Why now the  lithium revolution ?

Since the dawn of civilization, gold and silver have dominated the precious metal realm.  No more !

Gold was the revered currency for most of human history. It’s been around for the rise and fall of countless civilizations.

But since central banks and fiat currency (money invented out of thin air) have shown up on the scene, gold has taken a back seat on the world stage.

And while precious metals like platinum and palladium have more industrial uses than gold, they have lacked the types of returns that make fortunes.

LITHIUM - UP AND AWAY  - A CASE FOR LITHIUM

Global demand for lithium is growing by leaps and bounds. Especially as the demand for electric vehicles grows worldwide. And the impact and implications for the energy industry have made this “energy metal” a very hot commodity.

LITHIUM UP 168%

As you can see above, lithium is up more than 168% since the financial crisis in 2008

What’s behind this surge in price and demand?

Lithium has long been used in ceramic and glass production, as well as air treatment and polymer production. But its growing industrial use today is in rechargeable batteries.

Lithium-ion batteries have the ability to store a lot of energy in a very small space. Energy density is measured in watt-hours as a function of volume, or liters. The energy density of the basic lead-acid battery in your car is 30 Wh/L. A basic lithium-ion battery’s density is 250 Wh/L.

And new lithium-ion batteries in development will be able to store even more energy.

Due to their compact size and huge power storage capabilities, lithium-ion batteries are perfect for use in electric cars. Plug-in electric vehicles like the Tesla Model 3 are affordable, efficient and can travel about as far as a comparable gas-powered car. Their only weakness is charging time… and that’s quickly becoming a non-issue as rapid chargers get better.

Add in the fact that a lead-acid battery is an environmental disaster in a box, and you can see there are a lot of advantages for lithium. That’s why lithium batteries are likely to be the power storage system of the 21st century.

MOBILE DEVICE REVOLUTION

Our mobile device revolution is one of the biggest forces boosting lithium demand.

In 2017, the world produced 36,000 metric tons of lithium – 31% of that was for batteries.

In today’s web-connected world, I bet you do. There is a good chance you have one in your pocket or on your desk at this moment. In fact, you might be reading this on a device that’s using the stored power lithium provides.

The growth in mobile devices has resulted in an explosive demand for lithium. And we haven’t even touched on the growing electric vehicle and home energy markets that are also pushing up prices.

Battery maker Panasonic is looking for a 74.9% compound annual growth rate in stationary storage lithium batteries. These batteries can power your home or workplace. They’ll even revolutionize how you get from your home to your workplace. And Panasonic is looking for a 16.9% compound annual growth rate in automotive lithium-ion batteries.

Electric cars powered by lithium-ion batteries are the future of transportation if current sales figures are anything to go on. If you live in or around a major city there’s a good chance you saw a Tesla during your commute.

That’s because plug-in electric vehicle sales have surged 434% from just 320,713 in 2014 to 1,713,957 in 2018. On average, sales have grown by 42% every year with no signs of slowing down anytime soon.

Lithium-ion battery powered electric cars show more promise than any other alternative. Hydrogen powered cars aren’t as efficient yet. Biofuels still produce greenhouse gasses. And ethanol-based fuels make meals more expensive through simple supply and demand strains it puts on the food chain.

TESLA - MUSK EFFECT  

The primary industrial driver of the electric car revolution – and by extension the lithium surge – is the world’s most popular electric car company, Tesla (Nasdaq: TSLA).

The batteries Tesla uses for its Model S electric cars are Panasonic’s NCA lithium-ion batteries. These lithium-ion batteries are made of lithium, nickel, cobalt and aluminum oxide. A lot of lithium goes into each battery – about 21.4 kilograms (47 pounds) per car.

Tesla CEO Elon Musk wants a “complete transformation of the entire energy infrastructure of the world to completely sustainable zero carbon.” And to reach that goal, he wants lithium-ion battery production on an enormous scale.

MUSK GIGAFACTORY  - $5 Billion experiment - 2020 completion

In 2018, Elon Musk started selling electric cars for just $35,500 apiece (when including the tax rebates and incentives). That’s a little less than half of what a Model S costs now. Eventually, Musk wants to make electric cars so affordable that they become the predominant form of private transportation in the world.

The Tesla Gigafactory in Nevada will be the world’s largest lithium-ion battery plant. It is scheduled to reach full production capacity by 2020… and it is ahead of schedule. Carrying a price tag of $5 billion, the factory will make enough battery packs to power 500,000 electric cars a year.

And it won’t just make car batteries. About one-fourth of the Gigafactory’s capacity will be for Tesla’s new Powerwall storage batteries for home solar systems. And these will also require lithium.

Exactly how much lithium the factory will require is a matter of dispute. Tesla says the Gigafactory’s expected lithium demand per year will be 8,000 metric tons by 2020, the first full year of production.

But there are other estimates. Bank of America says the factory will probably use 9,000 tons a year. Goldman Sachs estimates that the Gigafactory could require 15,000 to 25,000 tons of lithium at full capacity – in other words, running round-the-clock shifts.

Per Tesla’s numbers, batteries would suddenly gobble up 53% of supply. And if you believe Wall Street, it could be a heck of a lot more.

Electric car batteries are rated in kilowatt-hours. Factories are rated in gigawatt-hours. The Gigafactory will have an annual production capacity of 35 million kWh, or 35 GWh. It will also source an additional 15 GWh from external suppliers.

But that’s just the beginning of the story. Elon Musk wants to build 200 factories around the world. And he’s not the only one with his eye on the lithium market.

Tesla’s biggest rival will likely be Chinese auto manufacturer BYD, also known as Build Your Dreams, a company backed by Warren Buffett. BYD is already building electric buses on American soil. It has global gigafactory ambitions. By the end of the year, BYD should have 10 GWh of battery production capacity. And with the addition of a new factory in Brazil, it expects to increase that to 34 GWh by 2020. That’s about the same capacity as Tesla’s Gigafactory.

Beyond that, every major auto manufacturer has more than one fully electric car. These manufacturers might outsource their batteries. And that would mean huge demand for lithium-ion batteries.

Thanks to the surge in demand for rechargeable batteries, companies are scrambling for supplies of lithium. And there is a major supply shortage on the horizon.

As you can see, there is a major projected gap between lithium supply and demand. This has put a hard floor under current prices. And it means there is huge potential for prices to continue to rocket higher.

Benchmark Mineral Intelligence forecasts the lithium price will increase 17.65% over the next year alone. If demand continues to outpace supply, prices could jump even higher in the short term.