Sony commercially introduced the Lithium-ion (Li-ion) battery in 1991, revolutionizing the market by creating a reliable power source for consumer electronic devices. Nearly 25 years later, Li-ion batteries now represent a major portion of the consumer electronic market and are currently the fastest growing segment in the rechargeable battery market.
This rapid growth can be attributed to the availability of various types of e-cigarettes and their growing global popularity, which has boosted the demand for Li-ion batteries. The Li-ion battery market for e-cigarettes produced 609 million units in 2014 and should reach 3,220 million units by 2019, growing at a CAGR of 39.5%. In terms of revenue, the market was valued at $2.8 billion in 2014 and should reach $14.1 billion by 2019, growing at a CAGR of 38.4%.
Source: Technavio Research
In 2014, the majority of Li-ion battery demand was for disposable Li-ion batteries but Technavio analysts expect the demand for rechargeable Li-ion batteries to rise significantly during the forecast period. Despite the declining annual growth rate, the overall market value and number of units will still increase significantly. This large growth will be driven by increased demand from e-cigarette manufacturers as governments across the world are banning public smoking and imposing taxes on the retail sale of cigarettes. The e-cigarettes consumer base has experienced continuous growth in recent years as vaping has easily become the most popular alternative to smoking cigarettes in comparison to nicotine gum and patches.
The United States currently dominates the market for e-cigarette batteries, accounting for more than 45% of the global battery demand. Russia, United Kingdom and Germany are the largest markets for e-cigarette batteries in Europe, while China, South Korea and Japan are the major battery component manufacturers in the APAC region.
Technavio analysts predict Bulgaria, Estonia and Latvia to be the emerging East European countries in this market during the forecast period. All three nations have permitted the use of e-cigarettes. Although more countries have started to accept e-cigarettes as a safe alternative to smoking, some countries only permit the device in their country if it is nicotine free and many countries have banned the product altogether. These government restrictions will ultimately decide just much this industry can flourish because despite the expected rapid growth rates over the next five years, this market hasn’t even scratched the surface in terms of its potential growth.