Tomorrow’s energy fueling mass transport is Lithium, and it is one of the most in-demand commodities in the world today.
As the ongoing shift to electric vehicles (EVs) and clean energy technologies, governments, and EV manufacturers are scrambling to secure their supply chains as demand for lithium soars.
China, already the world’s largest EV market, has a strong foothold in the lithium race, the US is lagging. So, the infographic from
Ventures highlights the booming demand for lithium and the need for countries to secure a domestic supply chain.
Global lithium production more than doubled in the last four years to 82,000 metric tons in 2020, up from 38,000 metric tons in 2016.
So here are some of the factors driving the demand for Lithium which could provide alpha commodity returns for invetsors
“Global lithium production more than doubled in the last four years to 82,000 metric tons in 2020”
- More EVs on the Road:
- EV sales continue to grow exponentially. For example, between 2016 and 2020, annual electric car sales increased by 297%, up from around 750,000 to nearly 2.9 million cars last year.
- Falling Battery Prices:
- Declining lithium-ion battery prices are allowing EVs to compete more aggressively with gas-powered cars. Since 2013, battery costs have fallen 80%, with a volume-weighted average of $137/kWh in 2020.
- Rise of the Battery Megafactories:
“Rise of the Battery Megafactories”
China’s Lithium Dominance stands out
In 2020, three countries, Australia, Chile, and China collectively made up 88% of global lithium production. After mining, for lithium to have application the commodity needs to be refining, processing, and packaging, then the lithium can be made into batteries. The majority of this supply chain process occurs in China.
In 2019, China produced 80% of the world’s refined battery chemicals, in addition to 73% of lithium-ion battery cells.
“the US is heavily reliant on imports for its supply of lithium, with only one lithium-producing mine in the country” – Win Investing
Moreover, the rise of battery mega factories is also in China. For example, of the 200 battery mega factories in the pipeline to 2030, 148 are in China. As a result. So China is already far ahead of other countries in the race for lithium and batteries.
Meanwhile, the US is heavily reliant on imports for its supply of lithium, with only one lithium-producing mine in the country. As demand increases, this lack of production could threaten US energy independence in the future. So an executive order was recently signed by the Biden administration to address this and gaps in the supply of other critical minerals.
Lithium is a strategically important commodity for other countries
As the shift towards mass electrification takes place, critical battery metals like lithium are becoming geopolitically significant, and their supply could redefine energy independence in the future. Lithium is already on the list of minerals, critical to the national security of the US, EU, and Canada.