Edison explains: Solid-state batteries – the next revolution in electric vehicle battery technology?

What are solid-state batteries and why the excitement around them?

In solid-state batteries (SSBs) the flammable liquid electrolyte found in conventional lithium-ion batteries (LIBs) is replaced with a solid alternative. This shift enables components to be packed more tightly, eliminates leakage risks and allows for the use of lithium metal anodes. These anodes can achieve higher theoretical energy capacities compared to graphite-based systems used in LIBs. Solid electrolytes also offer greater tolerance to high voltages and temperatures. The result is a new generation of batteries that are safer, charge faster, last longer and deliver more range than today’s best electric vehicle (EV) batteries.

What is driving the push for better batteries?

The global transition to net zero demands a revolution in energy storage technology. To meet 2050 climate targets, the International Energy Agency estimates annual EV battery demand will grow from 1TWh in 2024 to more than 3TWh in 2030. With the EU planning to ban petrol vehicle sales by 2035, battery innovation is no longer optional. Conventional LIB technology is approaching its practical limits, meaning that further improvements in energy density, efficiency and cost are increasingly difficult to achieve without making fundamental changes. Therefore, today’s batteries cannot deliver the performance leap required to make EVs as convenient and affordable as combustion-engine cars.

Why have we not seen SSBs in vehicles yet?

Despite their potential, SSBs face major technical and manufacturing hurdles. Lithium metal anodes expand and contract during charging, creating mechanical stress that degrades performance over time. Microscopic dendrites can form, penetrating the solid electrolyte and causing short circuits. Producing solid electrolytes that conduct ions as efficiently as liquids, while remaining stable and durable, remains a central challenge. Furthermore, manufacturing high-quality solid components requires precision engineering and stringent control, driving up costs. Bridging the gap between laboratory success and mass production at gigafactory scale remains the critical hurdle.

Which companies are leading the race?

Toyota holds over 8,400 patents related to SSBs and has partnered with Idemitsu Kosan and Sumitomo Metal Mining for mass production of SSBs. QuantumScape, which is partnered with Volkswagen, has demonstrated prototype cells achieving 844Wh/L energy density and 12-minute fast charging. Samsung SDI has joined forces with Solid Power and BMW Group to produce prototype SSBs with energy densities of 900Wh/L.

What about Tesla?

Tesla has made no official commitment to SSBs and may be betting on alternative approaches to achieve similar performance gains or positioning itself to acquire solid-state capability once the technology matures.

How is the global battery supply chain shifting?

East Asia still dominates global battery innovation and manufacturing. However, North America and Europe are investing heavily in localised production to reduce reliance on Asian supply chains, while emerging markets contribute fresh approaches to materials and design. This diversification is reshaping the industry’s dynamics and driving the need for adaptable, cost-efficient manufacturing.

How can investors play the theme?

Pure-play options include QuantumScape (Nasdaq: QS, c $11bn market cap) and Solid Power (Nasdaq: SLDP, c $1bn market cap). QuantumScape offers higher risk/reward with its proprietary ceramic separator, while Solid Power provides a more modest entry point. Neither is profitable, with meaningful revenues years away. Established automakers like Toyota (NYSE: TM, c $54.6tn market cap), BMW (Xetra: BMW, c €58bn) and Volkswagen (Xetra: VOW, c €52bn) offer indirect exposure with lower volatility.

When will SSBs go mainstream?

Pilot production of SSBs is underway, with prototypes shipping to automakers for testing. QuantumScape and Volkswagen plan for field trials to take place in 2026 with mass production targeted for 2028, while Toyota aims to launch vehicles with SSBs by 2027. Meaningful EV adoption is expected in the early 2030s (according to IDTechEx). In the meantime, semi-SSBs, which combine solid and liquid electrolytes, are reaching the market first, with MG Motor already launching a semi-solid-state EV in China.

Edison insight

Solid-state batteries are widely seen as the next major evolution in EV battery technology, offering a potential step change in energy density and safety. With a projected $10bn market by 2036 (a 53.9% CAGR), according to IDTechEx, and major automakers racing to commercialise, the technology represents a compelling long-term theme. However, with average lithium-ion cell costs around $80/kWh and solid-state batteries not expected to reach comparable cost levels until the late 2020s, mass adoption is likely to remain a late-decade story. Investors should focus on companies with proven manufacturing pathways and strong automotive partnerships rather than laboratory breakthroughs alone.