Every savvy investor understands the value of investing in a market while it’s still in the introductory stage, just before demand really starts to take off.
If you’re a first-time investor looking to get in early on a lucrative investment opportunity, it’s worth directing your attention to lithium-ion technology. If you want to understand more about the investment potential of lithium-ion technology, this guide provides a comprehensive overview of everything you need to know.
What is lithium and why is lithium-ion technology in high demand?
Lithium is a light, soft, silvery-white metal that can be found across the globe in hard-rock and clay deposits of spodumene ore, or in evaporated metallic brines.
While lithium has long been used as a form of medication to treat bipolar disorder, it wasn’t until the discovery of its potential for use as one of the key components in batteries in the 1970’s that its true commercial value was recognised.
After years of research and development (which was largely driven by Professor Stan Whittingham who served on the board at Magnis Energy Technologies for five years and still endorses the company), the first commercial lithium-ion battery was issued in 1991. Battery technology has been largely responsible for the growth in demand for lithium-ion technology to date, and is likely to continue to be the largest driver of demand.
What’s driving demand for lithium-ion batteries?
The lightweight and small size of lithium-ion batteries has long made it a preferred option for consumer electronics such as computers, smartphones, tables, watches, Bluetooth headsets, game controllers, digital cameras and calculators.
In addition to this, lithium batteries also have a wide range of other commercial applications and are often used in:
- aircraft manufacturing
- marine vehicles
- personal mobility equipment
- portable power packs
- uninterrupted power supplies (UPS)
- power tools
- remote surveillance and alarm systems
- smoke, fire and monoxide detectors
- remote car locks
- remote control toys
- medical equipment including pacemakers and hearing aids
- vaping devices
While consumer electronics has largely driven demand for lithium-ion batteries to date, the electrification megatrend, which includes the use of lithium-ion batteries in ‘green’ technologies to power electric vehicles (EV’s) and home battery storage units is set to explode demand for the technology in the coming years.
Is lithium-ion technology a good investment for 2022?
The investment potential of lithium-ion technology and associated materials in 2022 is largely reliant on changes to product demand in two key markets—electric vehicles and residential solar energy battery storage.
It’s no secret that the car industry is showing an increasing interest in moving towards increased production of EV’s.
While Tesla is considered the most prominent EV manufacturer, plenty of other automotive players including Jaguar Land Rover, Audi, Alfa Romeo, Rolls Royce, Mini, Volvo, Bentley, Mercedes-Benz, Fiat, Ford, Renault, Nissan, Volkswagen (VW), General Motors, Honda and Hyundai have already, or are very close to, introducing an EV offering to their range. Many of these companies have made firm commitments to be fully or predominantly electric within the next few years, with the majority to be powered by lithium-ion battery cells.
Even while most car manufacturers are still working to introduce or improve their EV offering, the market is already expanding at a rapid rate. Since 2019, the EV market has more than tripled in size from just 2.5% of global car sales (2.2 million vehicles), to close to 9% (6.6 million vehicles) in 2021.
Even while growth of the automotive market as a whole shrank over the last three years in response to the global pandemic and supply chain bottlenecks, demand for electric vehicles has bucked the trend—in fact, all net growth for global car sales came from the EV sector in 2021.
Government initiatives are also set to encourage further growth in the sector. While Chinese pollution reduction regulations and initiatives are encouraging the use of electric or hybrid vehicles, the United States’ Biden administration recently proposed an investment of US $174 billion toward EVs and EV infrastructure.
Residential battery storage
Residential solar energy battery storage is another market where growth is tipped to surge in coming years.
With a global market value of US $7.71 Billion in 2021, market projections estimate a value of US $27.45 billion by 2030, with a compound annual growth rate of 24.52% during the forecast period.
Some of the reasons driving the predicted growth include:
- high electricity prices
- decreasing grid feed-in tariffs and net metering payments
- changing environmental regulations and policies which focus on reducing greenhouse gas emissions
- advanced digital-based monitoring and control functionality supporting electricity aggregation and trade
- the potential for different financing models, such as product leasing or as-a-service contracts
While lead-acid batteries can also be used for residential energy storage, lithium-ion batteries are the preferred technology, accounting for the largest share of market revenue largely due to their cost, weight and charge/discharge rates.
How to invest in lithium-ion technology stocks
While you can invest directly in the end-product such as electric vehicle or residential battery storage stocks, many investors are choosing to invest in publicly listed companies involved in lithium-ion battery manufacturing which is used to power both industries, such as Magnis Energy Technologies Ltd.
Magnis Energy Technologies Ltd is a vertically integrated lithium-ion battery manufacturer with strategic investments in several aspects of the electrification supply chain, including:
- the manufacture of green-credentialed lithium-ion battery cells through its US-based subsidiary Imperium3 New York Inc. (iM3NY), one of North America’s largest home-grown factories in the international lithium-ion battery cell manufacturing market and the only non-China supply chain capable of meeting domestic and global demand
- a 33% stake in the Imperium3 Townsville (iM3TSV) battery plant, a Greenfield project in Townsville, Australia
- a minority stake in Charge CCCV (C4V), a cutting-edge technology company in New York with specialist expertise and patented, commercially-developed next-generation technology known for vastly extending battery life, while improving safety and charge performance at a lower cost.
- a wholly owned interest in a Nachu Graphite (a critical anode component in lithium-ion batteries) project in Tanzania.
Find out more about Magnis Energy Technologies Ltd.