You don’t need to be a Tesla (NASDAQ: TSLA) fan to know that lithium-ion batteries will play an essential role in turning electric vehicles (EVs) into mainstream transportation options. They’ve also become important in certain niche applications for stationary energy storage, such as helping utilities smooth out unusual demand on the grid a handful of times each year, or for early home energy-storage systems, in which they’re often coupled with solar panels. So it wouldn’t be a stretch to say that lithium-ion batteries have become synonymous with green and clean energy.
That’s what makes a Swedish study that went viral earlier this week so surprising. Researchers found that manufacturing lithium-ion batteries releases an enormous amount of carbon dioxide into the atmosphere — so much CO2, in fact, that an article accompanying the study estimated that an EV boasting a 100 kilowatt-hour battery would take 8.2 years of driving before it became greener than a gasoline-powered car.
Numbers from the study and article swept through social media like a wildfire in the middle of a dry summer. They seem to throw a wrench in the environmental value proposition of EVs and stationary energy storage — directly related to Tesla’s business model and story stock aura — but the good news is that investors need not worry. Here’s why.