Dollar Woes Drag Lithium

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"Though the next six months would be critical, a recovery is likely soon."

The race to build lithium-ion batteries for vehicles has never been hotter.

Massive international battery makers may dominate the mobile device and laptop markets for lithium-ion batteries, but a growing number of companies—some founded just in the last year, others that have been around for over a decade—are hoping to carve out a niche for themselves in the battery vehicle market.

Even as the government is trying to stimulate the growth of fuel-efficient cars by offering automakers $25 billion worth of loans to produce them and consumers a tax credit of up to $8,000 per vehicle to buy them, smaller firms are getting hooked on to the benefits of lithium-ion batteries and its varied uses.

Pike Research has forecast that revenue from lithium ion batteries, which appears to be the mainstay of fuel-efficient cars, will represent 26% of the $4.1 billion global stationary energy storage business by 2018.

The global market for lithium-ion batteries in utility-scale applications (storing energy from intermittent renewable sources like solar and wind) is set to grow to $1.1 billion by 2018—at a rate faster than at least 10 other energy storage options for the grid, including pumped hydro, compressed air and flow batteries.

Engineers are just beginning to work on lithium-ion batteries for grid support, though they are widely used already in personal devices such as cell phones and laptop computers.

However, lithium prices have been flat through 2009 bolstered by the steep fall in the U.S. dollar. Demand slumped through the third quarter 2009.

Though the next six months would be critical, a recovery is likely soon, according to Lithium consultants TRU Group Inc.

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