Dive Brief:

• Stanley Black & Decker adjusted its sourcing strategy to secure sufficient supply of batteries as lithium and other raw materials constrain producers, President and CFO Don Allan said in an earnings call this month.
• The company added battery suppliers and co-invested in vendor projects that aim to boost capacity, Allan said. The moves come as demand accelerates for rechargeable lithium ion batteries, which the company uses in its rechargeable power tools.
• The company employed a similar sourcing strategy for semiconductors, adding suppliers and investing in capacity projects for electrical components.

Dive Insight:

Lithium producers and battery makers have struggled to match production to the soaring demand from electric vehicle makers and other companies that depend on the metal for rechargeable batteries.

Chemicals company Allkem saw spot prices of lithium chemicals reach "new records" following supply deficits due to skyrocketing demand in China, Chief Sales and Marketing Officer Christian Cortes told analysts last month.

"It's a very, very tight supply market and as result of this we are seeing a very, very rapid increasing pricing," he said.

Energizer said it plans to raise battery prices after confronting high costs for lithium and other raw materials. The battery maker will also keep an elevated safety stock for the "foreseeable future" as labor challenges and issues sourcing raw materials continue to make supply volatile, President and CEO Mark LaVigne told analysts Feb. 7.

A rapid expansion in industries electrifying their products pushed Sunlight Group Energy Storage Systems, a global producer of industrial batteries, to expand investment in lead recycling methods. The company is also looking at ways to recycle lithium.

"We are investing in new product lines and increasing capacity across our plants in Europe and North America to meet this demand," Todd M. Sechrist, CEO and President of Sunlight Batteries USA, said in an email. 

Stanley Black & Decker is also investing in innovation to add capacity — the company's venture capital arm contributed to a $5.7 million investment funding round for 3-D lithium ion battery company Prieto Battery in August, according to a press release.

The company also introduced a power stack battery system in November using lithium-ion pouch cells instead of cylindrical cells, which are in higher demand because of their use in automobiles, CEO Jim Loree said during the company's Q3 earnings call. Innovation projects worth approximately $200 million are also currently in the works.

"We are continuing to invest in innovation, manufacturing, automation, inventory, and our supply chain to meet the strong demand in the near-term and fuel sustainable growth over the medium and long-term," Loree told analysts this month.