Lithium-Ion Battery Stocks
Lithium-ion batteries have been getting a bad rap lately.
The failure of the batteries in Boeing’s (NYSE: BA) 787 Dreamliner jet in early 2013 was a major incident that shed light on the troublesome nature of the technology.
Meanwhile, electric vehicles with lithium-ion batteries have been criticized for their short ranges and long charging times – problems that work against each other and force many EV owners to have a second conventionally-fueled car. Needless to say, you’d need a nice chunk of cash for this.
Then there are the relatively short lives of laptop and cell phone batteries, a situation that can be frustrating to the many consumers whose electronics outlive their batteries. Increased battery life has been a major focus of electronics companies and battery makers alike.
And yet despite all these criticisms, lithium-ion battery companies have been doing surprisingly well. The reality of the situation is lithium-ion batteries have yet to reach their full potential. They’re already starting to surprise with untapped potential, and they’re certainly going to remain prevalent in energy storage for a long time to come.
The Electric Vehicle Winner
Let’s take Tesla (NASDAQ: TSLA), for example. The company has quickly risen to fame as one of the only automobile companies in recent history to solidify its position in the industry. Not only that – it’s an electric vehicle company.
Its secret? Well, it has many. But one of the reasons it’s flown past its peers is its lithium-ion battery technology. Unlike competitors like the Nissan Leaf, which can only travel roughly 75 miles on a single charge, or the Chevy Volt, which can go roughly 40 miles on all-electric before it switches to the gasoline engine, the Tesla Model S boasts an impressive 270-mile all-electric range.
And it does this with a lithium-ion battery.
Perhaps more impressive is Tesla’s new charging technology. The Supercharger, of which Tesla is building a network across the U.S. and Canada, can charge a Tesla vehicle fully in just about 20 or 30 minutes -- a far cry from the six to eight hours many chargers require.
If Tesla isn’t proof enough that the lithium-ion battery hasn’t nearly reached its full potential, let’s take a look at how some battery companies have performed over the first six months of 2013.
Now, this chart isn’t quite fair. Tesla skews the chart with its gains of 245%. It makes the others look pathetic. But if we take Tesla out...
The stocks still have all grown at least 15% since the start of the year. That’s pretty impressive for a struggling industry.
So what’s keeping them afloat?
EnerSys (NYSE: ENS)
EnerSys made several announcements in the first half of 2013 that surely contributed to its good fortune – a rise of 34%.
In February, the company issued a press release announcing it was entering a joint product development and marketing agreement with Ioxus Inc., a New York-based company that manufactures ultracapacitors for the automotive, wind turbine, and industrial markets. The companies plan to combine EnerSys’ battery technology with Ioxus’ ultracapacitors to focus on energy recovery.
This could be particularly effective when it comes to the automotive industry. The companies are working to improve energy storage under particularly difficult environmental conditions. But they have also hinted that the partnership could extend into the hybrid vehicle market.
The company also issued a press release in March announcing it would build a battery manufacturing plant in China’s Gaoyou City. Here, the company will take advantage of a huge manufacturing sector, as well as sufficient labor and transportation to produce high-quality batteries for markets ranging from telecommunications to energy.
In essence, the company is expanding its operations. This is all the more reason for growth to continue.
Panasonic (TYO: 6752) (OTC: PCRFY)
Panasonic reported growth of 52% in Tokyo and 32% on the OTC market, and it’s no surprise. The tech company had no shortage of announcements throughout the first half of the year, ranging from tablets to televisions.
At the very start of the year, Panasonic announced a new line of televisions: the smart VIERA Plasma HDTVs. The new enhanced televisions will do more than just show videos – some will include web browsers and cameras as well.
The company also announced a new tablet that is expected to combine the experience of printed media with all the benefits of a tablet.
Clearly, Panasonic is not a pure-play battery company. Though it does work to produce lithium-ion batteries, it is also heavily involved in the tech sector, and that drove its first half of 2013. But this can be beneficial, since the company’s numerous innovations in just the start of 2013 alone have provided it with a profitable boost. It isn’t tied down by its work in the battery sector, but innovations in that sector can only help – and it will be one of the first to apply these innovations to its already popular technology.
Johnson Controls (NYSE: JCI)
Johnson Controls received a 17% boost in the first half of 2013. This company isn’t a pure play for lithium ion batteries either, and again, this can work to its benefit.
But the company is also showing signs of continued work and improvements in the lithium-ion sector, and this may have contributed to its profits in the first half of the year.
At the start of the year, the company announced it won a contract with the Department of Energy to supply lithium-ion batteries to power hybrid trucks used by publicly owned utilities and municipal electric companies.
The company’s Holland, Michigan plant was the first in the country to produce lithium-ion cells for vehicles, and this plant will participate in the DOE program.
There are many other companies involved in the research and development process to create more efficient lithium-ion batteries. And the industry is still young.
Some, like Tesla, have advanced the batteries well beyond their years already. Others, like Boeing, have struggled to find the right fit.
But the batteries are ubiquitous; they’re found in everything from our electronics to power tools, and they’re even gaining popularity in aerospace and military technologies.
As researchers are able to make marked improvements to the lithium-ion battery, the technology is sure to transcend even these industries. In the meantime, however, companies whose success doesn’t rely on battery improvements alone will come out on top. And when the full potential of the technology makes its way into their products, they’ll be the first to benefit.
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