Nickel Cadmium batteries were the first on the market for cordless power tools and though the technology is older, it is still very reliable. NiCads are less sensitive to adverse temperatures and have a high recharge cycle, meaning they can be charged and recharged repeatedly for a long period of time. NiCads are also less expensive than NiMH and Li-Ion batteries. On the down-side, however, NiCads tend to suffer from battery memory effect. This occurs when a battery can no longer accept a complete charge because it had been repeatedly charged without first being fully depleted. It seems the battery 'remembers' how much energy it has discharged, and only wants to accept back that much energy from charger. The element Cadmium is highly toxic making it the most harmful battery to the environment. The NiCad's negative effects on the environment, in fact, cause them to be heavily taxed outside the U.S.A. As a result, many European vendors won't sell NiCad batteries.
Nickel Metal Hydride batteries run on a higher amperage than NiCads, because of this, they also have a longer run-time. NiMHs are lighter than NiCads but they are far more sensitive to hot and cold temperatures, in fact, NiMH can't work in below freezing temperatures (32 degrees Fahrenheit and below) and they degrade very quickly in intensely high temperatures (105 degrees Fahrenheit an up). Although the NiMH has a longer run-time than the NiCad it doesn't accept as many charges. NiCad and NiMH batteries do have very similar overall lifespans but NiMH has a larger energy storage capacity.
Lithium Ion batteries have a higher energy density than most other rechargeable batteries. A high energy density means that the Lithium Ion has a superior energy to weight ratio storing more energy for their size than most other batteries. Li-Ions have a very slow self-discharge rate meaning they retain their charge for much longer. Most rechargeable batteries significantly deplete as they are disengaged, the slow rate of charge-loss in Li-Ions, however, allows them to maintain most of their charge for longer periods, even on a shelf in your shop or garage.
There are many benefits to working with Lithium Ion batteries from their light-weight, to their long run-time. Li-Ions maintain their charge for much longer and have continuous max power throughout their energy discharge cycle. Other batteries consistently lose power as you work. Li-Ions are light-weight, and have a huge storage capacity, this means you now have a lighter, more efficient and powerful battery without the bulk. Lithium Ion batteries are by a landslide the least detrimental to our environment, and for many reasons they are the favorite of most craftsmen.
There are, however, some disadvantages to Lithium Ion batteries. Li-Ions are a bit more expensive. The complexities of production (in circuitry) accounts for this price difference. Each Li-Ion also requires a specifically built charger to accommodate that type of battery; this means that chargers are more expensive as well, and aren't universal to all types of Li-Ion batteries. The Li-Ion has a built-in chip that protects the battery from over and undercharging, and ensures it has a longer life. This computer chip, however, doesn't allow the battery to continue accepting charge once its energy level has dropped below a certain point. Once this happens the battery is essentially dead. Li-Ions also rely on this circuit to stay cool. Since Li-Ions lose charge so slowly, and the battery and charger communicate so well together, it's fairly simple to keep Lithium Ions temperate and at a safe charge level.
Remember, the quality of the battery you use is just as important as the quality of your power tool. The battery gives the right amounts of energy and finesse to your tools and their working parts.