In a lithium-ion battery, lithium metal migrates through the battery from one electrode to the other as a lithium ion. Lithium is one of the lightest elements, and it has the strongest electrochemical potential of any element. This enables a lithium-based battery to pack a lot of energy storage in a small, light battery. As a result, lithium-ion batteries have become the battery of choice in many consumer electronics such as laptops and cell phones.
Lithium-ion Batteries Gain Momentum
Because of the inherent advantages in lithium-ion batteries, sales have grown exponentially since the turn of the century. This has helped drive down costs consistently. Falling costs have also helped lithium-ion batteries gain a solid foothold in new applications.
According to the research organization BloombergNEF, the volume weighted average lithium-ion battery pack price (which includes the cell and the pack) fell 85% from 2010-18, reaching an average of $176/kWh. BloombergNEF further projects that prices will fall to $94/kWh by 2024 and $62/kWh by 2030.
This declining cost curve has important implications for any company that utilizes batteries in its service, or for those that have a need to store energy (e.g., power producers). To date, most lithium-ion battery sales have been in the consumer electronics sector, but future sales will be increasingly driven by electric cars.
Most cars on the roads today still utilize a lead-acid battery and an internal combustion engine. But sales of electric vehicles — powered by lithium-ion batteries — have increased more than tenfold in the past five years. Further, more and more countries are setting future bans on cars based on internal combustion, with the expectation that electric vehicles will eventually dominate personal transportation.
This of course means far greater future demand for batteries. So much so that electric vehicle maker Tesla, in partnership with Panasonic, is investing billions of dollars to build new lithium-ion battery factories. Nevertheless, U.S. lithium-ion battery producers are falling behind in market share.
A related growth market for lithium-ion batteries is in heavy industrial applications such as lift trucks, sweepers and scrubbers, airport ground support applications, and automatic guided vehicles (AGVs). These niche applications have been historically served by lead-acid batteries and internal combustion engines, but the economics have rapidly shifted in favor of lithium-ion batteries.