Lithium-Ion Battery Developments: Most Affected Key Companies and ETFs

by: Juan Carlos Zuleta

In the first part of this article I reviewed and extended my discussion about the influence of oil prices on adoption of lithium batteries including a brief analysis of oil ETFs as possible investment options during the transition of the global automotive industry to electric propulsion. Now, I take a new look at technological development in lithium-ion batteries to identify major trends in chemistries that are being introduced, including an analysis of cathode and anode material and resource use, as well as advice on how and where to invest in response to these innovations. The contribution closes with some brief comments on what lies ahead both in terms of lithium batteries and beyond.

Technological development in Li-ion batteries

During the last year or so, technological development in the lithium battery industry seems to have made considerable progress in terms of different types of Li-ion batteries currently being studied but not in terms of new research projects that transcend them to venture into more advanced ones (e.g. Li-Sulfur or Li-air). To make things even more complicated, there has also been some indication that technological development is heading towards distinct clasess of batteries beyond lithium.

Based on a review of publications on Li-ion batteries during the first five months and eighteen days of this year in Science Direct, one of the most prestigious sources for scientific research, I have found some interesting trends in terms of cathode and anode material and resource use that are explained below.

Cathode material and resource use

As shown in Table 3, the results seem to suggest that in a few years from now important breakthroughs are likely to be accomplished in Lithium Iron Phosphate (LiFePO), Lithium Vanadium Phosphate (LiVPO), Lithium Manganese Oxide (LiMnO), Lithium Vanadium Oxide (LiVO), and Lithium Manganese Phosphate (LiMnPO) batteries; and less so in Lithium Cobalt Oxide (LiCoO), Lithium Nickel Phosphate (LiNiPO) batteries and Lithium Nickel Oxide (LiNiO). Safety and cost appear to be the main drivers of change in LiFePO, LiMnO, and LiMnPO batteries, whereas the pursuit of power seems to be the main motivation for LiVPO, and LiVO.

Initially, the number of studies on LiFePO seemed to be a puzzle. LiFePO batteries were first used (albeit with limited success) in mass-produced electric cars by BYD Company Limited (OTCPK:BYDDF) in China towards the end of 2008. In the United States, A123 Systems (AONE) has been striving, since its foundation in 2001, to become a leader in this specific kind of advanced storage systems. Yet it has experienced difficulty in selling its products to major electric car companies. Currently, its main auto clients are fisker Automotive and Smith Electric Vehicles (SEV). Beginning the second half of this year, A123 will supply its advanced Li-ion batteries to them. Note that neither of these companies is listed in the U.S. stock exchange market. Nevertheless, by January 2012 A123 is expected to release details of a deal with a major US manufacturer for an all-electric car to be launched in 2013. Meanwhile, the company´s shares price has been improving steadily in the last 10 days or so (following a new favorable rating by morgan stanley), and the stock has recently been included in the top ten stocks under $5 with most ´buy´-ratings.

All these prospects, together with those reported by a recent contributor, those suggested by this author in another piece, and the aid received by A123 from the US government since 2009, amply explain why that many scientific articles on that chemistry have been published. Nevertheless, there remains a high degree of uncertainty as to resource use for this specific class of Li-ion batteries. Hence, in this article, I will refrain from making any comments on that subject.

The number of studies on LiVPO (a derivative of LiFePO) and LiVO batteries clearly reflects a new course of technological development in Li-ion batteries. In a recent interview with the Gold report, a well known analyst has argued that although LiMnO batteries are safe, they´re low-voltage (power) batteries. By contrast, LiVPO batteries can produce more than six times as much power as the best LiMnO battery and produce it in a secure manner. If we agree that battery power is crucial for the operation of an electric car, then it comes as no surprise that so many companies such as China´s BYD (BYDDF.PK), Valence Technology Inc. (VLNC), Subaru Co. Ltd. (9778:JP) and GS Yuasa Corporation (6674:JP) have firm intentions to commercialize them. In its Annual report on Form 10-K, Fiscal Year Ended, March 31, 2011, Valence Technology Inc, for example, has indicated that: “Following years of commercial use, we believe our experience is paving the way for the lower cost and higher performance solutions that our next generation lithium vanadium technologies will offer.” Although Valence´s stock has shown a downward trend since the beginning of the year, it remains an interesting option given its relatively high 1-Year Return (81.537%). The prospects for this kind of batteries may have implications for use of vanadium. Those interested in investing in this resource may want to take a look at Largo Resources Ltd. (LGO:CN) and American Vanadium Corp (RMRCF:US). By and large, the latter stock appears to be a better bet; it reflects an extraordinary upward trend since December 2008.

