Global output of lithium ion batteries has skyrocketed in recent years by more than 20 percent annually and is expected to enjoy its upward momentum for some time.

The high expectations are not unwarranted--lithium, the lightest of all metals, has the greatest electrochemical potential and provides the largest energy density for weight. The self-discharge is minimal, an additional advantage that most other chemistries cannot claim. When disposed, lithium-ion cells cause little harm to the environment, unlike their conventional counterparts.

While the prospects for lithium are high, the batteries are far from perfect. A protection circuit is needed to cover the fragile power source and maintain a safe operation. Overheating or severe damage to the battery can lead to a short circuit, which can cause the unit to burst into flames. The odds of a battery pack combusting are two or three in one million, but when it does happen, the results can be devastating.

Japan staked early claims in the great lithium land grab, leveraging many cutting-edge technologies. The dominance peaked in late 1999 when it accounted for 95 percent of global lithium ion battery output. But as the costs of inflation pinched Japan's industrial profits, two of its Asian neighbors, China and South Korea, started to push their way into the limelight. While South Korea draws strength from a local electronics boom, China has utilized its rich mineral resources--its lithium reserves rank third in the world only after Chile and Argentina. The end result has been a three-way race among the three countries in the hunt for market shares.

But what really set the stage for Chinese battery makers to play catch-up, and what may make their products financially viable, was massive government support, said Yang Yusheng, an academic with the Chinese Academy of Engineering.

No sooner had the lithium ion battery become a component in the talk of a global village than Chinese policymakers set their sights on its infinite potential. In the late 1990s, the former Ministry of Information Industry jump-started a national program to build up the lithium ion industry from scratch, setting its top researchers on a race against the clock.

With millions in government funding, the smaller but more powerful battery swiftly found its market niche. Lithium ion battery makers sprouted up all over the country. The output nationwide added up to more than 1.4 billion packs in 2007, nearly 34 percent of the world's total, according to a report by the Xinhua News Agency.

Going electric

Though engineers have yet to find a compromise between operational safety and energy delivery, the coveted lithium ion batteries will be crucial as the global auto industry goes electric.

Lithium's incorporation into cars would lead to a win-win situation for both the battery and automobile industries. Rising oil prices and growing environmental concerns have placed pressure on the automobile sector for a source of green growth. As automakers shift from gasoline to voltage, they need batteries that not only can quickly and easily be recharged, but are also more able to facilitate long-distance travel and are light and compact enough to fit into cars. This will give lithium providers the perfect opportunity to expand their business.

And in China, the world's fastest-growing auto market, the lithium ion battery has been given the chance to prove its worth. The Chinese Government recently handed out generous policy incentives to get more electric cars on the road in the next few years. "Given the size of the Chinese auto market, the battery business has the potential to take center stage," Liang said to Beijing Review.

In a rush to join the party, automakers are looking to team up with battery giants. The U.S. company Miles Electric Vehicles joined hands with Lishen in July in a joint venture deal to build and sell electric cars in the United States and eventually in China. The new vehicle, called Coda, has hit showrooms and is expected to cruise into the market in the near future.

The alliance is a needed accelerator for both sides. While Lishen handles battery manufacturing, the key part to an electric sedan, Miles provides safety expertise, an area where battery makers lag behind automakers. But as they gear up to drive electric cars off the assembly line, one looming question is whether they can come up with more affordable products, since lithium ion batteries cost around 40 percent more than the nickel-cadmium ones.

Liang told Beijing Review that unit costs will come down once production begins on a large scale. It is still necessary to step up efforts to soothe safety worries and strengthen battery recycling capabilities, he added.