Lithium: The Latest Giga-Trend
The World is Running Out of Lithium
I love when the media focuses on the wrong thing.
No, really. Short of being pretty damn funny, it shoves the really important information to the background where only the more diligent readers will find it.
Take, for instance, this mess with workers walking away from Tesla's Gigafactory.
The same story is coming out of every news source: the construction union brought in workers from out of state even though Tesla was supposed to be giving precedence to Nevada natives.
First of all, Tesla is doing just that.
At last check, the construction workers were 68% Nevada natives; technically, Tesla only had to get to 50%.
But we'll let it slide... for now.
Meet the Latest Giga-Trend
Tesla's $5 billion Gigafactory wasn't the first major battery factory in the world, and it won't be the last.
In fact, Tesla had plans long ago to build a second one in Japan.
That said, however, I can't stress how important it is that its Nevada factory succeeds first — and fast — before other Gigafactories catch up.
In direct competition will be Faraday Future's $1 billion factory, located just north of Las Vegas, Nevada.
Faraday is looking to build its own specialized electric vehicles in-house and is aiming to have its first car on the market by 2017.
Even more daunting for Tesla, however, will be Daimler's latest move. The German car company plans to triple the size of its Kamenz battery plant to cover the new EVs it's adding to its lineup.
The investment will cost the company around $540 million, which is a far cry from Tesla's $5 billion...
But keep in mind, Daimler is already an established carmaker with experience in mass production. Plus, this is an expansion, not a whole new factory.
This project is expected to be completed in the summer of 2018.
Time is of the essence.
And yet this still isn't the story you should be digging around today...
The Secret Behind Musk's Gigafactory
All of these companies could spend tens of billions creating the biggest factories in the world (it wouldn't take much, considering Tesla's factory is only going to encompass roughly 5 million square feet), and it still wouldn't matter without one thing:
A steady lithium supply.
I've mentioned time and again that Musk's Gigafactory is going to require around 15,000 tons of lithium hydroxide to cover its ambitions of making 500,000 EVs per year by 2020.
And that's lowballing the real estimate.
I've come across more recent reports that have estimated that Tesla will need between 24,000 and 30,000 metric tons once it's at full capacity.
But we knew from the start that Tesla had some pretty lofty ambitions.
So why is this news?
Because the world's current lithium market can't handle that kind of demand.
According to the USGS, only about 36,000 tons were produced worldwide in 2014.
That means even in the beginning, Tesla will be using nearly half of the world's lithium production supply for just one factory!
Also keep in mind that Tesla isn't the only company preparing for the future.
To put it bluntly, the world is on its way to running out of lithium.
Or, rather, it's on its way to a full-blown war over every scrap of supply from just three huge producers: SQM, FMC, and Albemarle.
Of course, there is another option...
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Catch the Rising Stars... Quickly!
Last week I told you that lithium prices are already on the rise, and the coming shortage is only exacerbating the situation.
I couldn't be more excited.
Why? Because at this point, the only other way to keep this lithium shortage from becoming an all-out war is to bring in new suppliers.
And make no mistake; my readers and I are already backing our favorites.
Truth is, you would already be cashing in on them, too. You see, it really didn't take long for a small group of lithium stocks to take off, and they're not stopping anytime soon!
Fortunately, we're still in the very early stages for many of these stocks in the explosive lithium sector.
Until next time,
A true insider in the energy markets, Keith is one of few financial reporters to have visited the Alberta oil sands. His research has helped thousands of investors capitalize from the rapidly changing face of energy. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital as well as Investment Director of Angel Publishing's Energy Investor. For years, Keith has been providing in-depth coverage of the Bakken, the Haynesville Shale, and the Marcellus natural gas formations — all ahead of the mainstream media. For more on Keith, go to his editor's page.
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