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Summary

  • Military battery requirements are growing and changing.
  • Lithium and Zinc based batteries are making their way into military applications.
  • Review of several companies currently delivering equipment in the space.

Modern soldiers have been referred to as "Energizer Bunnies" because they are significantly weighed down by large numbers of heavy batteries. This has created huge opportunities to bring new technologies that are low-weight, high density and high efficiency into the military space. Batteries are considered mission critical in military applications and must meet extreme military specifications.

Critical military applications for soldiers include night-vision goggles, portable radios, handheld computers, global positioning systems, and other electronic personal gear. The biggest energy requirements and, therefore, the largest opportunities to supply batteries in the military space include: bulk energy storage, uninterruptible power supplies, medical equipment, motive power, satellite communications, military armored and ground combat vehicles, unmanned vehicles, battle field surveillance and night sight technologies.

A common case study involves the cost to transport fuel to remote locations of Forward Operating Bases (FOBs). FOBs can create significant logistic, safety, and cost challenges in supplying bulk fuel over long distances. Convoy routes through unsecured areas can be exceptionally dangerous, making the cost of the fuel quickly jump ten to a hundred times its original purchase price after factoring in the cost for the convoys to be fuelled, security, and the potential loss of life. Increasing the efficiency of the energy supply chain through the use of advanced battery technologies would reduce the overall operating costs.

The recent price decrease in lithium ion batteries has already led to a swap out of NiCd and NiMH batteries from military applications primarily because the lithium ion ones offer high energy density, high capacity and long life, no memory discharge effects, wider and more extreme operating temperature ranges while still operating at high output efficiencies and less weight with a rugged design.

The Ultralife Corporation (NASDAQ:ULBI), based in Newark, New York, is a leader in providing its market with products and services ranging from portable power solutions to communication and electronic systems. Ultralife serves government, defense and commercial customers across the globe through two business divisions: Battery & Energy Products and Communications Systems. The Battery & Energy Products group showcased their new products at the Special Operations Force Industry Conference; Ultralife offers an extended line of lithium ion batteries specifically targeted toward military and defense applications.

A123 Wanxiang Systems, a lithium ion developer and manufacturer, launched its military batteries in recent years, specifically aimed at military vehicle applications. A123 stated that the potential replacement of lead acid batteries reached over 300,000 pieces in 2010 alone.

Saft Group SA (OTCMKTS:OTC:SGPEY), based in Paris, France, is the global leader in designing and manufacturing high technology batteries for industries. Saft was recently awarded a contract by Lockheed Martin (NYSE:LMT) to provide Li-Ion batteries to the U.S. Air Force Space Command for advanced communications, because Saft has been the most successful in developing military defense-based lithium ion applications. They have deployed equipment to the Canadian Department of National Defense, U.S. Defense Logistics Agency, U.S. Army, and U.S. Marine Corps, amongst others. Raytheon Company (NYSE:RTN) together with its subsidiaries, is a technology company specializing in defense, homeland security and other government markets worldwide. Raytheon provides a much boarder investment scope outside of batteries.

Another notable established player in the industry is Arotech Corp (NASDAQ:ARTX), based in Ann Arbor, Michigan. Arotech is a leading provider of quality defense and security products for the military, law enforcement and homeland security, including multimedia interactive simulators/trainers. Arotech operates two major business divisions: Battery and Power Systems and Training and Simulation. Arotech's Battery and Power Systems division is focused on advanced zinc-air and lithium batteries and chargers. Through this division, it is a key supplier to the U.S. military, offering one of the most unique battery management systems available: Soldier Wearable Integrated Power Equipment Systems (SWIPES) utilizes a modular power distribution system that is powered by zinc-air or lithium ion batteries. This allows for direct power to equipment, thereby extending mission times, eliminating power source swaps, and reducing battery weight for soldiers by up to 30%. They received a $2.3million order for the deployment of SWIPES in Afghanistan. Recently, they announced a $2.4million order for military batteries and additional orders were announced for military and civilian applications totaling $10million. Arotech is continuously announcing multiple million-dollar orders for its extensive line of military batteries.

The overall benefit of the current conversion to and adoption of lithium ion batteries and other next-generation chemistries in military applications is not only allowing for an overall better battery system but, more importantly, it is reducing the weight load for soldiers. A standard patrol using lithium ion batteries could potentially have full control over its battery resources and significantly reduce "battery weight load", leading to less fatigue and improved mobility. The military case for new technologies continues to emerge and it may be an area of interest for investors' portfolios as regional uncertainty continues to make headlines such as the current Ukrainian crisis.

Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.

Source: Next-Generation Military Battery Suppliers Are Fully Charged