The Lithium War Erupts
Things are going to get ugly.
Last year, Elon Musk told us that lithium was just like the “salt on the salad.”
At the time, he insisted that his metaphor was due to the fact that lithium only accounted for 2% of the total volume of his lithium-ion batteries.
He even chuckled a little after quipping, “Our cells should be called nickel-graphite...”
As usual, the media ate it up... hook, line, and sinker.
Look, Musk isn’t stupid. Not only did he know exactly what he was saying at the time, but his metaphor was carefully crafted.
Why on Earth would a man as powerful as Elon Musk need to be cautious?
He’s protecting himself.
Dig a little deeper, dear reader, and you’ll see that Musk was trying to divert attention away from lithium so that the sharks didn’t smell blood in Tesla’s water.
Too late for that, because the real lithium war is about to erupt...
The Lithium Profiteer
Look, it should be clear today that Musk was trying to downplay the importance of lithium.
That’s understandable, isn’t it?
After all, lithium isn’t traded like your typical commodity. You can’t buy contracts for lithium delivery like you can crude oil.
Instead, a small group of three elite lithium producers (who control 85% of global supply!) set their own price.
You read that right.
These “Big Three” lithium companies get together and decide what they’re going to charge Musk (and everyone else, for that matter) for his lithium supply.
And as if Tesla shareholders didn’t have enough concerns to deal with, the lithium war is threatening to dry up future supply.
Remember, last year Musk told us flat out that his company would need to absorb the world’s current lithium-ion production in order to produce half a million cars every year.
The problem is that he’s got quite a bit of competition to deal with…
In 2018, for example, China will require that electric vehicles and hybrids account for 8% of total car sales.
India has even more aggressive goals in mind...
By 2030, India hopes to have an all-electric fleet of cars.
I’ve told my readers time and again that lithium prices have nowhere to go but higher.
And yet, Musk’s battle isn’t necessarily against China or India.
It’s against his own kind... other billionaires.
Wall Street has been desperate to learn where Elon Musk plans to get his future lithium supply. The thing is, he just accidentally let the answer slip!
Lithium Showdown: Billionaire vs. Billionaire
It turns out Elon Musk isn’t the only one with a mind to the future.
Back in 2008, another billionaire investor made a quiet move that turned out to be a profit windfall for him.
At the time, Warren Buffett’s Berkshire Hathaway snagged a 10% stake in BYD.
Shares surged at the time, but I don’t believe the market truly understood Buffett’s end game.
They do now.
But the dirty little secret to this lithium war is that there’s really only one winner.
And it’s not Elon Musk.
It won’t even be Warren Buffett, nor will the other billionaires (including Virgin’s own Richard Branson) come out on top when all is said and done.
It will be investors like you.
You see, these industry and investing magnates are actually playing this game handcuffed by the investments they can make in the sector.
And every new Gigafactory grand opening we see from here on out means things will get that much tighter for lithium supply.
Tesla, after all, is just one name on a very long list of companies desperately scrambling to secure the lithium they require.
In the next few weeks, we’re going to travel the world over and see where these billionaires will turn for help.
More importantly, I’m going to show you the lithium stocks that will take full advantage of this billionaire showdown.
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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