As the world shifts toward cleaner energy and away from fossil fuel dependence, the development of electric batteries and energy storage could continue to fuel a boom in the battery production industry, along with related exchange traded funds.
“Massive investments in battery manufacturing and steady advances in technology have set in motion a seismic shift in how we will power our lives and organize energy systems as early as 2030,” researchers from Rocky Mountain Institute wrote in Breakthrough Batteries: Powering the Era of Clean Electrification, CNBC reports.
UBS projects that over the next decade, energy storage costs will decline between 66% and 80%. Meanwhile, the market will expand to as much as $426 billion worldwide, and the growth will further impact other industries, with entire ecosystems growing and developing to support a new age of battery-powered electricity.
Lithium-ion batteries have been the backbone in the current growth spurt as they are found in everything.
“Over the past decades, this development [lithium-ion batteries] has progressed rapidly, and we can expect many more important discoveries to come in battery technology,” Royal Swedish Academy of Sciences said in October. “These future breakthroughs will undoubtedly lead to further improvements in our lives, not only for our convenience, but also with respect to global and local environments and, ultimately, the sustainability of our entire planet.”
The electric vehicle industry is just one of the major market segments that has helped fuel the growth in lithium-ion batteries. All automakers now offer or plan to provide fully electric or hybrid car models as costs for battery packs have gone down and may have even reached price parity with internal combustion engine vehicles.
“Although the concept of electric vehicles is not new, what is different in this automotive cycle is the availability of reliable and low-cost batteries that possess excellent energy and power capabilities in a practical form factor,” Cowen analyst Jeffrey Osborne said in a recent note.
ETF investors can also capture the potential growth in this segment of the market through targeted ETF strategies. For instance, the Global X Lithium & Battery Tech ETF (NYSEArca: LIT) tracks the full lithium cycle or companies involved in lithium mining, lithium refining, and battery production.
Additionally, the Amplify Advanced Battery Metals and Materials ETF (NYSEArca: BATT) provides exposure to Lithium, Cobalt, Nickel, Manganese and Graphite via publicly-traded stocks. These companies are principally engaged in the business of mining, exploration, production, development, processing or recycling of advanced battery metals and materials.