It is widely accepted that for electric vehicles to be accepted by consumers and to achieve wide market penetration, ranges of at least 500 km at an affordable cost are required. Therefore, significant improvements to lithium-ion batteries (LIBs) in terms of energy density and cost along the battery value chain are required, while other key performance indicators, such as lifetime, safety, fast-charging ability and low-temperature performance, need to be enhanced or at least sustained. Here, we review advances and challenges in LIB materials for automotive applications, in particular with respect to cost and performance parameters. The production processes of anode and cathode materials are discussed, focusing on material abundance and cost. Advantages and challenges of different types of electrolyte for automotive batteries are examined. Finally, energy densities and costs of promising battery chemistries are critically evaluated along with an assessment of the potential to fulfil the ambitious targets of electric vehicle propulsion.