Wednesday, April 20, 2016

Tesla Model 3 puts spotlight on lithium



If we reverse engineer the Model 3, we find lithium--the heart and soul of the energy revolution. While everything else is suffering from low prices and a supply glut, lithium is facing the over-charged demand, which opens a huge window of opportunity for new producers.

The Model 3, all by itself, will have a huge impact on lithium demand, which is already threatening to make supply impossible without exploration and production of new resources. At the end of the day, Tesla’s “huge step towards a better future” achieved by fast-tracking “the transition to sustainable transportation” comes down to lithium.

The lithium space is becoming a frantic game of who can get their hands on the choicest new mining acreage and who can launch new production fastest. And in North America, it’s all going down in the state of Nevada, which is the staging ground for a U.S. lithium boom that will feed the manufacturing beasts for everything from EVs, battery gigafactories, powerwalls and energy storage solutions to the long and growing list of consumer electronics that we use every day.

This article is a bit too optimistic in my view. I grant the fact that the demand for lithium will see a huge increase however it will take years for the development of new lithium mines. I suspect people will have to temper their expectations for electric cars and battery storage. The bigger problem for lithium is not that supply will not come but that it will not come fast enough and substitution by other more readily available materials will take place. In the meantime enjoy the ride over the short to mid term as prices and demand are high.

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