With the craze over the new lithium-ion-powered car producer, Tesla Motors, Inc. (Nasdaq:TSLA) hitting the headlines, it might be a good time to revisit the battery industry. Following the suppliers, or raw materials used could give savvy investors a head start in a growing industry.

IN PICTURES: 5 Investing Statements That Make You Sound Stupid

Lithium ion batteries use various materials depending on the purpose, but generally cobalt, nickel, manganese and lithium are the primary elements. According to Tesla's website, other materials used include aluminum and copper in its Japan produced roadster batteries. Japan is also the location for production of its newest Modes S batteries, which will be produced by Panasonic Corp. (NYSE:PC).

Battery Suppliers
One company that you should look at is Johnson Controls (NYSE:JCI). It is set to release its quarterly reports on July 23, with anticipated earnings per share of 54 cents according to analysts. This is more than double the EPS in the same period one year earlier.

A123 Systems (Nasdaq:AONE) develops technology for battery systems needed in transportation, power grid storage and other consumer markets. It lost the bid to produce batteries for the Chevy Volt back in January of 2010, but bounced right back. In March it signed an agreement to produce lithium ion batteries for Navistar Inc. (NYSE:NAV) electric vehicles. This is just one of several clients they have dealt with, which also include Black & Decker, Daimler, BMW, Delphi, Shanghai Automotive Industry and Fisker Automotive. (For more about the IPO, check out A123 Systems IPO Soars.)

It seems that A123 Systems are winning the bids, and then producing quality results which extend the deals. In its last four quarters revenues have been increasing but there is yet to be a profit. In its fourth quarter and full year ending December 31, 2009 there was a 22 cent loss per share on $24.5 million in revenue. A123 has only been trading publicly since September of 2009 with an IPO of $13.50. For the three months ending March 31, 2010 there was a net loss of 27 cents per share on $24.5 million in revenue. I would like to see this company start generating profit before taking any positions.

Materials Used
Investing in cobalt is not very easy unless you get into some small cap miners. Seeing as cobalt is a byproduct of nickel and copper you will be getting exposure to these elements if you were to invest in a company such as Rio Tinto plc (NYSE:RTP) or Alcoa Inc. (NYSE:AA) but these might not give you the full exposure you are looking for. On June 15, Rio Tinto announced a $469 million investment in a nickel and copper mine (Kennecott Eagle) with expected production to start in 2013. Nickel production is expected to average 17,300 tons per year and Copper is expected to be 13,200 tons per year. (Learn more in Commodities: The Portfolio Hedge.)

Nickel is another component of lithium ion batteries and can be added to your portfolio. Barclays Capital Inc iPath ETN DJ-AIG Nckl A (NYSE:JJN) attempts to mimic the returns of the Dow Jones-Nickel Total Return Sub-Index. The major producers in Manganese are BHP Billiton Ltd. (NYSE:BHP) and Vale S.A. ADR (NYSE:VALE) which also provide major exposure to nickel.

The Bottom Line
Lithium ion batteries are not just for vehicles, they are in the millions of cellular phones, cameras and laptops we use every day. When the economy starts gaining strength, these types of devices will be replaced with the newest model, electric cars will be purchased and batteries will be shipped. Not to mention the electric storage needed for alternative energy sources such as wind and solar, these companies could see the benefits.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Stock Analysis

    Starbucks: Profiting One Cup at a Time (SBUX)

    Starbucks is everywhere. But is it a worthwhile business? Ask the shareholders who've made it one of the world's most successful companies.
  2. Stock Analysis

    How Medtronic Makes Money (MDT)

    Here's the story of an American medical device firm that covers almost every segment in medicine and recently moved to Ireland to pay less in taxes.
  3. Investing News

    Latest Labor Numbers: Good News for the Market?

    Some economic numbers are indicating that the labor market is outperforming the stock market. Should investors be bullish?
  4. Investing News

    Stocks with Big Dividend Yields: 'It's a Trap!'

    Should you seek high yielding-dividend stocks in the current investment environment?
  5. Investing News

    Should You Be Betting with Buffett Right Now?

    Following Warren Buffett's stock picks has historically been a good strategy. Is considering his biggest holdings in 2016 a good idea?
  6. Products and Investments

    Cash vs. Stocks: How to Decide Which is Best

    Is it better to keep your money in cash or is a down market a good time to buy stocks at a lower cost?
  7. Investing News

    Who Does Cheap Oil Benefit? See This Stock (DG)

    Cheap oil won't benefit most companies, but this retailer might buck that trend.
  8. Investing

    How to Ballast a Portfolio with Bonds

    If January and early February performance is any guide, there’s a new normal in financial markets today: Heightened volatility.
  9. Stock Analysis

    Performance Review: Emerging Markets Equities in 2015

    Find out why emerging markets struggled in 2015 and why a half-decade long trend of poor returns is proving optimistic growth investors wrong.
  10. Investing News

    Today's Sell-off: Are We in a Margin Liquidation?

    If we're in market liquidation, is it good news or bad news? That party depends on your timeframe.
RELATED FAQS
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>
COMPANIES IN THIS ARTICLE
Trading Center