Sodium-ion will displace lead-acid, not lithium-ion
The battery industry has regularly seen rapid changes in technology dominating market share, and some believe the next successor could be sodium-ion battery technology. The first generation of passenger electric vehicles (EVs) used nickel-metal hydride technology before 2010. In the 2010s, automakers pursuing a longer EV range rapidly shifted to high energy density lithium ion (Li ion) chemistries – primarily nickel cobalt aluminium oxide (NCA) and lithium nickel manganese cobalt oxide (NMC). Chemistry preferences have again changed in the 2020s. China has spearheaded adoption of lower-cost lithium iron phosphate (LFP) to penetrate into the mass-market. European and American automakers have followed by realigning technology roadmaps to lean heavily on LFP for smaller vehicles.
Recently, some cell makers have started promising higher safety and even lower battery costs with sodium-ion (Na-ion) technology, targeting both EV and energy storage (ESS) markets. Many now wonder if we are on the cusp of another upheaval in battery technologies.
In short, we do not expect Na-ion to challenge the status quo in the EV and ESS market. Na-ion EVs will have much shorter ranges and Na-ion storage costs will be higher than Li-ion. Instead, we expect deployment of sodium-ion battery technologies in markets not suited to Li-ion competing more with lead-acid. Adoption will be driven by investment that is already expended by Chinese companies. China is set to replicate its dominance in Li-ion supply chains into the Na-ion market.
However, we forecast slower and more truncated penetration in the mass-market as Na-ion performance fails to compete with the Li-ion incumbent technologies. We expect a relatively small supply chain impact by 2030. Key adoption drivers are stronger performance at low temperatures, higher system safety and raw material substitution, particularly eliminating lithium content.
Low energy density will hinder opportunities for sodium-ion
Sodium-ion battery technology can be cycled at temperatures 10°C colder than Li-ion and maintain 30% higher capacity at -40°C – a benefit for energy storage systems at extreme latitudes and providing initial power to EVs. Na-ion cells are also safer, reaching lower temperatures at a slower pace than Li-ion cells when in thermal runaway – the dangerous chain reaction that causes battery fires. Na-ion cells can be transported when fully discharged without damaging the cell, thereby lowering logistics risks; whereas Li-ion cell health is compromised at 0% state-of-charge.
The main drawback for Na-ion is low energy density. Sodium ions are larger than lithium ions, meaning electrode materials are lower density and store less charge than Li-ion materials. The energy density is roughly a third of NMC and half of LFP. This also increases manufacturing costs from slower gigafactory throughput, negating savings made in electrode materials.
Other than energy density, a further barrier to Na-ion adoption is the inertia that developers face in competing with Li-ion technologies currently produced at terawatt-hour scale. The overshoot of investment into mainly LFP gigafactories has resulted in severe overcapacity, mainly in China, which will hinder business cases for new Na-ion gigafactories. Instead, the opportunity will largely be limited to retooling excess Li-ion production lines in response to new, but small, demand markets.
In reality, Na-ion tech will not challenge Li-ion but will instead progress electrification in sectors difficult to power with Li-ion batteries due to safety concerns, poor performance at low temperatures, or poor power density.
Na-ion will be used across a wide range of applications
Small cell makers account for most of new Na-ion gigafactory capacity
China’s industry is already mobilising Na-ion capacity for these reasons. We have tracked announced investment into over 300 GWh of cathode capacity and 370 GWh cell production capacity, bespoke for Na-ion.
While gigafactory investment of roughly $20 billion is enough to achieve near 10% market share in 2030, over 75% of announced capacity comes from new players to cell production. As a result, Na-ion cell production will be much lower, given the challenging nature for inexperienced companies to scale output.
Tracked capacity investment only accounts for new gigafactories. In reality, there will be even greater Na-ion capacity available with retooling idle Li-ion production lines. Cellmakers such as Gotion High-tech and Sunwoda have developed Na-ion products but not announced specific Na-ion capacity. This represents a significant upside risk to Na-ion production, given switching production lines can take mere months.
Na-ion battery technology benefits from no lithium or copper content
Interest has grown in Na-ion tech with lithium prices reigniting, having doubled from November 2025 to February 2026.
