Battery industry revenue could exceed $168 billion by 2030, but serious global shortfalls are likely from 2025, a new report said on Monday.

The battery industry is poised to be one of the most important in the next 10 years. A compound annual growth rate (CAGR) of 14 percent is expected by 2030, driven mostly by sales of lithium-ion batteries.

However, according to data and analytics company GlobalData, extraction of raw materials will not meet growing demand unless capital markets change course in the face of environmental, social and governance (ESG) pressures and invest heavily in new mines.

“Governments should play a bigger role in encouraging mining, refining and battery cell production,” said Daniel Clark, analyst with the Thematic Intelligence Team.

The reasons for this are twofold. First, an emerging challenge for the next decade will be whether the extraction of natural resources and raw materials such as lithium, nickel, cobalt and graphite can meet the growing demand for batteries.

“More gigafactories may be announced, but where will all the raw materials come from? While limited, these materials are not scarce, and require more investment,” Clark said.

Second, while much of the world is focused on today’s geopolitical tug of war between Russia and the Western world over energy, a new clean energy geopolitical battle is being fought in the lithium-ion battery supply chain.

“Western governments have woken up to their potential weakness in comparison to China, and are heavily and actively encouraging companies to build a regional lithium-ion battery supply chain. Lithium is abundant, but massive. Significant investment is needed in new hard rock mines to meet the growing demand,” Klarhe elaborated.

China has a very strong position in mining, refining and cell production, with monopolies at various stages of the supply chain.

“China-based battery maker CATL is part of the highly strategic ‘China Inc. Master Plan’ to dominate the global battery industry – and, in the process, the global electric vehicle (EV) scene,” said analyst Michael Orme.

Government incentives for the mining and refining of raw materials, along with battery recycling initiatives, are fundamental for the world to meet its climate goals.

“Battery recycling is imperative to reduce the environmental impact and prevent depletion of limited natural resources. Many companies are recognizing the need and financial opportunity for battery recycling, with global leaders including Tesla founder JB Straubel K Redwood and European battery maker Northvolt With,” commented Dr. Lil. Read, Senior Analyst.