Capgemini: Inside the Battery Sector's Balancing Act

In 2025, the battery manufacturing sector finds itself performing an elaborate balancing act.

In its latest report, the Capgemini Research Institute draws attention to how the industry is struggling with dual pressures.

Firstly, there's the demand to boost production capacity.

Then, there's the demand to develop the next generation of battery technology for electric vehicles and energy storage solutions.

The industry is split, navigating the demands of today whilst also looking to shape tomorrow.

"Innovation is driving a sustainable and competitive battery industry, with advancements in technologies and alternative chemistries improving performance and longevity," says Pierre Bagnon, Global Head of Intelligent Industry Accelerator at Capgemini.

However, even with this optimistic outlook, it is undeniable that there are huge challenges on the horizon.

Capgemini's study surveyed professionals from the industry, finding that 59% of them see the time necessary to build gigafactories (the colloquial name for battery manufacturing plants) as the main challenge.

Meanwhile, 53% see supply chain management as a roadblock, especially as uncertainty mounts regarding supplies of critical minerals.

The importance of battery technology in the modern economy

Batteries are the most expensive component of electric vehicles. Now, car manufacturers are considering innovative strategies to lower costs and boost the accessibility of EVs for consumers.

Approximately 64% of mobility companies are investigating battery-swapping technologies, which would allow for quicker battery replacements in vehicles.

Meanwhile, more than half are exploring Battery-as-a-Service (BaaS) models, where EV owners can lease batteries instead of owning them outright, which could reduce upfront costs.

In the energy sector, about 69% of utilities are either already providing BaaS or planning to do so soon.

However, these advances are impeded by challenges such as insufficient grid infrastructure, the necessity for varied battery types to support different storage durations, and a lack of standardised performance metrics.

How the battery sector can expand its capacity

Capgemini find that 76% of manufacturers need to enhance or completely rebuild production lines to accommodate new generations of battery cells.

This development is resource-intensive and raises questions about financial feasibility.

The talent gap is another formidable barrier, with 60% of firms facing difficulties in recruiting skilled workforce in battery technology and manufacturing.

This shortage extends to roles like data scientists and manufacturing engineers, who are pivotal in optimising production processes.

In response, significant initiatives are being undertaken to boost production capacity globally.

In the UK, new gigafactories are set to open in Sunderland and Coventry in the UK, with further sites likely to follow.

Director Sir James Wates from the Wates Group, responsible for constructing the Sunderland gigafactory, emphasises the project's sustainability.

"This gigafactory represents the future of green automotive manufacturing not only in the North East, but nationally," he says.

The outlook

Despite its essential role in reducing carbon emissions, only a third of battery manufacturers have adopted substantial circular economy practices - those strategies aimed at minimising waste and encouraging the recycling of resources.

What's more, the forthcoming European Union 'battery passport' regulation - effective from February 2027 - mandates comprehensive reporting on the composition, sourcing, and carbon footprint of batteries used in EVs within the EU.

This directive is likely to propel the adoption of digital tools for better tracking and management.

Pierre believes that digital technology could be the solution.

"Data and digital technologies can enhance the entire battery value chain, optimising lifecycle management from quality control to waste management and recycling," he says.

"Equally, collaboration within an innovation ecosystem that brings all players and regulators together is vital to continue the industry's journey towards a battery-driven sustainable future."

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