Sodium-ion battery momentum grows, but challenges remain

Sodium-ion batteries are emerging as a new player in battery markets, offering opportunities to diversify battery chemistries and supply chains at a time of rising global demand for electric vehicles and energy storage. Developed in laboratories since the early 1980s, sodium-ion batteries operate on the same fundamental principles as lithium-ion batteries - which currently dominate the market - yet their path to commercialisation has been markedly slower.

While lithium-ion batteries entered commercial use in the 1990s - with the first electric vehicles appearing in Japan in 1996 - sodium-ion batteries reached vehicle applications much later, with the first sodium-ion powered electric car introduced in China only in late 2023. The first battery storage system using sodium-ion batteries was installed a few years earlier, in 2019 in China. However, in 2025 their total global production was less than 1% of that of lithium-ion technologies.

Recent technological advances and investment announcements suggest that this dynamic is starting to change. CATL, the world's largest battery manufacturer, released its second-generation sodium-ion batteries and has confirmed plans for their commercial-scale deployment across multiple sectors starting in 2026. BYD, the second largest producer, began construction of its first sodium-ion battery plant in January 2024, targeting applications in electric vehicles, grid-scale storage and industry. Hina, a smaller Chinese battery manufacturer and the first to power an electric vehicle using sodium-ion batteries, also released an advanced sodium-ion battery designed for electric cars last year.

These investments are driven primarily by the goals of improving battery performance in cold climates and reducing exposure to lithium-price volatility. Sodium-ion batteries exhibit significantly better low-temperature performance than lithium-ion batteries, particularly lithium iron phosphate (LFP) chemistries. The latest generation of sodium-ion batteries can retain around 90% of nominal capacity at temperatures as low as -40 °C, and can operate at temperatures as high as 70 °C.

In addition, sodium-ion batteries do not rely on lithium, which has been subject to price swings in recent years. For the largest global battery manufacturers, which are capable of maintaining several supply chains in parallel, sodium-ion expertise and production capacity can act as a strategic hedge against the risk of lithium price spikes, enabling rapid switching if needed. This flexibility could become increasingly valuable. Although lithium prices remain around 70% below their 2022 peak, they doubled over the past year. Current lithium price levels are not yet high enough for sodium-ion batteries to undercut LFP costs in most applications, but sodium-ion technology is already cost-effective for electric vehicles and stationary storage in particularly cold climates. It can also be deployed in hybrid electric vehicle battery packs to limit range losses in cold weather.