“The storage battery is, in my opinion, a catchpenny, a sensation, a mechanism for swindling the public by stock companies,” wrote Thomas Edison in 1883.
Today, the battery industry is mustering for exponential growth as car makers electrify their fleets, most visibly at Tesla ’s $5 billion factory in Nevada. For investors looking to gain from the battery’s rise, though, the doubts of the 19th-century entrepreneur linger. The path to profitability is far from clear.
. . .A handful of big East Asian companies have rushed into this supply gap. For all the “gigafactory” hype, Tesla doesn’t make batteries: Cell production is the responsibility of its Japanese partner, Panasonic. The other leaders in the field are LG Chem and Samsung SDI , both listed subsidiaries of the namesake Korean conglomerates, which supply the electric-vehicle projects of Nissan Motor , General Motors and BMW , among others.
Hot on the Koreans’ heels are two Chinese companies determined to supply the ballooning Chinese electric-vehicle market: BYD , 8.25%-owned by Berkshire Hathaway and an electric-car maker, and Contemporary Amperex Technology, which is planning a $2 billion initial public offering in Shenzhen in coming months. These five companies and a few newcomers intend to build 24 factories with a total capacity of 332 GWh by 2021, calculates Simon Moores, managing director of consulting firm Benchmark Mineral Intelligence.
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