Lithium-ion batteries have come a long way in the past 20 years, and for good reason. Billions have gone into researching how to make these batteries commercially viable. However, li-ion batteries still need a lot of work, and even if they reach their theoretical maximum for energy storage, they still can't compete with octane, according to the Joint Center for Energy Storage Research. For Tesla (NASDAQ:TSLA), this could spell trouble.
Battery Chemistry 101
When you break it down, a battery is just a way to store energy. Further, they have three essential elements -- an anode, a cathode, and an electrolyte. The anode and the cathode are electrodes, while the electrolyte -- the stuff in between the anode and cathode -- allows the flow of electrical charge between the electrodes. The idea behind new battery technology is to experiment with these materials to find a battery that is, in essence, superior.
Currently, Tesla's vehicles, along with Boeing's (NYSE:BA) Dreamliner, Toyota Motor's (NYSE:TM) RAV4 EV, and General Motors' (NYSE:GM) Chevrolet Spark EV, all use a Li-ion battery. Additionally, these companies have spent significant time and resources on improving this technology. And that's great -- they've all delivered different vehicles, and a plane, that are more energy efficient and "green." However, these ventures may also be shortsighted.
Consider: Following a surge in gas prices in the 1970s, lithium-air batteries were pushed as being the next big thing for powering cars. But, after 40 years of development, the short rechargeable life of li-air batteries -- among other things -- has remained problematic. Recently, however, researchers at MIT and Sandia National Laboratories made a significant breakthrough in li-air batteries.
By watching how li-air batteries charge, Yang Shao-Horn, the Gail E. Kendall Associate Professor of Mechanical Engineering and Materials Science and Engineering, and her team, were able to observe the oxidation of lithium peroxide -- a byproduct of discharging li-air batteries that interferes with charging. Their observations are critical for designing the next step in li-air batteries, and have facilitated a much-needed stepping-stone in resolving the challenges with li-air batteries.
Why this spells trouble
Two of the main reasons li-air batteries pose a threat to li-ion batteries is that they have the potential to hold five to 10 times as much energy as, and would be cheaper than, li-ion batteries. In other words, cars using li-air batteries would theoretically be able to go much greater distances than current EVs -- around 500 miles per charge -- and be more comparable in cost to their gas counterparts. Two big obstacles in getting consumers into EVs.
Who's betting on air and other technology
One company betting on Li-air is Toyota . Toyota's never been shy about its dislike for li-ion batteries, and now it's teamed up with BMW (OTC:BAMXF) to develop li-air, solid-state, and fuel cell vehicles, which it hopes to start bringing to market in 2020. It states, "As Toyota anticipates the widespread use of electric vehicles in the future, we have begun research in developing next-generation secondary batteries with performance that greatly exceeds that of lithium-ion batteries."
Li-air batteries aren't the only batteries that pose a threat to li-ion. Toyota is also researching magnesium-ion batteries because of their potential high energy density, and scientists at the Oak Ridge National Laboratory recently overcame a major problem facing lithium-sulfur batteries by using a solid electrolyte. Chengdu Liang, the lead author of the study, said, "This game-changing shift from liquid to solid electrolytes eliminates the problem of sulfur dissolution and enables us to deliver on the promise of lithium-sulfur batteries."
More pointedly, batteries themselves may not be the future for green cars. As I've written before, cryogen (liquid) air powered engines, are reemerging as a possible alternative energy, and with recent successes, are gaining more momentum .
Watch out, Tesla
The reason these advances could be especially concerning to Tesla is that Tesla's main operation is based around cars powered by li-ion batteries. Yes, they're the creme-de-la-creme of li-ion batteries, but if li-ion batteries fall out of favor for better batteries or new technology, Tesla could be in trouble. It's not like Boeing, Toyota, or GM, which have a variety of products to fall back on. Tesla's eggs are in the proverbial "one basket." As such, it's in a risky spot. Yes, it could pan out, but there are a lot of advances in green technology that seem to have much greater potential than li-ion batteries -- and some could become commercially viable, soon. Consequently, this is something investors should closely monitor.