Trends and Outlook for the Global Advanced Materials Market: From Batteries to New Materials
2025. 10. 31
The global materials market is experiencing a major transformation. This shift began with the automotive industry’s rapid transition from internal combustion engines to electric vehicles. At the same time, advancements in autonomous driving technology are moving the industry’s focus from hardware to software. The emergence of Software-Defined Vehicles (SDVs*) is driving the need for higher standards in batteries and electronic components. Enhanced criteria are now required across performance areas such as driving range, speed, and safety. These changes are becoming key factors behind the rising demand for advanced materials. In addition, as renewable energy usage increases and AI data centers continue to expand, the importance of Energy Storage Systems (ESS) is also growing. A stable power supply is essential for AI data center operations. ESS has already become a core infrastructure—and another powerful growth engine for the advanced materials market.
*SDV (Software Defined Vehicle): A next-generation vehicle concept in which functions and performance can be defined and updated through software.
The realignment of policies and supply chains is also having a profound impact across industries. Europe is strengthening its domestic industrial ecosystem through subsidy programs and critical mineral regulations. The United States, by excluding Chinese-made batteries from its subsidy eligibility, is accelerating a shift toward an alliance-based supply chain. Amid this trend, global battery and material companies are being called upon to move beyond the role of simple component suppliers and become strategic partners. In particular, as the presence of Chinese products diminishes in the U.S. market, new opportunities are emerging for Korean companies. With global policy shifts and technological innovation occurring simultaneously, the importance of the advanced materials industry has never been greater.
Electric vehicles and batteries have become key pillars driving the advanced materials market. Global EV sales are projected to reach around 40 million units by 2030, nearly double the current level. As sales increase, battery demand is also expected to expand. Global battery demand is expected to exceed 2,400 GWh, continuing to grow rapidly at an annual rate of around 16%.
As demand continues to surge, battery technologies are becoming increasingly diversified. LFP (A type of lithium-ion battery that uses lithium iron phosphate as its cathode material), known for their cost competitiveness, are mainly used in small vehicles, while high-nickel batteries (lithium-ion batteries with higher nickel content that offer greater energy capacity) are adopted in high-performance models to extend driving range. In addition, next-generation solid-state batteries(A lithium-ion battery which replaces liquid electrolytes with solid ones to enhance safety and energy density) are accelerating toward commercialization. This technological diversification reflects the growing segmentation of market needs.
Policy factors are also playing a crucial role. In the U.S. and Europe, subsidy programs and regulatory measures are set to take full effect after 2026, with EV demand expected to rebound. In particular, the U.S. Inflation Reduction Act (IRA) and Europe’s EV and battery subsidy policies are projected to generate tangible impacts from 2026, marking a new growth inflection point for the global EV market. This trend goes beyond a simple increase in sales — it underscores the need for battery and materials companies to begin long-term investments and technological preparations now to ensure stable growth.
The ESS market is expected to experience rapid growth in the coming years. By 2030, global ESS demand is projected to exceed 500 GWh. Large-scale energy storage systems are essential for the stable utilization of variable renewable sources such as solar and wind power. In addition, the recent surge in AI data centers is driving further expansion of ESS installations to ensure a reliable power supply. The market is increasingly shifting toward LFP batteries, recognized for their cost competitiveness and safety. In particular, as U.S. regulations take full effect after 2026, Chinese-made ESS batteries are likely to be gradually excluded, creating new opportunities for Korean companies to expand their market share. Today, ESS is evolving beyond a simple energy storage facility to become a key growth driver in the advanced materials industry.
Changes in policy are also having a major impact across the industry. In Europe, the CISAF* subsidy program is providing large-scale support for the EV and battery sectors through 2030, particularly by boosting market demand through the expansion of small electric vehicles. In addition, the Critical Raw Materials Act (CRMA)* aims to reduce reliance on third countries to below 65% of total regional consumption by 2030. Meanwhile, the United States is implementing the Inflation Reduction Act (IRA)* and Foreign Entity of Concern (FEOC)* regulations to exclude Chinese-made batteries and promote an alliance-based supply chain. This shift is prompting global companies to take on the role of strategic partners rather than mere suppliers. In particular, as Chinese products lose ground in the U.S. market, Korean companies are gaining greater prominence.
The global advanced materials market stands at a crossroads of challenges and opportunities. With technological innovation and policy transformation unfolding simultaneously, only companies equipped with a stable supply chain and a diversified technology portfolio can achieve sustainable growth. Now, let’s take a closer look at how LG Chem is presenting its solutions in this rapidly changing market.
*CISAF(Clean Industrial State Aid Framework): An EU policy framework that allows member states to provide public funding to promote clean energy development, industrial decarbonization, and the manufacturing of clean technologies.
*CRMA(Critical Raw Materials Act): A regulation introduced by the EU to secure a stable supply of critical raw materials essential to its regional industries.
*IRA(Inflation Reduction Act): A law enacted by the U.S. federal government to reduce the budget deficit and prescription drug prices, promote clean energy, and invest in domestic energy production.
*FEOC (Foreign Entity of Concern): Refers to companies owned, controlled, or directed by the governments of China, Russia, North Korea, or Iran.
The global advanced materials market is becoming increasingly complex as changes in technology, policy, and demand intertwine. The rapid expansion of electric vehicles (EVs), energy storage systems (ESS), and AI data centers is creating new opportunities for companies — while also testing how quickly and systematically they can adapt to this transformation.
LG Chem views this change not merely as an expansion of production, but as a reorganization of its business foundation. By diversifying supply chain hubs and establishing local production systems near its customers, the company is building a solid base to ensure on-time delivery and stable quality even in an uncertain market environment.
