I’m going to be honest here: I’m drinking the Kool-Aid on this… but I’m not the only one.
By now, I’m sure you’ve come across Elon Musk’s announcement a few months back when he talked about the development of the Powerwall, a battery storage system for solar power that uses lithium technology supported by Panasonic.
If you haven’t, I suggest you familiarize yourself with this device, because there’s a very good chance it could become the new home energy status quo in the near future.
On that note, let’s pretend we’re in Musk’s head for a moment and flash forward to how he envisions that future.
For the Tesla CEO, the ideal situation would be one in which every family has a Tesla Powerwall to power their home and charge the Tesla cars they use to commute to their jobs at the Gigafactory. Yes, in a perfect world, we’d all be completely disconnected from the grid, powering our homes purely through solar.
It’s both an exciting and disruptive prospect.
However, that’s not the Kool-Aid I’m drinking.
My focus is on the lithium portion of this story… and yours should be, too.
The Demand We Face
Now, I’m sure we all realize lithium batteries are everywhere. If you’re reading this on a laptop, tablet, or smartphone, you’re holding lithium in your hands.
And while there are plenty of other uses for lithium, the real boom in the next few years is going to be the demand for lithium-ion batteries.
Earlier this year, Tesla estimated the lithium demand for its vehicles alone will be about half of Australia’s total lithium capacity. Tesla plans to produce 500,000 cars per year, and it needs a stable lithium supply to support its line of vehicles, as well as the Powerwalls.
Keep in mind that pre-orders for the system within a week of its unveiling totaled $800 million!
Expectations for the Gigafactory are a 50-megawatt-hour capacity, requiring 40 million tons of lithium carbonate equivalent. For us, that means just one of Musk’s Gigafactories is going to consume 20% of today’s global lithium supply!
If you weren’t paying attention before, here’s where you should start.
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Tesla, Musk, and the Growth Ahead
Tesla, by developing lithium battery technology, is doing more than providing us with sustainable transportation, energy, and storage.
Its need for lithium, combined with that of other industries where demand is booming — glass, ceramics, construction — is opening doors for some real investment opportunities, not just in renewable energy strategies, but in the materials they require as well.
The lithium industry itself is experiencing a growth rate of about 7% to 8% annually. That’s more than the global economy (no more than 3%) and even that of other commodities. In fact, lithium is basically immune to economic cycles that affect other commodities like oil or copper.
And this is happening fast…
In anticipation of an impending lithium shortage, scientists in Japan are already experimenting with efficient ways to extract lithium from seawater. Researchers even expect dialysis extraction methods to be ready for commercialization within five years.
I can’t help but ask you, “Do you really think Musk’s move to erect his Gigafactory near the salt lakes of Nevada was simply coincidence?”
I didn’t think so, either.
Like I said, it’s happening fast, and the lithium revolution taking place before our very eyes is almost too good to pass up.
Until next time,
Keith Kohl
Check us out on YouTube!A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.
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