Material Insights · Understanding the Material World

Lithium and Sodium-ion batteries

Sodium-ion cells do the same job as lithium-ion cells with sodium, which is about 1,000 times more abundant, so they cap how far lithium prices can rise before buyers switch. Their progress follows the lithium price: investment slowed when lithium fell in 2023, and lithium prices in early 2026 at more than twice their level a year earlier have strengthened their case.

Lithium (commodity) and Sodium-ion batteries (energy): 3 relationships.

How they are linked

1. Substitute for lithium-ion

Substitution · Weak · Sodium-ion can replace lithium-ion cells

Sodium ions shuttle between electrodes much as lithium ions do, so a sodium-ion cell can replace an LFP cell where weight matters less, such as grid storage, two-wheelers and small cars.

  • 120 to 200 Wh/kg typical sodium-ion energy density range
  • up to 175 Wh/kg latest sodium-ion cells, such as CATL Naxtra, close to mainstream LFP
  • just over 1% sodium-ion cell capacity as share of lithium-ion capacity

The best sodium-ion cells now reach about 175 Wh/kg and retain over 90% of capacity at -40°C, which suits cold climates. CATL and Changan expect the first mass-produced sodium-ion passenger car to reach the market by mid-2026. Capacity is still tiny next to lithium-ion, so substitution is a constraint on lithium at the margin, not yet a large volume.

Sources: IEA; CnEVPost; ESS News; Electric & Hybrid Vehicle Technology International

2. Lithium price trigger

Cost and price · Asymmetric · High lithium prices pull in sodium-ion

Sodium-ion's main advantage is cheap, stable raw materials, so it becomes attractive when lithium is expensive and loses appeal when lithium is cheap.

  • USD 6,000 to 83,000/t range of lithium carbonate prices, 2020 to 2024
  • USD 100 to 500/t range of sodium carbonate prices over the same period
  • 10 GWh China's sodium-ion cell capacity by June 2023, slower than expected as lithium fell

Investment in sodium-ion cooled in 2023 as lithium prices fell; by early 2026 lithium prices were more than twice their level a year earlier, and CATL was moving sodium-ion into passenger cars. IRENA notes that lithium shortages or higher lithium costs favour sodium-ion. The link is one-sided: sodium-ion limits lithium price spikes but does little when lithium is cheap.

Sources: IEA; ESS News; CnEVPost; S&P Global Market Intelligence

3. Cap on lithium demand growth

Transition · Rising · Sodium-ion takes share from lithium in batteries

Batteries dominate lithium use, so every GWh of storage or vehicles that moves to sodium-ion removes lithium demand directly.

  • 88% battery share of world lithium end use, 2025 estimate
  • USD 40/kWh sodium-ion cell cost some makers expect at scale
  • up to 70 GWh sodium-ion production capacity expected in 2025, mostly in China

If makers reach USD 40 per kWh at cell level, sodium-ion would compete strongly in stationary storage, where its lower energy density matters least. Researchers expect full parity with LFP in cost and performance only by the mid-2030s, so the displacement of lithium is likely to be gradual.

Sources: ESS News; ESS News; USGS

For investors

Key learnings

  1. Sodium-ion acts as a ceiling on lithium prices: when lithium carbonate is expensive, cell makers add sodium-ion capacity.
  2. The threat to lithium demand is real but slow, with sodium-ion capacity at just over 1% of lithium-ion's.
  3. Lithium producers face the most risk in stationary storage, where sodium-ion's lower energy density matters least.

What to track

  • Lithium carbonate spot price in China: Sustained high prices speed sodium-ion adoption; low prices slow it (Daily · price reporting agencies; Guangzhou Futures Exchange)
  • Sodium-ion cell capacity and output: Rising output shows substitution moving from pilot to volume (Quarterly · IEA, industry trackers)
  • Sodium-ion use in passenger cars: Wider vehicle use would extend substitution beyond storage (As announced · CATL, BYD and carmaker launches)

For policymakers

Key learnings

  1. Sodium-ion reduces dependence on lithium, a mineral most importing countries lack, so it is a supply security option.
  2. Battery incentives that are neutral on chemistry allow sodium-ion to compete where it suits, such as grid storage and cold regions.
  3. Sodium-ion manufacturing is concentrated in China, so building domestic cell capacity matters as much as the choice of chemistry.

What to track

  • Share of storage tenders won by sodium-ion: Shows whether the technology is competitive without subsidy (As awarded · national energy agencies)
  • Lithium import bill: Indicates the value of substituting part of battery demand (Annual · trade statistics)

Sources

  1. Global EV Outlook 2026: electric vehicle batteries, IEA (2026)
  2. Sodium-ion battery cell cost could drop to $40/kWh, says IRENA, ESS News (2025)
  3. CATL's sodium-ion batteries begin deployment in production-ready passenger vehicles, CnEVPost (2026)
  4. Falling lithium prices cool investment in sodium-ion batteries, S&P Global Market Intelligence (2023)
  5. Sodium-ion batteries now competitive in niche markets, ESS News (2026)
  6. Mineral Commodity Summaries 2026: Lithium, USGS (2026)
  7. Changan and CATL unveil first mass-production sodium-ion battery passenger EV, Electric & Hybrid Vehicle Technology International (2026)