LG Chem is expanding its supply chain by establishing production bases near key markets. In Tennessee, U.S., LG Chem is constructing a cathode materials plant scheduled to begin operation in 2026. North America is one of the world’s fastest-growing EV markets, supported by strong U.S. government policies and active local investments from global car manufacturers.
In line with this trend, LG Chem is advancing local production to better respond to customer needs. Through its supply agreement with Toyota, the company has established a concrete foundation for collaboration and aims to enhance supply stability and logistics efficiency through local manufacturing.
In Morocco, LG Chem has established an LFP supply chain through a joint venture. Morocco is attracting attention from global companies due to its rich battery-related resources, such as phosphate, and geographic advantage of being close to Europe. Working with local partners, LG Chem has built a stable supply system that covers everything from securing raw materials to producing precursors. This enables the company to manage fluctuations in mineral procurement and prepare for long-term supply chain diversification.
LG Chem is establishing a comprehensive battery materials portfolio that spans the entire electric vehicle (EV) and energy storage system (ESS) markets. The company is simultaneously developing a wide range of technologies — from LFP, suitable for small EVs, and mid-range LMR (Lithium Manganese Rich) batteries, a type of lithium-ion battery that uses cost-effective manganese instead of cobalt and nickel in the cathode, to high-nickel cathode materials designed for long driving ranges and high performance, and next-generation all-solid-state batteries that are attracting significant attention.
The required materials vary depending on the vehicle type and application. For small EVs, cost competitiveness is crucial, making LFP the ideal choice. In contrast, premium EVs demand higher energy density and longer driving ranges, for which high-nickel materials are more suitable. Meanwhile, in the ESS sector, which is rapidly expanding alongside the growth of renewable energy, safety and cost efficiency are key priorities, positioning LFP as the mainstream solution. In this way, LG Chem offers a broad product portfolio that meets the diverse needs of the market.
LG Chem is also accelerating the development of next-generation technologies. Although all-solid-state batteries still require time for commercialization, they hold great potential for improved safety and performance, driving continued investment in R&D. At the same time, the company is conducting research on complementary technologies such as silicon anode materials, striving to overcome the limitations of energy density.
LG Chem’s portfolio strategy goes beyond simply listing its technologies. Its goal is to provide customized solutions tailored to market and customer needs. By preparing a diverse set of options rather than relying on a single technology, the company has built a system that can respond flexibly and reliably to changing market demands and policies.
LG Chem is focusing on developing advanced materials that meet both environmental and safety standards. A representative example is its PFAS-free flame-retardant material. As global regulations tighten on PFAS—so-called “forever chemicals”—LG Chem has developed an alternative material that achieves both sustainability and performance. Compared to conventional materials, it can reduce carbon emissions by up to 46%, and is being applied across various sectors that require flame-retardant solutions, including electronics and electric vehicle components.
Enhancing battery safety is one of LG Chem’s core priorities. By developing a thermal-runaway suppression material, the company has effectively reduced the risks that may occur from impacts during driving or during the charging process. Even when abnormal reactions occur inside a cell, the material helps delay temperature rise and suppress fire propagation, significantly improving the safety of electric vehicles (EVs) and energy storage systems (ESS). As trust in safety is essential for the expansion of the EV market and the wider adoption of ESS, these safety enhancement efforts are closely aligned with LG Chem’s key strategy to meet future demand.
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LG Chem is also making remarkable progress in the plastic materials sector. The company developed Korea’s first BOPE (biaxially oriented polyethylene), an eco-friendly packaging material made from a single resin. It offers excellent recyclability and durability, making it a sustainable alternative to conventional composite films. By reducing film thickness, LG Chem has lowered resource consumption while maintaining the same level of product protection. Recognized for its innovation, BOPE received the Presidential Award, officially demonstrating the company’s technological excellence. Combining both recyclability and durability, BOPE provides a differentiated solution for clients pursuing ESG-driven management.
Rather than focusing on general materials that are mass-produced, LG Chem is strengthening its portfolio of specialty and high-value products, which feature higher technological barriers and more stable profitability. Specialty refers to customized materials designed to meet the specific needs of certain industries or clients. While general materials are subject to intense price competition and market fluctuations, specialty materials maintain stable and long-term business relationships built on technological expertise and trust.
Representative applications of specialty materials include the semiconductor and display industries. These markets have high entry barriers, making it difficult for new companies to participate, but once supply begins, it often leads to long-term partnerships with clients. In addition, LG Chem is strengthening its presence in the engineering plastics sector, which is essential for electric vehicles (EVs) and electronic devices. Engineering plastics must deliver both lightweight property and heat resistance, and are used in components that require high safety and durability, such as battery housings and high-voltage connectors.
In this way, LG Chem is continuously expanding its investments in specialty and high-value products, further strengthening its technological competitiveness. This approach goes beyond merely maintaining current sales — it establishes a foundation for stable and sustainable growth, even in an environment of high market volatility.
The global advanced materials market still faces numerous uncertainties. Amid the simultaneous shifts in policy, supply chains, and technology—where opportunities and risks coexist—LG Chem continues to move forward with unwavering preparation. The company has built a foundation for growth through region-optimized supply chains, a diversified product portfolio, innovative materials that integrate environmental and safety performance, and a business structure centered on specialty products. Furthermore, LG Chem provides differentiated value to global customers through a wide range of advanced materials for semiconductors and displays, including PID (Photo Imageable Dielectric), CCL (Copper Clad Laminate), DAF (Die Attach Film), and NCF (Non-Conductive Film). These efforts serve not only as a response to market changes but also as a driving force for sustainable growth. LG Chem’s long-standing experience in maintaining quality and trust amid rapidly changing markets will continue to guide its path forward.
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