Ask an Analyst: What Lies Ahead for Lithium Ion

The market for lithium ion battery investing is going strong right now, despite recent research which suggests that the sector will see some new competition in the next ten to twenty years. To unpack the research from the rumours, the Investing News Network turned to Lux Research senior analyst Cosmin Laslau to get the inside scoop on lithium ion.
Laslau, who has an academic background as a nanomaterials scientist and engineer, manages three Lux Research teams: Energy Storage, Dispuated Generation and Solar. All told, he’s an expert in the intersection between renewables, batteries and the internet-of-storage. Therefore, read on to hear his expert opinions on the current state of the lithium ion market, what’s next for electric vehicle batteries and where investors should be looking in the long term.

EV hype propels market for innovative batteries

The hype surrounding electric vehicles these days is propelling the market for lithium ion batteries to new heights. But these batteries are also serving as an inadvertent roadblock to widespread EV adoption, as innovators search for new ways to make them more affordable, more powerful and more efficient. Essentially, Laslau explains that the main question affecting the sector today is “how do we make the batteries cheap enough to serve this market?”
Some researchers believe that the answer to this question lies outside lithium ion, and within different battery types. By the mid-2020s, Laslau predicts that we will see some new batteries emerging. The academic literature is currently pointing towards solid-state batteries and lithium sulfur batteries as the two biggest breakthroughs. However, today these batteries are a long way from mass production, as scientists still need to resolve challenges related to power output and the manufacturing process. Therefore, in the interim the lithium ion will reign supreme, but in the medium term we may see some market segmentation between price versus performance.

All told, it looks like the cheapest option is going to be the evolving lithium battery, which means that even if solid-state batteries and lithium sulfur batteries do eventually come to the market, lithium ion will still have an important place in the market. Meanwhile, Laslau estimates that such newer battery types will be more appealing to high end vehicles, where speed, weight and interior space become greater priorities.

Future trends

Considering these factors, Laslau sees the luxury vehicle market as one of the most promising sites for electric vehicles in the short- to medium-term. This market, he predicts, “will be the first one to get plug-in vehicles that customers are entirely happy with.” We already see this with Tesla’s entry into the lower end of the luxury market. Tesla’s newest Model 3 vehicle starts at $35,000, a rough $15,000 more than the average market for cars. Therefore, investors should focus their attentions on this luxury car market in the next five to ten years, as more and more brands invest in making the switch to electric vehicles. After that, it remains to be seen which markets become the most profitable from an investment standpoint.
By around 2040 or 2050, Laslau predicts that “pretty much all new car sales will be plug-ins.” Therefore, if you privilege the affordability and current market position of lithium ion batteries or are tempted by the greater potential and greater instability of solid-state batteries and lithium sulfur batteries, the electric vehicle market – and the batteries behind it – are certainly sectors to watch.
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Securities Disclosure: I, Morag McGreevey, hold no direct investment interest in any company mentioned in this article.