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Strong demand for EVs look to contribute to a decade or more shortage for lithium
Electric vehicles have seen strong sales growth in the past two years, contributing to a significant climb in prices for the lithium needed to build the batteries that power them.The moves raise concerns for a shortage in supplies of the commodity that may last a decade or more.
Original equipment manufacturers — those producing parts for end users — are “all-in on electric vehicles,” or EVs, said Keith Phillips, CEO of Piedmont Lithium.
The OEMs and battery companies are investing tens of billions of dollars in battery plants, he added.
“That is a sea change from just a couple of years ago.”
In a February report, market consultancy AutoPacific forecast fully electric light-vehicle sales in the U.S. of 669,200 units in 2022, up 155% from 262,000 in 2020.
The EV market accounts for almost 80% of lithium-ion battery demand, according to a report from Jiayue Zheng, a consultant at Wood Mackenzie, a unit of Verisk Analytics.
The lithium-ion battery market encountered shortages last year because of “thriving” EV market demand and rising raw-material prices, she says, and Wood Mackenzie believes that battery supply won’t meet demand until 2023.
Phillips, meanwhile, expects OEMs and battery companies to experience dramatic shortfalls in the lithium they’ll need to make batteries because it takes more than 10 years to bring a natural-resource project from “idea to production,” and most lithium project developers slowed down during the 2018 to 2020 bear market.
President Joe Biden on Thursday will announce he’s using the Defense Production Act to secure U.S. supplies of materials needed for a clean-energy economy, senior Biden administration officials told reporters. The focus will be on procuring tools to build batteries in the U.S. that will go into electric vehicles.
Australia, the world’s largest lithium producer, forecasts a tight lithium supply-and-demand market in 2023.
In a quarterly report issued in December, it said world demand is estimated to rise to 724,000 metric tons of lithium carbonate equivalent by 2023, from 486,000 metric tons in 2021, as “global EV uptake rises,” driven by government measures, lower vehicle prices, and increasing vehicle model choices.
The report also sees world lithium production at 821,000 metric tons in 2023, up from 485,000 metric tons in 2021.
“There have been some big increases in [lithium] supply, but much bigger increases in demand,” said Cameron Perks, senior analyst at Benchmark Mineral Intelligence.
That is fed by “emotional” and economic decisions to buy an electric vehicle, he says, noting that an emotional decision is partly based on the idea that owning an EV is a status symbol, as well as a way for people to reduce their carbon footprint.
The recent run-up in oil prices has sped up demand for EVs, he said.
U.S. and global benchmark oil futures settled at their highest levels since 2008 on March 8, contributing to a rise in average retail U.S. gasoline prices to $4.331 a gallon on March 11, the highest on record.
EV prices have also climbed, due to general inflation, said Perks, but also because of the rise in costs for lithium and other raw materials.
For lithium contracts, there are “cost pass-through mechanisms in place that essentially mean that the higher lithium prices are being handed down to consumers,” he said.
The February reading for the lithium price index, which is tied to the global weighted average price for lithium carbonate and hydroxide — two primary lithium chemicals — stood at 869.2, up 88% so far this year, and up by a whopping 441% from the same time a year ago, according to data from Benchmark Mineral Intelligence.
“I could not be more bullish” on the outlook for lithium, said Piedmont Lithium’s Phillips. “We expect [EV] demand to grow dramatically,” given that these cars are smoother, quieter and faster, and far less expensive to fuel and maintain, he said.
“As EV demand grows, lithium demand will grow, and we expect shortages for the next 10 [to] 15 years, at least.”
www.marketwatch.com
Ford, Rivian Are More Influential Than Tesla. No, Really.
Time magazine published its list of 100 most influential companies recently.
On the list: Ford Motor and Rivian Automotive, and Chinese electric-vehicle maker BYD. Not on the list: Tesla.
The snub has been noticed by Tesla bulls.
Future Fund Active ETF portfolio manager Gary Black tweeted out Wednesday evening: “Very sus.”
He has a point.
Like it or not, Tesla is the world’s most valuable car maker by a very wide margin.
The company has ushered in the era of electric vehicles, and its strategy has been either praised or emulated by global auto makers ranging from Volkswagen to General Motors.
All the U.S. companies that achieved trillion dollar market caps made it on the list: Alphabet (GOOGL), Amazon.com (AZMN), Meta Platforms (FB), Microsoft (MSFT), and Apple (AAPL).
Just not Tesla.
Still, Time seems to acknowledge the importance of the car business, with three auto makers on the list.
Cars, after all, generate trillions in annual economic activity while employing millions around the globe.
Vehicles also account for roughly 15% of all global carbon-dioxide emission.
Carbon dioxide is the atmosphere’s greenhouse gas blamed for climate change.
About Ford, which the magazine lists in the Titans category, Time notes the company is going all out to electrify its products.
That is true.
Ford has announced billions in spending for EV assembly and battery capacity. The company plans to have enough capacity to manufacture two million EVs by 2026.
BYD isn’t a household name, but it is one of the five most valuable auto makers on the planet, making cars, buses, and batteries.
Tesla actually shows up in BYD’s write-up as a competitor in China.
BYD is in the Titans category with Ford. Rivian is in the innovator category.
Time detailed Rivian’s struggles to ramp up production, which is probably the number one thing investors are watching in 2022.
Rivian plans to make about 25,000 vehicles in 2022. At the start of the year, Wall Street was hoping for about 40,000.
Time, of course, has significantly acknowledged Tesla recently.
Elon Musk was its “Person of the Year” in 2021.
Musk has also appeared on Barron’s list of best CEOs for the past two years. Barron’s recognized his disruption in two businesses—cars and rockets.
Musk also runs SpaceX, the company that pioneered reusable rockets and that now owns about two-thirds of all the satellites orbiting earth.
SpaceX, in private markets, is valued at roughly $100 billion.
That is more than either Ford or Rivian, and roughly the same as aerospace giant Boeing.
SpaceX didn’t make Time’s list either.
Axiom Space did though.
It’s building a commercial space station.
So did Astroscale. It’s a company dedicated to cleaning up space junk.
In the end, lists exist partly to get people talking.
This one certainly will.
www.marketwatch.com
Food for thought on the Road to Mining Manono with that ML in the Bag sooner or later
Fingers Crossed
Cheers
Frank
She wears too
