Mike Fagan,
Editor
Nov. 11, 2022
We’re going to be talking A LOT about the 2022-23 lithium boom in the coming weeks and months — including why investors need to be positioning now.
The main driving force, of course, is the global EV megatrend.
As you know by now, the vast majority of EVs run on lithium-ion batteries… and that’s not likely to change any time soon.
What that means is lithium — aka, “the white petroleum” — is going to continue to be one of the most highly sought-after metals, globally, for many years to come.
Already, lithium prices have surged 123% year-to-date and are up as much as 10X versus historical levels.
Global EV sales doubled from 3.3 million units to 6.6 million units between 2020 and 2021 and are expected to increase by another 52% this year alone.
Meanwhile, lithium miners have been unable to scale-up supply to meet increased demand levels.
And that means higher lithium prices are a virtual lock as supply is unlikely to grow in lockstep with demand for the foreseeable future.
Here in the United States, a full quarter of Americans surveyed say they will opt for an EV as their next automobile purchase as disgust-at-the-pump has literally become too much to bear for many.
Not surprisingly, Millennials are leading the proverbial charge as the most eager demographic to soon electrify their ride — with 30% saying they plan to buy an EV next.
That’s an enormous jump from where we were just a few short years ago… and it shows that we’re only at the very, very beginning stages of this global supertrend.
Full-electric vehicle sales reached 6% of total US auto sales in the third quarter of this year. Compare that to 2020 when less than 2% of total US auto sales were EVs.
Now, imagine what’s going to happen to already sky-high lithium demand as EV sales jump from 6% to 25% or higher in just the next few years.
And that’s being conservative!
The United States is aiming for HALF of all new vehicles sold by 2030 to be electric in an effort to fight climate change and as a means of keeping pace with Europe and China, who are surging well ahead in terms of EV market share.
Looking out a bit further, Bloomberg New Energy Finance projects that by 2040 — 57% of all global vehicle sales will be electric.
That’s over 55 million EVs being sold annually — a nearly 10-fold increase from the 6 million being sold today.
Tesla founder Elon Musk goes even a step further stating… all transportation on Earth will eventually go electric!
Major automakers such as GM and Volkswagen have already committed to an all-electric future in the United States.
Similarly, Ford is heading toward a mostly electric future but will still maintain an ICE (internal combustion engine) division focused on longtime stalwarts such as the Mustang and its popular line of F-Series Super Duty pickups.
In California, legislation was recently passed requiring 35% of all light vehicles sold in 2026 to be all-electric — with that number rising to 100% by 2035.
Numerous other states — including Washington, Massachusetts, New York, Oregon, and Vermont — have already made commitments to follow California’s lead.
Countries around the world — including Canada, Sweden, Norway, the Netherlands, and the UK — are committing to 100% EV sales by 2040.
The question is… where will all of this lithium come from to keep these EVs going?
Tesla founder Elon Musk has stated that his company may have to get into the lithium mining and refining business directly to meet its future lithium requirements.
In Tesla’s Q2 2022 earnings call, Musk called for investment into lithium production to ease shortages… saying those who seized the opportunity would be “basically printing money.”
Following suit, GM and Ford recently inked deals with US-focused lithium miners to secure future lithium sources to meet their own manufacturing requirements.
Looking at the current supply/demand imbalance, global lithium demand is expected to rise from roughly 500,000 tonnes per annum currently to upwards of 4 million tonnes per annum by 2030 — an 8-fold increase.
Lithium mines, on the other hand, produced just 100,000 tonnes worldwide in 2021 — a far cry from what’s needed even by today’s standards.
And while the supply of lithium from mining is indeed increasing… it’s happening at a far slower pace than the breakneck rise in demand.
In response, President Biden has turned to a Cold War-era law — the 1950 Defense Production Act — to boost domestic production of lithium and other critical minerals used to power electric vehicles and other green-energy technologies.
Put plainly, Elon Musk can build all the Gigafactories he wants… but the bottom line reality is that it can take up to a full decade to take a lithium project from development all the way to production… and even longer to get the metal into the supply chain.
And that means an escalating lithium supply gap is a near certainty going forward as millions of drivers make the switch to electric-powered cars and trucks.
Like I said, this is just a tease to whet your appetite as to the immense profit opportunities ahead.
We’ll be covering the lithium space in much greater detail in the coming weeks and months — including the best and safest ways to participate — as this global megatrend intensifies.