Batteries are hot

Growing interest from big corporate players and investor funds

Batteries have joined photovoltaic systems and biofuels as the latest heartthrob of venture capitalists. The battery market has got the full attention of major corporate players and venture capital funds. In 2006 alone, more than $100 million of venture investments were made in the battery sector. The innovative battery company A123 Systems, for example, received huge injections of cash and technology from General Electric, Motorola, Procter & Gamble, Qualcomm, and a number of key venture capital funds. The driver for this battery market boom is the expectation of robust growth in electric vehicles.

The first boom driven by ICT devices

In the nineties, the battery market experienced its first boom. It was driven primarily by the development of portable computers, cell phones, and cameras. This created the opportunity for innovators to leave the path of traditional rechargeable batteries with their high weight/storage capacity ratio, to develop the much lighter, nanotechnology-based lithium-ion batteries.

Searching for even better performance

Today, the electric vehicle market is pushing battery technology towards even greater storage capacity and ever faster recharging times. To realize this, battery manufacturers are using technology originally developed for ICT devices. The Tesla Roadster for instance (see recent blog post on plug-in electric vehicles), is powered by 7,000 small lithium-ion cells similar to those in cameras and cell phones.

Investors not afraid of risk

According to some players, ultracapacitors herald a potential game-changing technology for the battery market. Many electrical engineers are sceptical of this approach, but that has not prevented venture capitalists from taking the risk and investing in ultracapacitor R&D companies like EEStor (see former blog post). This is ample proof of just how hot the battery market is for venture capitalists at the moment, and what a huge return they expect if a battery technology breakthrough should occur.