To The Moon

Lithium Future

Lithium-ion cells contain three major parts:

1 Anodes

2 Electrolytes

3 Cathodes

As we described earlier in our battery section, there are companies constantly searching for breakthroughs and efficiency in battery chemistry. Materials from nickel, to cobalt, to aluminum, and manganese can all be used in cathodes.

The UN estimates total cathode mining will jump from $7 billion in 2018 to $58.8 billion 2024.

Yet a key theme of this report has been most electric vehicle predictions are underestimating the coming impacts of the industry. As production and interest in the space grows, that will create a virtuous cycle that drives down battery costs and makes EVs cheaper than gas-powered cars, which will create even more demand.

Resources are a notoriously difficult industry to invest in with booms and busts. However, they can also prove quite lucrative when demand suddenly outstrips supply and there’s an inability to rapidly bring production online.

The amount of lithium used in a single Model S battery (70 kWh) is estimated to be more than the amount used in 10,000 cell phones. Given the coming growth in electric cars, the forecasts for lithium-ion batteries demand are mind-boggling.

UBS estimates we’ll need 2,700 gWh of lithium-ion batteries a year by 2030, which is about 13-fold growth from 2020’s battery power usage.

Lithium prices got ahead of themselves in 2019 and saw a steep drop, but looking ahead, UBS gives a blunt assessment on lithium:

“There is not sufficient supply to meet this demand projection based on our knowledge of known projects today. That includes all projects whether they are under construction, in feasibility, or still in exploration.” by Glyn laccock

The bottom line is that resources can tend to be finicky, and we tend to avoid them at The Motley Fool. However, with our thesis being that electric car sales will reach an inflection point in the coming years, the resource angle on self-driving cars is just too compelling to ignore.

Ganfeng Lithium ($Ganfeng Lithium Co Ltd.(GNENF)$) Market Cap:15.36Bil (Recommended)

"China’s largest lithium producer"

Ganfeng is China’s largest producer of lithium and the third largest producer worldwide. It has long-term supply contracts with battery producers like Tesla, Panasonic [otc: pcrfy] and LG Chem, giving it an impressive customer base.

Another thing to like beyond the resource angle: today, 75% of Ganfeng’s revenue comes from lithium refining and processing, but it’s also moving up the value chain by manufacturing batteries as well.