The results for LiMnO and its derivatives, as well as LiMnPO appear to be not very significant considering that this energy technology powers the two only mass-produced electric cars (i.e the Volt and the Leaf) already on the roads. The question remains as to whether this has anything to do with the inherent limitations of this type of batteries in comparison with LiVPO, for example, or the possibility that the bulk of scientific research currently being advanced in LG Chem Limited (051910:KS) from South Korea and NEC Corporation (6701:JP) from Japan, the battery suppliers for these revolutionary electric vehicles, is not being published for proprietary reasons. As for prospects for magnesium in the US, a recent article published on Manganese Investing News informs: “Currently, there are no producers of manganese in North America. However, two companies are working on their deposits, the first being American Manganese Inc. (AMYZF:US) which could be the lowest cost electrolytic manganese producer in the world at $0.44/lb compared with$0.98/lb in China. The second company is Wildcat Silver (WS:CN) that is working on its Hardshell property in Arizona.” Investing in these companies seems to be a very good option, as reflected by their extremely high 1-Year Return indicators: 196.902% and 335.443%, respectively.

According to an article published in 2006, most battery makers were already back then moving away from cobalt-based Li-ion because these batteries are “not very robust and cannot take a high charge and discharge currents.” As of now, only one electric vehicle is using this energy storage technology (since 2008): The Tesla Motors (NASDAQ:TSLA) Roadster. However, Tesla’s CEO has just announced that in a few months it will stop producing the emblematic all-electric car. Hence Tesla’s cobalt-based Li-ion batteries will most likely be discontinued as well.

As shown in Figure 6, OM Group (NYSE:OMG), the world’s largest producer of cobalt chemicals and powders, has seen the price of its shares substantially decreased in the last 5 years or so. Tesla’s decision will certainly not contribute to improving the performance of OM Group in the stock market. Under these circumstances, I have no suggestions for investing in cobalt which is still a very volatile and difficult-to-extract commodity due to its concentration on a very conflictive region of the world.

Two decisions appear to be shaping the future of nickel for the next ten years or so. One, the decision by Panasonic Corp (PC) and Tesla Motors in January 2010 to work together for development of next-generation Ni-based Li-ion battery cells for electric vehicles, and two, the decision by Toyota Motor Corp (NYSE:TM) to launch the Prius v model, also equipped with Li-ion batteries developed by Panasonic, by the end of the summer. So in a couple of months we can expect to see more studies on these kinds of batteries. Beware though that Panasonic’s association with Toyota is still primarily focused on production of NiMH batteries for the classic Prius cars. This probably explains why Russia´s Norilsk (OTCPK:NILSY), the world’s largest producer of nickel and nickel cathodes has performed outstandingly in the stock exchange market over the last 2 years (See Figure 7). However, the situation may change in the following years as use of nickel in NiMH batteries will most likely be gradually substituted for use of Ni in cathodes for Li-ion batteries, resulting overall in less Ni being consumed. Lastly, as shown above, Norilsk may be an interesting short-term option for investing in nickel until the trend previosuly described gets underway.

Anode material and resource use

In Table 4 it is shown that if we add up carbon nanotubes, carbon nanowalls as well as graphite and graphene, we end up with 13 studies, which implies that carbon remains the “king of anodes”. Nonetheless, three other trends have also been identified. The first one has to do with silicon (Si), a metalloid which has been mentioned as capable of storing more energy than any carbon-based anode. The second one refers to use of tin (Sn), a metal that seems to have recently become important in the commodities market apparently due to its newly discovered energy storage application. Lastly, the third one pertains to use of titanium (Ti).

In terms of silicon-based anode materials, at least two start-ups: amprius and nexeon Limited appear to be working hard on this kind of materials with a view to commercialize them. In December 2007 Dr. Yi Cui, inventor of silicon nanowire Li-ion batteries, said that it would take 5 years to make this kind of batteries commercially available. He couldn´t have been more accurate in his forecast: In March 2010, panasonic announced that it would launch a new rechargeable Li-ion battery for use in notebooks in fiscal 2012. The new battery will be equipped with next-generation material silicon in the anode and offer a capacity 30% higher than that of any cell of similar size.