Na-ion cells use sodium, rather than lithium, as the active ingredient in cathode and electrolyte materials. They also use aluminium at the anode current collector, rather than copper in Li-ion. This is due to sodium not easily alloying with aluminium at anode potentials, unlike lithium, presenting a minor cost and mass savings.
We expect most cellmakers to adopt Na-ion as a technology hedge against raw material prices, particularly lithium and copper.
Different Na-ion chemistries meet different use cases
Not all Na-ion cathodes are the same. We expect certain chemistries to suit different applications across automotive, energy storage and niche uses.
While most present lower cost options than LFP on a mass basis, layered oxide and polyanion NVPF are higher cost due to nickel, copper and vanadium content. This contradicts the myth that all Na-ion materials cost less than Li-ion.
We expect NFPP ESS cells to reach cost parity with LFP in the next decade, as high manufacturing costs during ramp-up outweigh minor material cost savings.
Analysis from our Battery Technology and Cost Service shows that lithium carbonate prices would need to reach $35/kg in 2026, and remain higher than $20/kg for the rest of the decade for Na-ion to become cost-competitive. This is highly unlikely given strong lithium supply growth in all major producing regions in 2026.
Polyanion NFPP is already being adopted in ESS applications due to its low cost and long cycle life. Layered oxides and NFS will be used in mobility applications, typically two- and three-wheelers wheelers, due to their high voltage.
PBA and NVPF will be used in high-frequency and high-power applications, such as uninterrupted power sources and power tools due to high-power density capabilities, and low-voltage EV batteries due to low-temperature performance.
A more suitable comparison for Na-ion is against lead-acid batteries, not Li-ion. Cellmakers are targeting edge use cases that Li-ion cannot power, such as low voltage car batteries, 2/3 wheeler products, and low-temperature or safe power sources – all with strong lead-acid market share. Na-ion will likely displace lead-acid, which typically costs over $100/kWh, and this will be the core driver of increasing Na-ion adoption.
China will dominate Na-ion supply, just as it has done Li-ion
Many Western companies have championed Na-ion tech, which could enable a highly localised supply chain given chemistries like NFPP use abundant materials. There are a handful of companies developing Na-ion tech and supply chains outside China. However, the vast majority of technology and supply chain developments are coming from within China, leveraging its leading Li-ion industry. For example, 98% of announced Na-ion cell capacity and over 99% of cathode material is located in China.
Furthermore, a key hindrance to developing Na-ion cell manufacturing in Europe or North America is the increased capital intensity of gigafactories compared to Li-ion, due to low energy density. This means more coating lines, cell assembly, and other equipment is needed per GWh of factory capacity. Announced Na-ion gigafactories in China require $53 million per GWh capacity, but TIAMAT’s plant in France will require over $120 million per GWh. We expect extremely limited appetite for investment into Na-ion gigafactories in the West given higher upfront and operating costs compared to Li-ion and a lack of evidence for market demand other than niche, low volume applications, like power tools pursued by TIAMAT.
Scaling Na-ion capacity reduces exposure to lithium price risk
Despite the poor energy density of Na-ion holding back adoption, we expect 135 GWh of demand in 2030, rising to 346 GWh in 2035. This will have a small impact on battery raw material demand. We forecast a 17 kt increase in nickel demand and a 64 kt reduction in LCE demand in 2030 versus a scenario where that demand is supplied by LFP – equivalent to roughly 2% and 3% of battery demand, respectively. There will be negligible impact on multi-megatonne copper and aluminium markets.
With China looking to scale Na-ion technology largely to displace lead-acid usage, Na-ion will act as insurance against volatile lithium prices or supply chain disruptions. Any spike in lithium prices will see ESS installers switch to Na-ion, while consumers may be swayed to choose low-range Na-ion EVs with rises in Li-ion EV prices, shortening periods of market tightness.
Detailed analysis on sodium-ion battery technology cost, performance, and supply chain impact is presented in our regular reports as part of the Battery Technology and Cost Service. More details on CRU’s battery offerings can be found here.
