density of 241.01 Wh/kg and 643.3 Wh/l.
The team also discovered that in order to keep the electrode sheets in place, both the company use novel methods as opposed to those used by most manufacturers in the industry.
The method used by BYD Blade involves an electrode stack featuring a novel processing step to laminate the separator’s edges. The separator sits between the anode and the cathode. Tesla also uses a novel binder for its battery, a substance to hold the active materials in the electrodes together. Researchers have identified polyethylene oxide (PEO) and polyacrylic acid (PAA) as binders.
On the cell level, the Tesla 4680 cell’s energy density outperforms BYD’s Blade cell by margins of 1.8× volumetrically and 1.5× gravimetrically.
When it comes to cost, the larger BYD Blade cell benefits from the cost advantage of LFP batteries, being €10/kWh cheaper at current price levels. According to the study, the anode active material (AAM) cost per kWh for BYD is higher than Tesla’s, as Tesla uses AAM with higher energy density.
The study has also found the batteries to be having considerable differences in the speed at which a battery charges or discharges relative to its maximum capacity.
While batteries from Tesla and BYD are very different, they also share unexpected similarities. Both manufacturers use an unusual way of connecting their thin electrode foils. While ultrasonic welding is used by many in the industry, they utilize laser welding.
Also, the fraction of passive cell components like busbars, housing, and current collectors are similar in both cases despite the BYD cell being much larger than that of Tesla’s. Both cells use graphite (a popular anode material for Li-ion batteries) anodes without SiO2 (silicon dioxide).
“We were surprised to find no silicon content in the anodes of either cell, especially in Tesla’s cell, as silicon is widely regarded in research as a key material for increasing energy density.”
– Gorsch
Innovative Company
QuantumScape (QS -1.44%)
While Tesla and BYD are leading the battery technology space, other players are also making considerable progress.
This includes QuantumScape, which is known for its solid-state lithium-metal battery tech, offering faster charging, energy density, and more safety. It is being developed for EVs and other applications such as consumer electronics and stationary storage.
QuantumScape’s battery cells do not contain the host materials that are being used in existing anodes. They are actually manufactured without any anodes in the discharged state, which reduces weight and improves efficiency.
The company has also presented a unique ceramic separator that is capable of resisting dendrite formation at higher power densities for about 800 cycles at around 25 degrees C. The separator is more stable and safer than liquid electrolytes.
QuantumScape has a market cap of $2.08 billion with its shares trading at $3.78, down 26.6% so far this year. With that, it has an EPS (TTM) of -0.94 and a P/E (TTM) of -4.05.
This weakness in price performance reflects broader stock market sentiments which have been plagued with tariff uncertainty. But with QuantumScape, there’s more. The company has been facing headwinds over the past year with the battery and EV market fast evolving and competition rising. Investors are also concerned about QuantumScape’s ability to commercialize its technology and while the company’s cash position is strong, it’s to be seen if it can sustain it.
QuantumScape ended 2024 with $910.8 million in liquidity, which is expected to last until the second half of 2028.
QuantumScape Corporation (QS -1.44%)
Now, a deeper look into its financials; while Q1 2025 results will be released on April 23, 2025, for 2024, the company reported a GAAP net loss of $477.9 million, up from $445.1 million in 2023, and EBITDA loss was $285 million. Its capital expenditures were $62.1 million during this period.
In a letter to shareholders, the company called 2024 “a watershed year,” as it achieved four key goals. This includes shipping Alpha-2 samples, ramping up its (faster and more efficient separator heat-treatment process) Raptor, and releasing its advanced Cobra separator heat-treatment equipment.
The last goal achieved was on the product front, which was the debut of the QSE-5 cell. The company began the low-volume B0 sample production of QSE-5 cells that boast low-temperature operation, 10C discharge power, fast charging in just over 12 minutes, and an energy density of 844 Wh/L.
“This combination of performance features demonstrates the compelling value our technology platform can create: QSE-5 represents a no-compromise solid-state battery unmatched in the industry,” noted CEO Siva Sivaram and CFO Kevin Hettrich in the letter, which states that their “mission is to revolutionize the electric vehicle and energy storage industries.”
Another major development made last year includes QuantumScape partnering with PowerCo, Volkswagen Group’s battery manufacturing company. The focus of this partnership is on industrializing the QSE-5 technology platform for EV usage, leading up to its gigawatt-hour (GWh) scale production in PowerCo’s own facilities.
Now, for 2025, the company forecasts its capital expenditures to be in the $45 million and $75 million range and adjusted EBITDA loss to be between $250 million and $280 million. Its main focus meanwhile for this year is on readying the technology platform to finally bring its solid-state lithium-metal technology to market.
QuantumScape’s key goals for this year include bringing Cobra into baseline production, which will be once the full production flow is in place and has achieved sufficient quality and yield. The company also aims to achieve higher-volume QSE-5 B1 sample production in partnership with PowerCo.
Once both higher-volume separator and cell production equipment are installed, the next step is shipping QSE-5 B1 samples to customers for testing, for which QuantumScape is targeting 2026.
Another major focus this year will be on expanding its commercial (licensing) partnerships, which have already begun to take shape with QuantumScape in active discussions with two automotive OEMs.
“Executing on these goals will further cement our place as the global leader in solid-state batteries,” stated the company, and with that, they’ll move another step closer to achieving the long-term goal of industrializing its next-gen battery tech, revolutionizing energy storage, and creating exceptional value for shareholders.
Conclusion
Batteries are key to the ongoing electric vehicle revolution happening all over the world. And as the EV market grows along with the rising trend of electrification and energy storage for renewable energy integration, the role of batteries will only increase over time.
Currently, BYD’s Blade and Tesla’s 4680 are the leading batteries in the market but not much is known about their internal mechanics. So, the latest study offers a rare insight into the design and performance of these top-tier battery tech, and how the two leading companies tackle the same problem differently.
Notably, it reveals how BYD’s focus is cost and efficiency while Tesla emphasizes performance. The unveiling of innovative yet diverging philosophies of these battery designs has the potential to help manufacturers and next-gen battery developers in a meaningful way.
The insights shared can lead to better batteries that are cheaper, safer, and longer-lasting. As battery tech evolves, we will see the development of state-of-the-art cells that offer higher efficiency and scalability. This will, in turn, drive the future of EVs to be better and more advanced.
Click here for a list of top battery stocks.
Studies Referenced:
1. Gorsch, J., Schneiders, J., Frieges, M., Kampker, A., Muñoz Castro, M., & Siebecke, E. (2025). Contrasting a BYD Blade prismatic cell and Tesla 4680 cylindrical cell with a teardown analysis of design and performance. Cell Reports Physical Science, 6(3), 102453. https://doi.org/10.1016/j.xcrp.2025.102453