Analyst Insight: The IRA's Impact on the US Lithium-Ion Market

The Inflation Reduction Act (IRA) is a critical turning point in the US’s outlook on sustainability technology. It is igniting aggressive investment in technologies such as EVs, renewable energy technology, batteries, and services for the grid, along with major tax incentives for businesses and citizens willing to participate. While this wave of green tech excitement should have an overall positive impact on the US’s sustainability measures, markets like energy storage systems (ESS) will need time to adjust.  

The energy storage market currently depends on overseas lithium ion (Li-ion) battery manufacturing and is facing stiff competition from growing global demand. The IRA has stimulated interest in US battery production, which is quickly evolving to keep pace with demand. Major OEMs are taking advantage of IRA incentives to build new battery recycling and manufacturing facilities to combat the last few year’s supply shortages and rising prices.

This Guidehouse Insights Energy Storage Tracker Analyst Insight provides an overview of the Li-ion trends and opportunities the IRA sparked, including market inflection trends, market drivers and barriers, an overview of the energy storage market and investments in the US battery market. It provides Energy Storage Tracker highlights from the past two years and conclusions and key recommendations for stakeholders in the energy storage industry. The report is based on data from the Energy Storage Tracker released in 2Q23.