Lithium is a chemical element and is the least dense metal and the least dense solid element. It is also the most commonly used metal for new energy applications. Lithium batteries are widely used by the global vehicle industry.
Investors should be aware that lithium and lithium batteries also come with a long list of problems.
The politically driven expansion of electric vehicle (EV) manufacturing is dependent on the availability of affordable batteries, currently, predominately lithium based. Over the last several months there has been a significant number of announcements relating to new EV battery manufacturing facilities. What remains to be said is, where will they get battery raw materials? Currently, China is the dominant (80%) factor in the EV battery chain. Production (mining) and processing of raw materials are essential for manufacturing EVs. The Inflation Reduction Act requires increasing North American sourcing. Environmentalists do not see the mining and processing of lithium, and other raw materials, as “green”, and are using litigation to delay or remove these projects.
Some of the other problems confronting the wide-spread adoption of lithium battery technology include, rapidly increasing costs, unexplained spontaneous combustion and battery charging.
Consumers and investors should expect continuing limited availability, rising prices and manufacturer focus on premium priced EVs.
All comments and suggestions are welcome.
Walter J. Kirchberger, CFA