How the Rebirth of Electric Cars Sparked a Lithium Boom

In the early 1900s electric cars were very popular.

The fact is, back then, people liked electric cars. They were less noisy and could be recharged at home.

Gasoline cars, on the other hand, polluted. You needed to buy gasoline to run them and needed a crank to start them up.

So why did the electric car die?

It all has to do with a nickel-iron battery, and Thomas Ford, founder of Ford Motors.

2018 Mining Boom: Could these 10 cheap, top-quality Aussie mining stocks lead this year’s commodities comeback? Find out here.

Could a Nickel-Iron Battery Power a Car?

In 1896, Ford was an employee at Edison’s Illuminating Company. The pair met at a company conference and became friends.

Edison had already invented a nickel-iron battery and was selling them for several uses, including powering electric cars.

While Ford had plans to build a petrol automobile, in 1914, they both started working together to develop a low-priced electric car. Rumour had it that the new car would be ready by 1916. Yet that year came and went and there was still no Ford-Edison electric car.

It was then that a mysterious fire almost destroyed Edison’s workshop. Needless to say, the Edison-Ford car never ended up coming to market.

Nobody knows what really happened.

Conspiracy theorists claim oil cartels forced them to abandon their plans. As much as I like a good conspiracy theory, I find Ford R Bryan’s explanation more plausible. That is, they were unable to build a long-lasting, low weight battery. 

Ford refused to use any other battery than Edison´s nickel-iron battery. Traditional lead-acid batteries were too heavy, and leaked. Yet Edison’s battery couldn´t power electric cars consistently.

Cheap oil and automatic starters soon gave the advantage to petrol powered cars. The new cheap Model T, invented by Ford, gave electric cars the deadly blow.

Fast forward to today and electric cars are making a come-back.

Lithium, the lightest solid element on Earth, has emerged as the key material in electric car batteries. It offers a lightweight storage solution, and it’s becoming integral to the electric car future.

Lithium used to be a minor commodity. Yet demand has skyrocketed in recent years due to its use in phones, laptops, and now electric cars. A vehicle battery requires 100 times more lithium carbonate than a laptop battery.

This is why the rebirth of the electric car is turning lithium into one of the world’s most strategic commodities.

Much of the lithium that powers electronic devices and electric cars comes from an area called the lithium triangle.

The lithium triangle is an area between Chile, Argentina and Bolivia. It contains more than 70% of the known reserves of lithium in the world, or as it is otherwise called, ‘white gold’.

The Lithium Triangle

Source: CIECTI

[Click to open in a new window]

Free Report: 10 ASX mining stocks that could make you huge money in the next 12 months and beyond. Get access now.

Australia is the World’s Largest Lithium Producer

Lithium products used in batteries come from three sources: hard rock mining, battery recycling, and brine. Brine from salt flat projects is cheaper than hard rock extraction.

In this triangle, companies harvest the harsh sun and use it to evaporate brine from the ponds. The oily substance left behind is lithium.

Australia is the world’s largest lithium producing country, followed by Chile and then Argentina.

Since 2015, when Mauricio Macri won the Argentinean presidential election, Argentina has been stepping up competition in lithium production against Chile. Macri eliminated the 5% export duty on lithium and trade controls that were in place before.

With new technology making the process of extraction cheaper, more companies have been entering the market in the triangle.

But it’s not just mining companies pouring into the sector. Big auto makers, like Mitsubishi Corp [TYO:7211] and Toyota Motor Corp [TYO:7203], are also getting in the lithium race by partnering with mining companies in the area.

The large white gold buyers are China, Europe, Japan, South Korea, and the United States. The processes to create the batteries are usually done in those countries rather than in the lithium producing countries.

According to a recent report by Grand View Research, a consulting company, the global lithium battery market is set to reach US$93.1 billion by 2025, growing at a compound annual growth rate of 17%.

The increase in demand is mostly to do with batteries for vehicles, electronics and grid storage systems.

For electric cars, China is where the big demand is coming from. China is already a big lithium producer. It is also a big consumer of electric public transportation and electric vehicles.

The fact is, China’s demand for NEVs (New Electric Vehicles) keeps increasing. Take a look at the chart below. It compares monthly electric vehicle sales between 2016 and 2018. In the first half of 2018, China’s new electric vehicle sales were much higher than the two previous years.

! DESCRIBE ME !

Source: ev-volumes.com

[Click to open in a new window]

Lithium batteries are emerging as an alternative to fossil fuel.

But Markets & Money Editor Greg Canavan believes another source of energy could also be about to take off. Something called ‘Element U’.

What’s Element U? Well, it is a raw mineral that could supply all the electricity the planet needs for the next 230 years.

To read the full story on Element U, click here.

Best,

Selva Freigedo,
Editor, Markets & Money


Selva Freigedo is an analyst with a background in financial economics. Born and raised in Argentina, she has also lived in Brazil, the US and Spain. She has seen economic troubles firsthand, from economic booms to collapses and the ravaging effects of hyperinflation, high unemployment, deposit freezes and debt default. Selva now writes from her vantage point here in Australia. She is lead Editor at the daily e-letter Markets & Money. And every week, she goes through each report and research note produced by our global network of trusted advisors to find the best investment opportunities for you in Australia and overseas. She packages these opportunities for you in Global Investor.


Leave a Reply

Your email address will not be published. Required fields are marked *

Markets & Money