Sanjiv Tumkur, Rathbones' head of equity research, looks at how a revolution in battery technology could reshape the way we live.
Electric cars were a third of the market about 100 years ago, before Henry Ford's moving assembly line catapulted the Model T and petrol cars to unrivalled dominance.
The internal combustion engine was cheaper, faster and had a longer range than primitive batteries could compete with. The electric car all but died out.
The rapid technological breakthroughs in battery technology that have, a century later, brought the electric car roaring back to life are the reason why we believe an energy revolution is building.
The rechargeable lithium-ion battery, commercialised by Sony in 1991, made the rise of mobile devices possible.
Since 1991, the battery's energy density (amount of energy held) has more than doubled, reducing the weight of electric cars, while its cost has fallen by more than 90%.
Since 2010, average electric vehicle battery prices have fallen from $1,000 per kWh to $273 (see infographic, below). They are predicted to fall to $109 by 2025.
Cheaper, lighter and more powerful batteries are crucial for electric vehicles to be cost-effective and fast, and in giving alternative energy a greater role in the economy.
Energy mix
Cheaper and more efficient battery storage will allow national grids to manage inflows of solar or wind power and continue to provide electricity on demand, even as more reliable fossil fuel generation is phased out.
This will enable renewable energy to become a much more important part of the energy mix.
This potential could be enhanced through 'flow batteries', where energy is stored in the liquid electrolyte and which could be recharged many more times than lithium-ion batteries.
Grid-level storage could also utilise second-hand batteries from electric vehicles for a much cheaper storage solution.
The revolution in battery technology and an increasing role for alternative energy and electric vehicles could potentially be much quicker than the market currently expects.
Companies focused on old technology - whether car companies wedded to the internal combustion engine or fossil fuel-reliant power generation companies — will face significant challenges.
Also, the role of centralised utility companies could be undermined by the growth of self-sufficient homes and businesses with solar power fulfilling most or all of their power needs.
The battery revolution is under way and we will be monitoring developments in order to identify the winners and - perhaps more numerous - the losers.