A recent paper reviews the different options of anodes available for use in Li-ion batteries. It concludes that both Sn and Si-based materials constitute the best alternatives to graphite and other carbon-based materials, particularly due to their higher theoretical capacity. In my presentation at the second LS&M conference last year I already discussed about the possibility of “replacing the standard graphite anode with silicon, which is meant to store ten times more lithium than graphite”. The above mentioned study argues that “the lower price and easier processing of tin-based materials compared to Si-based materials may affect the future of these materials in the battery industry”.

Until recently, Sony (SNE) was the only option to invest in tin-based Li-ion batteries. The Japanese company would describe its product as follows: NexelionTM is:

The industry’s first hybrid lithium ion rechargeable battery which “utilizes a tin-based amorphous anode; translating into a 30% increase in the capacity per volume ratio compared to conventional lithium-ion batteries...

But according to the authors of the article mentioned above, this battery may still not be ready for prime time. Now Toshiba (OTCPK:TOSYY) is offering a new battery Li-ion battery that utilizes “a tin-carbon anode and a cathode made of lithium manganese oxide doped with nickel and cobalt.Time will tell if this battery can actually be upgraded for use in electric-vehicles. In the last two years or so the perspectives for tin have become most interesting.

Traditionally, tin has been primarily used for “cans and containers”. In 2010, this industrial application was superseded for the first time ever by “electrical” uses, which clearly points to the importance of tin as an energy mineral nowadays (see usgs, tin, 2011). As to where to invest in tin, I would recommend opting for Metal X Limited (MLX:AU). It is Autralia´s largest tin producer. Unlike many of its competitors, this company has had an adequate performance in the stock exchange market in the last 12 months or so. To invest in tin in the US, the only option available would be the iPath Dow Jones-AIG Tin Total Return Sub-Index ETN (JJT), which has performed reasonably well over the last 12 months, rising almost 45% (although its YTD figure is - 5,51% ).

Titanium-based Li-ion batteries with TiO2 in the anode have received a great deal of attention because they are faster to charge than other Li-ion batteries. Toshiba Corporation from Japan has been working for quite some time on this kind of chemistry. Just a couple of days ago, it announced that its titanium-based SCiB Li-ion battery has been selected by Mitsubishi Motors Corporation (7211:JP) to power its new models of electric vehicles, the i-MiEV and the MINICAB-MiEV. The announcement had an almost immediate positive reaction in the price of the stock; it climbed from almost 29 USD on June 23, 2011 to almost 31 USD on June 29, 2011. Although Mitsubishi has clarified that Toshiba´s batteries will power a lower-priced model of its i-MiEV with driving distance of about 120 km per charge and not its standard i-MiEV with 160 km per charge, which will continue to use the batteries supplied by Lithium Energy Japan, a joint venture (JV) of Mitsubishi Motors, GS Yuasa Corp. (6674:JP) and Mitsubishi Corp (MSBHY.PK), some doubts have begun to arise regarding the future of this JV. As to where to invest in titanium, Zachs seems to favor Titanium Metals Corporation (TIE). But its 1-Year Return appears rather low (2.782%). In the following table I synthesize all the investment options described above.

Beyond Li-ion batteries

Regarding new research projects that go beyond Li-ion batteries, little progress appears to have been made in relation to Li-Sulfur and Li-air batteries since my January 2010 presentation at the second LS&M conference in Las Vegas. In fact, in a search performed on March 16, 2011, I couldn’t find any study on either Li-air or Li-Sulfur batteries available online in Science Direct after January 18, 2010. Although this finding may seem surprising considering that Li-air batteries constitute the most promising technological development of all times, it also reinforces the idea that advances in this field will be rather slow. Nevertheless, it is well known that since 2009 IBM has been working in the development of these batteries with a view to make them commercially available in the following years. Similarly, Sion Power Corporation, a private company, is already developing and manufacturing rechargeable Li-Sulfur for portable power, mobile electronics, and electric vehicle applications. In Table 6 I synthesize the discussion about the possibility of actually substituting oil for lithium which was already put forward in the above mentioned presentation.

Beyond Lithium

Finally, many alternatives to Li-ion as well as Li-Sulfur and Li-air batteries have recently been suggested in the literature, such as Mg-ion, Na-ion, Mg-Sulfur, Na-Sulfur, Mg-air and Na-air. Time will tell which batteries will finally make it to commercial production in the next 10 years or so. Needless to say, this whole new spectrum of possibilities will have implications on both availability of energy mineral resources and the specific types of electric cars that will prevail during this decade and the next.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.