Having spent a considerable part of my earlier career in corporate finance, I am always struck by the influence of fashion on the financial markets. Industries and industrial sectors go in and out of fashion with the financial markets on a regular basis. Sometimes there is a reason for the fashion (at least initially); sometimes there is not. And always there are the rational markets guys trying to explain–lamely—why it actually all makes sense.
For the past several years, advanced batteries have been decidedly out of fashion with the financial markets. The lithium-ion and electric vehicle bubble of the end of the last decade popped, leaving a bad taste in the mouths of the investment community. Advanced battery companies trying to raise capital over the past few years have faced heavy headwinds.
But in the last few weeks, it seems as though the winds may be changing. A number of deals, price movements, and credible market projections point to increasing interest by the financial markets in now sexy again advanced battery technology. Some of the recent developments include:
- Total’s bid to acquire advanced battery manufacturer Saft for $1.1 billion.
- Tesla’s plan to sell $1.46 billion of new stock to expand its production capacity.
- The price of battery grade lithium carbonate increasing 300% since October 2015.
- Kreisel Electric’s announcing the construction of a new battery plant in Austria.
- Panasonic’s doubling its prior investment in the Tesla Gigafactory in Q1 2016
- Nissan’s entry into the residential energy storage market
- A report by Reuters that China is expected to raise its power storage capacity by ten-fold, to 14.5 gigawatts by 2020
After several years in the capital markets wilderness, it appears that energy storage companies are sexy again. The industry should take full advantage of this renewed interest in advanced battery technology to raise the money it sorely needs for technology development and manufacturing expansion.