The recent downturn in electric vehicle (EV) sales across China and the United States, the two largest automotive markets, has significantly impacted the global battery industry—an industry that thrives primarily on demand from automakers. Notably, Tesla emerged as a standout performer, experiencing a year-over-year increase in deliveries during the first quarter. This uptick benefitted Tesla’s battery suppliers, including Panasonic and LG Energy Solutions, as highlighted by research from SNE Research.
In the first two months of this year, worldwide energy storage in EV batteries reached 135 gigawatt-hours, marking a modest 4.4% increase compared to the previous year. However, this growth pales in comparison to the impressive 45.5% annual growth rate witnessed from 2017 to 2025, signaling a potential slowing down of an industry that was once on a rapid upward trajectory.
The financial markets reacted to Tesla’s performance, with share prices dipping almost 3% recently, following two consecutive days of declines. As of April 22, the company is set to report its earnings, a moment that could provide further insight into its financial health and growth strategies.
Several key factors contributed to the sluggish sales among major EV manufacturers, particularly in China and the U.S. In China, intense competition significantly affected leading brands, while in the U.S., changing consumer sentiment towards EVs forced manufacturers to reconsider their product launches. In contrast, Tesla saw a reversal of these trends, reporting a 6% increase in total EV deliveries during the first quarter.
Panasonic, one of Tesla’s primary battery suppliers, reported a 2.7% rise in battery deployments for January and February, amounting to 5.3 gigawatt-hours. However, Tesla’s shift toward self-driving technology and robotics, coupled with a planned reduction in high-end models like the Model S and Model X, might lead to decreased battery demand over time.
Interestingly, while the Model Y continues to see strong sales, the slowing demand for other Tesla models indicates a transforming landscape in consumer preferences. This shift could have implications for Panasonic and Tesla’s reliance on specific vehicle models for battery procurement.
In the broader landscape of battery suppliers, LG Energy Solutions faced a 2.7% decline in battery deployments compared to the previous year. Despite Tesla’s growth providing some relief, other clients such as Chevrolet and Ford are experiencing contractions.
Chinese manufacturers CATL and BYD continue to dominate the market, holding a considerable 42% and 13% share respectively. CATL’s sales surged 13.7% during the initial months of the year, largely supported by the introduction of new models from Chinese EV manufacturers like Li Auto, NIO, and ZEEKR. However, Tesla’s sales from CATL have diminished, partly due to reduced demand for the Model 3, highlighting the interconnectedness of model performance and battery supplier sales.
BYD faced a 12.5% drop in EV sales despite maintaining a strong second position in the global market. The company’s fortunes are somewhat variable, with recent growth reflecting diversification efforts among commercial clients while still grappling with volatility in domestic demand.
This scenario underscores a critical transition phase for the EV market, where adaptability and innovation will be key to navigating challenges posed by increased competition and changing consumer behaviors. As battery technology continues to evolve, the dynamics between manufacturers and suppliers will be pivotal in shaping the future of electric mobility.
