In around six months China’s EV share almost doubled and sales in May were up 70% year over year.
According to Bloomberg, we can expect EV sales to increase 10x by 2025, 27x by 2030, 50x by 2040.
With EVs, we are currently in a phase similar to smartphones in the early days.
Tesla is the company that started it all. If not for Elon Musk and TSLA, this boom may never have happened.
Lithium and cobalt are the best players since they are small markets.
The story behind the interview...
Matt Bohlsen has been following and investing in the booming trend in electric vehicles (EVs) for years.
We recently sat down to get an update on how the trend is developing and how investors can best profit.
For those who prefer to read, my full interview notes are copied below.
Link to Matt's original article:
The electric vehicle boom is largely centered in China. 50% of electric car sales are in China (they have lots of buses as well). There are lots of subsidies and they are a center point of government planning.
EV is a broad term that Includes motorbikes, trucks, ferries, ships, most transport.
The second biggest area for EV sales in Europe, then the US. In May China reached 5% market share, Europe 2%, and the US at 1.7%. In around six months China’s EV share almost doubled and sales in May were up 70% year over year.
EVs are best suited to large cities and countries with pollution problems and China has some of the world’s worst pollution.
There are three core drivers to China’s EV focus: 1) Fix their serious pollution problem, 2) They want to reduce oil dependency, and 3) A desire to create an industry where they can export cars
According to Bloomberg, we can expect EV sales to increase 10x by 2025, 27x by 2030, 50x by 2040. This means EVs will make up 55% market share by 2040.
With EVs, we are currently in a phase similar to smartphones in the early days. As a result, the EV boom has less risk but also a reduced reward now.
3 years ago the question was whether this trend would happen, that question has now been answered.
China is beginning to dominate manufacturing and supply chains for batteries
China playbook: 1) Start a trend 2) Buy everything up 3) Dominate the supply chain
The checkbooks are starting to come out and Matt is playing this boom by investing in the metals
As with TSLA, car companies have massive CAPEX and relatively low-profit margins. This makes these companies struggle on profits.
Lithium or cobalt companies can see higher profits than car companies and have better moats
TSLA forced BMW and VW to get in the EV game by making a cool, amazing car. TSLA probably will be successful, but he prefers the risk/reward elsewhere. It’s a shame that TSLA has the people bashing that it does, it’s admirable to see what Elon Musk has done.
Important background on Lithium: it's found as a compound that is mined, Lithium is very abundant but in low concentrations, Challenge is to find larger, quality concentrations, Chile and Argentina have good Lithium brines, Australia and Canada have hard rock sources and others sources of lithium include clay.
It’s been a tough year for the miners, have been oversupply scares and tariff wars. Depending on your entry point, you have done great or poorly on miners. Cobalt has been retracing a bit lately.
Lithium and cobalt are the best players since they are small markets
Some people look at manganese and copper, but these are already huge markets. Same with nickel
Lithium and cobalt, graphite, rare earth, then nickel, then copper and manganese
Cobalt currently has the most restricted supply: Cobalt Blue (OTCPK:CBBHF) and Havilah Resources
Graphite is an okay market because it doesn’t receive as much attention: Syrah Resources (OTCPK:SYAAF) and Triton Minerals are both opportunities.
It all comes back to whether the forecasts end up being correct: Bloomberg's 54x increase in coming decades
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Disclaimer: This article is for information purposes only. There are risks involved with investing including loss of principal. Brian and Investor in the Family make no explicit or implicit guarantee with respect to performance or the outcome of any investment or projections made. There is no guarantee that the goals of the strategies discussed by Brian and Investor in the Family will be met.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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