The Li-ion battery revolution, how to invest in the trend

Lithium ion battery market to see exponential growth

Li-ion batteries are being used in many applications from Electric Vehicles, mobile phones, Laptops, digital cameras, power tools, Energy storage systems and many more.

The Global lithium ion battery market was valued at $30,186.8 million in 2017 with projections to grow at a CAGR of 17.1% from 2018 to 2025 reaching $100,433.7. Lithium-ion (Li-ion) batteries are rechargeable batteries with high-energy density and is used predominantly in portable equipment. Exponential growth in use of these batteries is expected due to the increase in use in smartphones, tablets/PCs, digital cameras, and power tools with further demand for Li-ion batteries driven by the automobile industry. The demand for electric vehicles is expected to drive the demand for Li-ion batteries. Many automobile companies are investing in new factories for electric vehicles that will use Li-ion batteries due to the small size, light weight and energy density compared to alternatives like nickel metal hydride batteries.

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With China leading in adoption of electric vehicles in circulation the number of electric vehicle sales was greater than one million. According to the International Energy agency, Electric vehicle ownership is expected to grow beyond 125 Million and could potentially reach 220 Million by 2030. The IEA estimated a significant increase from the previous year of 54% to 3.1 Million electric vehicles in use in 2017. Although China contributed to the majority of electric vehicles on the road, Nordic countries such as Norway, Sweden and Iceland led in market shares. “The shift to electric cars will come faster and in a more pronounced way, fueled by the diesel demise in Europe, battery technology advancements and regulation in China and Europe,” said UBS analyst Patrick Hummel.

In order to understand what to invest in, we need to look at the underlying technology, manufacturing process and supply chain involved.

This video explains how a lithium-ion battery works and the materials involved. The most commonly used materials used in batteries are Lithium, Aluminium, Copper, Nickel and Cobalt.

An easy way to invest in Lithium and battery technology is to find an ETF that tracks a collection of securities like stocks specifically targeted at this market. The Global X Battery and Lithium ETF invests in the full lithium cycle, from mining and refining the metal, through battery production.

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