And now Bloomberg is joining our discussion about critical secure lithium supply to feed this Energy rEVolution and the coming tide of electric cars. The total disconnect between the exponential growth of sales of electric cars and available secure lithium supply is making its way into the mainstream investment media.
For us here, it will not be a secret that BNEF is totally right to point out the main driving force of this coming Electric rEVolution - cheap lithium batteries change everything. The surprise is coming with the news from Audi - they are claiming to be able to purchase lithium batteries for the upcoming electric cars at $114 per KWh from China already! And I will not be surprised by it at all. With all that build up in lithium batteries capacity, the new coming players will bid for business now betting on mass volume production to bring the cost of lithium batteries fast down. We are entering the Solar Panels stage of total industry cost structure disruption for Lithium Batteries with China investing billions to corner this market as well.
Security of lithium supply is at the very base of this sate-level investment game by China. In the end, you cannot participate in billions of dollars in available government funding if you cannot secure the supply of lithium raw materials to feed all this pyramid. Disruption of $12 Trillion dollars industries ($4 Trillion Transportation and $8 Trillion Energy and Utilities) is based on the $2 Billion dollars market by sales of lithium raw materials. And the price of that critical commodity is just under 2% of total cost of a lithium battery. We will have the very fast increase in lithium prices and the wave of M&A in our very small sector will be one of the most impressive ones, when billions will be chasing all available secure lithium supply trying to buy the time they have lost already.
"The forecast is BNEF’s most bullish to date and is more aggressive than projections made by the International Energy Agency. Surging investment in lithium-ion batteries, higher manufacturing capacity at companies including Tesla Inc. and Nissan Motor Co., as well as emerging consumer demand from China to Europe support BNEF’s projections, which also include: · In just eight years, electric cars will be as cheap as gasoline vehicles, pushing the global fleet to 530 million vehicles by 2040
· Electricity consumption from EVs will grow to 1,800 terawatt-hours in 2040, or 5 percent of global power demand, from 6 terawatt-hours in 2016
· There's around 90 gigawatt hours of EV lithium-ion battery manufacturing capacity online now, and this is set to rise to 270 gigawatt hours by 2021.
· Charging infrastructure will continue to be an issue with bottlenecks capping growth in key Chinese, U.S. and European markets emerging in the mid-2030s" Bloomberg.
"While traditional car suppliers may be hurt by EV growth, some commodities will get a lift, according to BNEF:
· Graphite demand will soar to 852,000 tons a year in 2030 from just 13,000 tons in 2015
· Nickel and aluminum demand will both see demand from EVs rise to about 327,000 tons a year from just 5,000 tons in 2015
· Production of lithium, cobalt and manganese will each increase more than 100-fold" Bloomberg.
International Energy Agency: In Order To Limit Temperature Increase Below 2º C The Number Of Electric Cars Needs To Reach 600 Million By 2040.
Disclosure: I am/we are long ILHMF.