Lithium: The Most Important Metal for Electric Cars? Think Again…

The Tesla, Inc. [NASDAQ:TSLA] 2170 battery cell is supposed to be the ticket to make electric vehicles (EVs) go mainstream. Tesla is trotting out the Model 3 as cheap EVs that will encourage people to buy one the next time they’re in the market for a car. Retailing at US$35,000 (AU$44,500), it is certainly more affordable than previous Tesla models.

Will it work? If nothing else, Tesla chief Elon Musk should be admired for his gumption. He is taking multi-billion-dollar risks to bring a product to market, even when analysts aren’t entirely convinced there’s massive demand for it.

However, the key to making the Model 3 affordable is the 2170 battery. Its design, and dense energy storage, supposedly makes it the battery that will see EVs go further, lasting longer on a single charge. Battery production began in January this year at Tesla’s ‘Gigafactory’.

While lithium-ion batteries attract plenty of attention, these batteries can’t store more energy without certain base metals.

Lithium only makes up around 14% of these batteries.

An equally important base metal to the Tesla 2170 battery is nickel.

The nickel cobalt aluminium oxide (NCA) component to the 2170 battery is 80% nickel, 15% cobalt, and only 5% aluminium. In fact, the total dollar value of nickel in the 2170 electric battery is almost exactly the same as the amount of lithium-ion required.

Of course, this was something resource analyst Jason Stevenson covered months ago in Resource Speculator.

Unsurprisingly, it appears the mainstream is only just catching up.

BHP has decided that base metals like nickel are again back in fashion. Thanks to increasing demand from EVs and their expensive batteries, BHP will build the world’s biggest sulphate plant.

BHP nickel chief Eddy Haegel told The Australian on Wednesday: ‘Lithium-ion batteries are growing at spectacular rates, the role of nickel is significant in lithium-ion batteries and the concentration of nickel is increasing because it increases energy density and gives greater range.’ He added that, even though present battery demand only accounted for 10% of total nickel demand, this could be as high as 90% five to six years from now.

BHP’s Kwinana plant, south of Perth, was set to be closed down a couple of years ago. Instead, BHP will pump US$43.2 million (AU$54.9 million) to make it ready to process as much as 100,000 tonnes of nickel sulphate.

BHP reckons the plant will be bigger than any comparable factory in the world. There are expectations that they may even double capacity once the first phase is complete.

Yet BHP isn’t the only mining giant chasing the battery market.

Glencore plc [LON:GLEN] says electric vehicles are a key factor to boost demand for their products. Consumers want longer-lasting batteries for their electronics devices.

Chief executive Ivan Glasenberg said on Thursday evening: ‘As we look forward, the potential large-scale roll-out of electric vehicles and energy storage systems looks set to unlock material new sources of demand for enabling underlying commodities, including copper, cobalt, zinc and nickel.’

Nickel has been used by humans for over five millennia. Yet it turns out to be a crucial component to making the dream of electric, self-driven cars a reality.

One company listed on the ASX has leapt ahead of the competition in the race to lead nickel’s emergence. More details here.

This week in Markets & Money

On Monday, Vern warned that the stage is set for the next market crash:

For more than eight years, these economic quacks have tried to stimulate the economy. Never before in the history of money has “so much been done to produce so little”.

The only thing they’ve managed to inflate is asset prices. US stock prices and select capital city real estate prices keep going higher and higher.

But will these markets experience a hard landing?

According to BS wisdom, that’s not possible. Which only means it’s an odds-on certainty.

On Tuesday, Ryan Dinse explained that cryptocurrencies are no fad. This new form of money isn’t going anywhere. Although, too many investors underestimate the importance of how crypto-cash fits into portfolios. In fact, Ryan broke the ‘Bitcoin boom’ down into three key psychological stages. And, by his reckoning, we are only in the second part of the phase, with an important third phase still to come.

To read Ryan’s full analysis, go here.

On Wednesday, the hot topic was North Korea. Behind all the attention hogging tweets from US president Donald Trump, there are genuine investing opportunities hidden behind the headlines. As Ryan suggested, we should keep our heads away from the Cold War powers fighting it out, and instead look to one economic powerhouse for future growth.

For more on this story, click here.

On Thursday, Matt addressed the $2.3 trillion dollar question, looking into what role listed investment companies (LICs) and exchange traded funds (ETFs) played in a self-managed super fund. The answer might surprise you.

On Friday, Vern implored readers to become second-level thinkers. Second-level thinkers are people that are different and better to first-level thinkers. It’s another way of saying that, when everyone is thinking the same, it shows that no one is thinking at all.

To be a successful investor, you have to think differently to first-level thinkers. Central bankers, in particular, exhibit a a special case of first-level thinking. They’re blindly obsessed with their economic models. And, when these don’t work, it’s not because the models are flawed, but because not enough stimulus was provided.

For the sake of your financial well-being, you need to become a second-level thinker. More on this story here.

Shae Russell started out in financial markets more than a decade ago. Working with a derivative brokering firm, she helped clients understand derivative markets, as well as teaching them the basics of technical analysis. Since joining Port Phillip Publishing eight years ago, Shae has worked across a number of publications. She holds the record for the highest-returning stock recommendation, in which a microcap stock returned over 1,200% in six months. Ask her about it, and she won’t stop yapping on. For the past two years, Shae has worked alongside Jim Rickards as his Australian analyst, translating global macro trends for Aussie investors, and how they can take advantage of these trends. Drawing on her extensive experience, Shae is the lead editor of Markets & Money. Each day, Shae looks at broad macro trends developing around the world, combining them with her distaste for central banks and irrational love of all things bullion.

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