FRANKFURT - Production and trade in Germany's battery sector this year hinge largely on whether a dip in the appeal of battery-electric cars can be overcome, trade group ZVEI said on Tuesday, after presenting positive figures for last year.

"I can't say whether we have overcome a decline early in the year amid the scaling back of electric vehicle support at the end of 2023," said Gunther Kellermann, managing director of the battery section of electro and digital association ZVEI.

"At the moment we are seeing a positive reversal...but I don't dare a forecast," he told reporters in a call with reporters.

Market volumes, describing production plus imports minus export, in the industry grew 32% in 2023 to a total value of 23.2 billion euros ($24.84 billion), mostly due to the biggest block, lithium-ion batteries used in e-mobility.

Germany has ended EV subsidies amid budgetary belt-tightening after paying 10 billion euros between 2016 and 2023.

This resulted in a fall of the share of EVs to 12% last month, down from 14.3% reached in 2023, official statistics show.

Apart from the resulting setbacks in affordability, consumers are also seen as uncertain whether EVs meet their requirements for range and safety, analysts say.

For ZVEI, demand for li-ion batteries, also used in electricity storage, medical equipment and smartphones, is crucial as the segment accounted for 81.5% in the overall market volume and had grown 58% year-on-year.

Policymakers must make improvements in a number of areas, said Christian Rosenkranz, chairman of the ZVEI battery section: the roll-out of EV charging infrastructure, better strategic raw materials supply, where Germany and Europe depend on overseas lithium and cobalt, and cheaper energy.

He also called for less bureaucracy, as well as more research funding for sodium-ion batteries which could bring independence from lithium.

($1 = 0.9338 euros)

(Reporting by Vera Eckert, editing by Philippa Fletcher)