Smartphones, DJI, Even Tesla: How Lithium Helped Product After Product Upend Its Industry

Batteries have no Moore's Law, yet they are what made it possible to upend the car and phone markets

What kind of company is Tesla, in your mind? A maker of luxury electric cars? Another big bet by its founder, Elon Musk? Or a marketing tool for Yidao, Uber and their like?

Musk himself believes that batteries are Tesla's most important business.

"For Tesla, batteries may one day be a bigger business than electric cars," Musk said, a week after unveiling the new Tesla Energy product line. The Powerwall home battery had already taken 38,000 orders, enough to book out production even for the first half of next year. The Powerpack commercial battery had 2,800 orders, and even Amazon's data center in the western United States had signed on as a customer.

Whether in homes or in businesses, Tesla's batteries do the same job: they store electricity when it is cheap and release it when it is expensive, cutting the power bill. Musk goes further. He imagines using them to build a local smart grid.

High-performance battery packs are what let Tesla compete with conventional gasoline cars at all, and the Gigafactory is the other ultimate weapon Musk has readied for the battery business. Besides supplying batteries for Tesla's cars, it will also turn out Tesla Energy products. The plant, larger than Boeing's aircraft factory, will by 2020 make more lithium batteries each year than the whole world could produce in 2013.

This is not, however, the first time someone has tried to use batteries to change several industries at once. In 1881, after finding a way to mass-produce lead-acid batteries, the French engineer Camille Faure considered using them to power cars and to supply homes with electricity, with the aim of one day replacing the grid. The lead-acid battery is the ordinary car battery, and old-style electric bicycles and low-speed electric cars still mostly run on it.

This time, though, Musk's idea may actually come true. Besides Tesla, a number of companies with no background in car making have entered the auto industry because of batteries.

The Chinese automaker BYD started out selling batteries, but it seems to want to become a car company. In 2003, already the world's second-largest maker of rechargeable batteries, BYD bought Qinchuan Automobile Co., Ltd. and began building cars. In 2010 it launched the all-electric BYD e6, which is still the best-selling new-energy vehicle in China. Scud, long a maker of phone batteries, has also started to dabble in electric bicycles.

Cars aside, the new devices that have caught on over the past two years all depend heavily on batteries. They range from drones and the Apple Watch, a device that brings in billions of dollars a year, down to the electric skateboards, unicycles and other portable personal transporters now rolling along our streets.

What brought these devices to us is the evolution of the lithium battery.

A Hundred Years Ago, Electric Cars Were the Mainstream

In the age when carriages gave way to cars, there was a 19th century that belonged to the electric vehicle.

The electric vehicle was invented almost half a century before the fuel-powered car. In 1841 the chemist Robert used voltaic batteries to build a 7-ton electric locomotive. It managed only 2.4 kilometers per hour, slower than a horse. The embarrassments that fuel-powered cars would later face, electric vehicles suffered from the start. The locomotive ran far more quietly than a steam engine, but it simply cost too much to build.

More than 50 years later, people on the streets of New York could hail an electric taxi developed by the Electric Carriage and Wagon Company of Philadelphia. In 1897 the electric car went into commercial use for the first time.

Even ten years before that, from the 1880s on, the field was already crowded with competitors. In 1899 the French inventor Camille packed 80 sets of batteries into an electric vehicle, the CGA Dogcart, reaching a top speed of 66.6 kilometers per hour. The Fumin-brand batteries of Britain's Exide Technologies, which supplied batteries for these cars, still hold a quarter of the world market today.

Yet this was the start of the electric car's decline. For a long time afterward, lead-acid technology alone could not give electric vehicles more range or speed. Edison, an inventor who had himself run an electric car factory during this electrical revolution, said: "The whole world cannot be sustained by electricity alone." From the end of the 19th century, fuel-powered cars quickly took over the market.

In 1908 the Ford Model T began spreading across the United States. A series of inventions followed that made gasoline cars easier to drive, while their cost kept falling. The electric self-starter that Charles Kettering invented in 1912 freed drivers from the hand crank. Driving became simpler, and for a time women and the elderly became targets for car salesmen. In the early 20th century the muffler, invented earlier, came into use, and the gasoline car stopped being a roaring beast.

By 1912 a gasoline car cost at most half as much as an electric one. An electric roadster sold for about $1,750; a gasoline car, only $650. Over the following decades electric vehicles were reduced to children's rides in amusement parks and golf carts.

In 1973 the first oil crisis broke out. By then the major industrial cities of the United States, Japan, Britain and other countries had long suffered air and water pollution of varying severity. Major battery and oil companies succeeded in developing lithium batteries in their laboratories, but their use stayed confined to specialized fields such as medicine. Lithium batteries were a promising energy alternative.

Even today, though, very few pure lithium-battery electric cars have truly reached mass production. Held back by speed and range, the mainstream car market still belongs to vehicles that burn fuel (or gas). The one new-energy car that can claim real commercial success, Toyota's Prius, is still a gasoline-electric hybrid. As a full hybrid, the Prius uses its high-performance battery to let the electric motor help drive the wheels more efficiently when the car accelerates or works under heavy load.

