|Re: Neometals. Tesla’s Battery Plans Could Push Lithium Prices Even Higher|
The global lithium market is now projected to reach US$1.7 billion by 2019, and the hunger for this decade’s most precious commodity is set to intensify further now that America’s first battery gigafactory is online and ready to start pumping out batteries to support the mass production of electric vehicles—just for starters.
Against this backdrop, there is nowhere more exciting to be than on the ground floor of a new lithium development, and the general consensus is that 2017 will lend critical acclaim to small-cap lithium companies hitting up the U.S. state of Nevada or the Latin American ‘Lithium Triangle’.
Lithium has become such a high-demand material driven by rapid expansion of the battery industry, Freedonia Group Global projects demand to rise 8.9% through 2019, which in dollar value for lithium carbonate equivalent (LCE) is roughly $1.7 billion.
Lux Research, a leading independent research and advisory firm, believes the electric vehicle market will grow to $10 billion within the next four years, while Navigant Research forecasts sales of electric vehicles to increase from 2.6 million in 2015 to over 6 million in 2024.
According to Deutsche Bank, demand for lithium will rise from 209,000 tonnes in 2016 to 534,000 tonnes in 2025.
Tesla Motors (NASDAQ:TSLA) is leading the market for now because competition is all about lithium-ion batteries. But German and Chinese competitors are racing to the finish line as well. This is a heated battle for new market share, and the key weapons are lithium and batteries. Tesla is ahead of the competition because it’s got its own battery gigafactory. And it’s only a lack of battery supply that could give its competitors—like BMW (NASDAQ:BAMXF), Volkswagen (NASDAQ:VLKAF), and Daimler’s (NASDAQ: DDAIF) Mercedes-Benz—a chance to cut in.
Still, there’s a way to go before anyone starts catching up with Tesla. By 2018, Tesla predicts it will churn out 35 gigawatts of batteries per year. It’s a massive amount that surpasses more than what the rest of the world combined produces. In other words, one of Elon Musk’s many claims to fame will be doubling global battery production capacity as early as 2018.
And while the mass production of Tesla’s Model 3 electric sedan is one of the more exciting and visible drivers of demand—with 370,000 vehicles already ordered—there are other major drivers, such as massive energy storage systems, that will push demand exponentially higher.
What it all means is that we’re set for one of the biggest bull runs of since the shale boom thanks to limited lithium supply availability. If lithium grows at its expected rate of 16 percent annually, it will be the fastest-growing commodity of the century. With this in mind, small-cap lithium companies—the heart of new supply—are where the smart money is going.
With Tesla looking to “absorb the entire world’s lithium production”, in the words of Elon Musk, and seeking “American lithium sources first”, there’s no better place to start looking than Tesla’s own back yard—Nevada.
And when there are only a small number of lithium companies listed on the TSX.V., it comes down to picking the one that’s got the right resources and the right management team. For that, we follow the money and the mining legends behind Lithium X, which has just popped up on the radar again thanks to its phenomenally fast-paced growth strategy. This time, it’s acquired a 100% interest in yet another major project in Argentina, in one of the world’s largest and least-explored lithium hot spots.