Ryan Stancil,
Editor
Dec. 5, 2022
There’s a new war brewing right here in the US.
It’s not something that’s mentioned much right now, but soon no one is going to be able to ignore it.
It’s a war for a resource that is already one of the most in-demand. And demand for it is only going to skyrocket in the next decade.
I’m talking about lithium, a core component in the batteries that power the electric vehicles appearing on American roads in increasing numbers.
Far from a fad, EVs are going to be the norm in the next few decades.
California has already banned gas car sales starting in 2035, and other states are likely to follow.
Automakers are already ramping up production in response to this and the rise in demand from consumers.
So aside from retooling their assembly lines, carmakers are scrambling to ink deals with mining companies that can pull lithium from the ground so they can power their cars.
And like a fight over any resource, the problem is everyone wants it and there isn’t enough of it to go around.
It wasn’t long ago that Tesla (NASDAQ: TSLA) was basically the only game in town when it came to EVs. That translated into Elon Musk being able to get the lithium he needed on terms that benefited him. He sealed deals with suppliers and his company could meet its sales goals.
But then other companies saw that the future was electric and they began looking to stake their lithium claims.
It started with many of the major car brands introducing a model here or there. Before long, it reached a point where EVs became the main focus, and manufacturers devoted larger development budgets to them.
And now, those major brands are gunning for the same lithium supplies that Elon Musk has been trying to secure for Tesla.
Ford (NYSE: F) and General Motors (NYSE: GM) have already signed contracts to secure supply for their EV offerings.
Ford has an agreement with Australian miner Liontown Resources (OTC: LINRF) for 150,000 metric tonnes of lithium spodumene concentrate each year for five years from its flagship Kathleen Valley project in Western Australia.
GM, meanwhile, has a deal with Livent Co. (NYSE: LHTM) to source lithium from its mines in South America over a six-year period starting in 2025.
More deals like this will follow.
Every car company under the sun is getting into the EV game, and they’re all going to need lithium to stay competitive. By 2030, demand is expected to jump more than fivefold. Mines cost hundreds of millions to build out and can take years to come online, so options for getting EVs built now are limited.
When you combine all those factors, it’s easy to see just why lithium prices are skyrocketing. The values of the companies that can extract it now are going to climb right alongside those prices, making their investors wealthy.
It’s been happening all year with some of the top performers in the lithium sector beating the market and netting high returns for their investors.
And it isn’t too late to get in.
But instead of buying into one of the big names that are making headlines in the mainstream financial press, you have the chance to get in on a little-known play with 100-bagger potential.
It’s still early days for this lithium company.
As competition between car companies intensifies, the companies that can produce lithium will get more exposure.
When that happens, this company won’t be little-known anymore.
By getting in now, you can make sure that exposure works to your advantage.
Ryan Stancil
Editor, Daily Profit Cycle