Not until 2010 was a lithium-battery all-electric car, Tesla's Model S, first sold as a mid-to-high-performance vehicle. Before that, the world's best-selling all-electric car, the Nissan Leaf, topped out at 60 kilometers per hour, roughly what electric vehicles could do in the century before last.

Phones Drove the Lithium Battery Industry Forward

If you follow recently launched electric vehicles such as TSINOVA and NIU, you will notice that the Panasonic 18650 ternary lithium battery used in the Tesla Model S has become the choice of a number of Chinese electric vehicle companies.

At heart this is a cheap lithium battery, and Chinese battery makers commonly produce it too. "18650" refers only to the battery's size: a cylinder 18 mm in diameter and 65 mm tall. The designation usually covers three kinds of battery: lithium-ion, lithium iron phosphate and ternary lithium. Go back ten or twenty years, when the radio was still a popular handheld device, and the 18650 also included nickel-metal hydride batteries of the same size.

Like the nickel-metal hydride battery, the lithium battery became familiar as standard hardware through mobile devices. In 1991, with technical support from the Japanese telecom company NTT, Sony and Asahi Kasei commercialized the first lithium cobalt oxide battery. It was soon used in all kinds of portable devices: personal stereos, camcorders, cameras, mobile phones and laptops. Early examples you may know include the Sony Walkman, NEC phones and Motorola's "brick" phone.

In 1993 the mobile phone industry alone used 5 million lithium batteries. By 1994 that figure had grown fivefold. In 1999 a smartphone developed in Qualcomm's labs became the first to use a lithium-ion battery. That year, global sales of feature phones passed 1 billion units.

The smartphone placed new demands on phones, including battery life and processing speed. Today a phone is in effect a small computer that uses more power than ever, and the trade-off between battery life and processing speed has grown sharper. Space inside a phone seems to have become the most valuable real estate there is; companies will spend almost without limit to win back a single square centimeter.

Since 2010 the SIM card has shrunk twice, and to save space many phones, Apple's foremost among them, split the mainboard into pieces spread around the case. The battery is the largest component, so even a 10% gain in battery density makes a phone a little thinner. These demands, in turn, have pushed battery makers to develop new technology.

At the same time, huge demand from phones brought down the cost of mass production. In 2007 a total of 1.2 billion phones were sold, 120 million of them smartphones. By 2014 sales reached 2.5 billion. Every smartphone needs a lithium battery, and mass production cut the unit cost of lithium batteries by at least 50%.

The electric vehicles that sell well today are all hybrids. Besides fuel cells, these hybrids often use lithium iron phosphate batteries. The BYD e6, which went head to head with the Tesla Model S in 2010, uses this type.

Along the way, the lithium battery's evolution set off a war:

The lithium battery war

Michel Armand, who proposed in 1977 that lithium batteries be made with intercalation compounds, began fighting for his rights in the 1980s. Along the way his own battery company went bankrupt, and Photech Lithium, a battery company funded by his employer, the Canadian utility Hydro-Québec, lost a lawsuit brought by Valence, Segway's battery supplier.

Another patent holder, John Goodenough, has long been famous in the battery field. Yet he too has expressed regret at handing his technology to A123 Systems for commercialization without a patent license. A123 Systems is now the largest battery company in the United States. It has won orders from Black & Decker, America's largest machinery maker, and received $10 million in support from the U.S. Department of Energy.

In the past year or two, A123 Systems has also won the Chevrolet Volt contract back from the South Korean battery maker LG Chem. Big companies are not the only ones making batteries; a wave of startups has joined in. Several companies whose battery businesses had stalled discovered that cars are big business. They either build cars themselves or find automakers to partner with. Panasonic was willing to work with Tesla largely because the market for its batteries was shrinking.

Besides Electric Cars and Phones, What Else Have Lithium Batteries Changed?

Smartwatches: These are computers even smaller than phones. Microsoft's smartwatch of ten years ago, the Timex Datalink, had a monochrome display and could update its data only by receiving FM radio signals.

Today's Apple Watch can connect to WiFi and run apps. Many people complain about having to charge it every day, but that battery life would once have been hard to imagine.

Drones: In the late 1990s, when Northrop Grumman built the RQ-4A Global Hawk for the U.S. military, it used a Rolls-Royce engine of the kind found in ordinary manned jets, burned aviation fuel, and cost nearly $200 million per aircraft including development.

Today's civilian drones cannot yet fly above 10,000 meters, but they are good enough to film a few shots that once required a helicopter, and they cost far less. DJI's official website lists the standard Phantom 3 at 4,799 yuan. In 2014 more than 390,000 drones were sold worldwide, the vast majority of them civilian. These consumer drones run on lithium polymer batteries, the same kind used in the iPhone 6.

Personal transporters in every odd shape: Walk down the street today and the next person to brush past you may well be riding something like Nezha's wind-fire wheels. Electric bicycles, electric motorcycles, self-balancing scooters, unicycles, skateboards and kick scooters all run on lithium batteries.

Battery makers now sell custom packaging along with their batteries. In other words, how many lithium cells you bundle together, and in what shape, can be chosen freely to fit the design of a smart device. Before long you will see smart hardware in many more shapes.

Graphics: Lin Yuyao

Cover image from ecomento