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.

Despite recent progress, sodium‑ion batteries remain constrained by lower energy density than prevailing lithium‑ion technologies. The latest sodium‑ion cells reach up to around 175 Wh/kg, compared with up to 205 Wh/kg for LFP batteries and 255 Wh/kg for lithium nickel cobalt manganese oxide (NMC) batteries. In practical terms, this translates into a driving range of up to 350 km for an average sport utility vehicle (SUV) equipped with sodium‑ion batteries, compared with a range of 400–600 km for lithium-ion batteries under average weather conditions.

Sodium-ion batteries are often highlighted as a way to reduce reliance on critical minerals and diversify battery supply chains. This claim is only partially accurate.  While sodium-ion batteries do not require lithium and graphite, the chemistries closest to commercial deployment rely on other critical minerals, such as nickel and manganese, whose processing remains highly concentrated geographically. Moreover, global supply chains for sodium‑ion batteries are far less developed than for lithium‑ion batteries, constraining near-term prospects for large-scale deployment.

While sodium-ion batteries could enable more geographically diverse supply chains over time, current project pipelines point in the opposite direction. Nearly all existing global sodium‑ion manufacturing capacity is located in China, which also accounts for more than 95% of 2030 capacity, when accounting for already installed and announced production plants.

Scaling up this technology outside China remains challenging. Korean LG Energy Solution, the world’s third-largest battery manufacturer, announced a sodium-ion pilot line at its existing plant in Nanjing, China – a choice highlighting the attractiveness of China’s rapidly developing sodium‑ion ecosystem. The recent shutdown of Natron Energy, an US-based sodium-ion battery company, further underscores the challenges of building competitive sodium-ion battery supply chains outside of China.

The concentration of sodium‑ion battery manufacturing capacity and expertise extends beyond cell production to include key components such as cathode and anode active materials and their precursors. As with lithium-ion batteries, where China plays a central role in refining several critical minerals and producing key battery components, this reinforces supply chain risks. However, the mining of the minerals used in sodium‑ion battery components is more geographically diversified than that of minerals used in lithium‑ion batteries, offering a potential advantage in upstream supply chain resilience.

Sodium-ion batteries are on course for commercial success, and 2026 could prove to be a pivotal year for the technology’s scaling efforts. Nevertheless, highly optimised and low-cost lithium-ion batteries – particularly the latest LFP technologies – continue to offer advantages in energy density, supply chain maturity and cost. For sodium-ion batteries to compete on a more equal footing, either sustained higher lithium prices or technological advances that significantly improve the energy density of sodium-ion batteries would be required.

Despite these challenges, sodium-ion battery performance is already sufficient for specific applications, most notably in cold climates and in hybrid battery systems that pair lithium‑ion and sodium‑ion cells. In these applications, sodium-ion batteries can complement lithium‑ion technologies to meet different customer needs.

Sodium‑ion batteries would contribute to technology diversification, and the supply of their constituent materials is generally more geographically diversified than for lithium‑ion batteries. However, concentration risks in sodium‑ion battery and component manufacturing remain significant. Current investment plans suggest that China could play a role at least as large as it does in the lithium‑ion battery industry. Addressing these risks through greater diversification of supply chains will require higher investments, partnerships with leading battery manufacturers and stronger international co‑operation.