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Lithium Ion Batteries – A Super Charged Market

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The lithium ion battery market is continuing to expand as the popularity of electric cars and non-coal energy sources rise and as the technology and efficiency of manufacturing the batteries continue to grow. Forecasts have the market growing at a compound annual growth rate (CAGR) of 17% from 2016 to 2021. Many car companies plan to exploit the demand for electric cars powered by lithium ion batteries, none more than Tesla.

Tesla and Panasonic entered into a joint venture in 2014 to build the Gigafactory in June 2014. This factory has the capacity to produce more lithium ion batteries than were produced worldwide in 2014. The factory is set to reach capacity in 2018 and will be able to produce up to 500,000 cars annually. The Gigafactory’s capacity is about five times greater than the amount of electric cars sold in the U.S. in 2015.

Lithium ion batteries are used for more than just electric cars. They power many electronics that we use daily, such as smart phones, watches, and many medical devices. There is a growing demand for large home batteries to pair with solar panels. Even though demand is increasing exponentially for lithium ion batteries and products containing them, there are some drawbacks to the industry.

High barriers to entry exist to enter the lithium ion battery industry. There is a high expertise needed from the workers to produce the batteries and the factories must be specialized for the production. Along with these concerns, there are many regulations that govern workplace safety and the specifications of the battery. Procuring the lithium is another difficulty. The majority of the world’s lithium reserves exist in the “Lithium Triangle,” which consists of Chile, Argentina, and Bolivia. Procuring the lithium from these countries can prove difficult and the transportation can prove costly. Currently LG receives their lithium from a mine in Canada and Tesla receives their lithium from a mine in Nevada.

Although the market for lithium ion batteries is growing rapidly, it is still a relatively small market. As technologies increase, overall demand is expected to increase and a rapid increase in the lithium ion battery market could come to fruition.

Resources:

http://www.prnewswire.com/news-releases/global-lithium-ion-battery-market-competition-forecast-and-opportunities-2021—research-and-markets-300307586.html

http://www.mining.com/web/investors-cant-get-enough-of-south-americas-lithium-triangle/