Lithium Demands Surge As Tesla Expands

Lithium is it the new gold?

Lithium is the new gold and it has created a new “Eldorado” momentum, experts say. 

Lithium is the lightest metal and is largely used across the board for electronic devices, such as laptops, smartphones and numerous other digital devices. 

With Tesla developing lithium-induced engines and Tesla devices depending on this precious metal, demand has never stopped increasing since 2013 and will quadruple by 2025. 

This year only, 55% of the lithium demand was coming from batteries. 

At the moment, lithium is also in the middle of a trade war between China and the United States; lithium mines in China are not well regulated and Europe is expecting more transparency.

What is lithium?

Lithium is a light silver with alkali and is considered to be the lightest metal in the world. 

It is extracted from natural mines around the globe, quite often in developing countries who do not have proper regulations. According to commodity.com,Lithium-ion batteries cost about $3,000 per kilowatt-hour (kWh) to produce when they were first introduced commercially in the mid-1990s.”

Moreover, “$240 per kWh equates to about $3 a gallon gasoline while $150 per kWh equates to a gas price of $2 per gallon.”

Why is Tesla obsessed with lithium? 

Elon Musk, Tesla’S CEO, is obsessed with lithium for both his cars and his power grids “Tesla Powerwall”. With the pandemic forcing consumers to stay home, thus consuming more electricity and rethink about how they consume, Powerwalls have been surfing on an unprecedented hype. 

Unit price went from $9,000 in 2017 to $12,500 in 2020 and last month, Tesla announced it will increase its batteries price by $800 after the company confirmed it will half the batteries’ price in 2025. 

It is also likely to become very popular in some rural parts of the United States, with more and more frequent power outages – Powerwall makes each house power independent.

China is leading the lithium industry

One issue remains for those who are planning to consume ethically from A to Z: lithium has not yet been submitted to any regulation internationally. 

Europe has started raising concerns, while the Old Continent is scheduled to have its need multiplied by 18 times by 2030. 

The French association Afnor has shared with the press that at the moment, only 100 rules are in place to monitor lithium extraction in Chinese mines, but that there are not enough to make sure children are not working there – and also that workers are not risking their health, while providing a pure and good quality  on a global scale. 

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China is at the moment the global leader of lithium, producing 10,000 EVs every month. But this comes at a cost: 500,000 gallons are used to produce one tonne of the precious metal.

Also, lithium is not a metal that can be created artificially, therefore countries are putting a high price on it. 

According to Dialogo Chino, “South Korea (US$483 million), Japan (US$312 million) and China (US$240 million) are the main buyers” – and while China tried to limit its exportation to keep the monopoly,  the World Trade Organisation imposed rules against the country to prohibit such practice in 2012. 

The above content is considered to be market commentary information and shall not be perceived as independent investment research or investment advice.

Note: The opinions expressed in this article are the author's own and do not necessarily reflect the view of Alvexo on the matter.