Investors look to lithium
The silver-white metal lithium, encountered in high school chemistry lessons and smartphone batteries, has experienced a dramatic surge in demand this year. Producers of the precious metal have seen their stock prices trading at double their value of twelve months ago. Expectations surrounding electric cars and acquisitions within the lithium market have hit all-time highs.
Lithium – Leading The Battery Charge
The majority of current electric vehicle designs rely on lithium-based batteries. Understanding why requires a brief look at its alternatives. Lead acid and nickel metal hydride batteries can both be cheaper to manufacture than lithium based cells. However, manufacturers are increasingly attracted to light-weight, efficient options in order to gain maximum power output from every cell. Those criteria are best met using lithium.
Production
Today, worldwide lithium battery production amounts to around 100 gigawatt hours. This figure is expected to triple by 2021. Tesla announced its first “gigafactory” in Nevada just three years ago. The factory has since been developed and became operational in 2016.
Mass production of these battery cells commenced this year. Now Tesla has set its sights on producing 35 gigawatt hours per year of cells by 2020. This would make the firm one of the largest battery producers in the world.
Auto manufacturers gear up
Tesla is by no means the only car company showing investment in the technology. Many companies are pushing into China. They aim to achieve growth by taking advantage of the country’s new emission regulations which make electric vehicles more attractive.
Renault-Nissan has teamed up with Dongfeng Motorgroup Co. to design electric vehicles in China. At the same time Volkswagen AG received approval in May for a partnership with Anhui Jianghuai Automobile Group for the same reason. With environmental concerns climbing up the agendas of many governments and consumers, regulatory changes will be a key determinant of the future demand for battery-powered vehicles.
Lithium And Battery ETF Price Chart:
Demand To Soar
While the supply of batteries is anticipated to increase, car manufacturers show no signs of waiting for it to do so. Tesla, Smart, Ford and Nissan have already begun to ramp up production targets. This has created the perfect incentives for miners and producers to expand.
Such conditions suggest further acquisitions within the market in the years to come. Such moves provide a strong indication that over the next few years, much like the cars that it powers, the speed and efficiency with which lithium is mined and made into batteries will keep getting faster and faster.
Source
Graph: Battery Power Surge
From the article: China Battery Demand To Spike
