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Which area in the Lithium Industry has the Greatest Potential?

 As much as I have learned about this industry, I often get surprised every now and then as I recognize we generally still don’t understand the full potential for lithium and how it could impact and benefit our world in the near future.  At least as long as innovation in battery technologies still develop.  I think lithium mining, battery manufacturing, automotive, and public utility companies will be the primary beneficiaries in the future as projects ramp up and investment flows into the industry.

So it got me researching about what is the market potential for the three largest areas driving the lithium industry going forward.  The one industry utilizing lithium most today is consumer electronics.  Whether they are iPods, iPads, power tools, cell phones, portable radios, or digital cameras there’s not another battery that can provide efficient power in a small size like lithium-ion batteries.


We’re already witnessing this drive for e-mobility since the early days of the smart phone.  Interestingly, I found that the current lithium market is approximately $13 billion a year according to a past interview performed by Dan Galves of Deutshe Bank’s Automotive Equity Research Team.

For the automotive sector, I believe things are just getting started as we’re still in year #1 (marked by the release of Chevy Volt and Nissan Leaf less 6 months ago).  There will be an emergence of more electric vehicles and Plug-in Hybrid Electric Vehicles especially in 2012-2013 in major markets around Asia and around the world.

But I believe we’ll also see a dramatic shift in commercial vehicles like delivery trucks and buses, as they regularly idle and make many stops along the way releasing large amounts of emissions from driving.  You are already hearing companies like UPS, Johnson Controls, SAP, and Google (to name a few) already are investing a portion of their fleet in electric trucks and cars nowadays.  Let us also not forget the smaller mopeds and motorcycles that will also be utilizing lithium batteries and are more popular in many parts of Europe, South America, and Asia.  The automotive market is also estimated to be worth  around $13 billion.


And then there’s the electric grid and power storage for public utilities, estimated by Deutshe Bank going to be…(wait for it) $18 billion.  In this sector, lithium batteries will be used to regulate the supply and demand volatility with the electric grid (often referred to as a smart grid).   It delivers electricity from suppliers to consumers using two-way communications to measure the demand from major users and control electricity production, transmission, distribution, and consumption.

Therefore, if you have a spike in demand in electricity, a utility company can use lithium-ion or even lithium-vanadium batteries connected to your power generation plant which then inputs electricity quickly into the grid to help meet the demand (also referred to as frequency regulation).  You could also utilize lithium-ion batteries to keep as reserve energy storage units.  One of the major issues with wind and solar energy is that it can’t be stored. If the wind is blowing at night and there’s not a lot of demand for electricity at night, you lose the energy.  The same can also happen for solar panels without storage cells.   There’s more potential for these batteries to store large amounts of this energy so it can be used later when there is more demand.

At first, I thought the automotive industry would have the greatest potential and would essentially bring the industry new heights.  But I’m realizing the potential of electric grid and power storage for public utilities will probably have longer term benefit and will also have greater benefit to governments, businesses, utility companies, consumers, and even environmentalists who want better carbon footprints.  Thinking about it, this is the area that has immense potential even if it takes a long time to invest in such infrastructure here in North America.