Function
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All batteries use electrochemical reactions to produce an electric current. Essentially, the chemical energy of the material stored in the battery is converted into electrical energy via a chemical reaction. The battery consists of three things, a cathode, an anode, and an electrolyte to separate them. A chemical reaction results in a surplus of electrons at the anode. They cannot simply escape to the cathode because the two are separated by the electrolyte. When the battery is connected to a circuit, the electrodes run through the circuit from the anode to the cathode, and energy can be extracted from them along the way.
Significance
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The lithium in lithium batteries is used to form the anode, with a variety of different materials serving as the cathode and electrolyte. The most common chemistry for lithium batteries has a lithium metal anode, manganese dioxide as a cathode and a lithium salt dissolved in an organic solvent as the electrolyte.
Benefits
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Lithium is used in batteries primarily because it is a highly reactive alkaline metal and so has the potential to generate higher voltages than batteries that use other material. Another important advantage is that lithium is a light element, and lithium battery chemistries typically also use light materials for their cathode (carbon, usually). This means that lithium batteries are also much lighter than most other types of battery.
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