Although electric car batteries have other metals that can be interchangeable, such as nickel, cobalt and manganese, “you’re always going to need the same amount of lithium,” Philips told CNN Business.
Lithium is the lightest metal in the universe and also has a high energy density, which means it is able to store more energy — which is key for an electric battery.
“Nothing can do what lithium does for portable charging,” Phillips said.
The growing global demand for electric cars is helping companies that mine and produce lithium as well as the manufacturers of the lithium-ion batteries that are needed for cars and trucks made by Tesla and its rivals.
“There is still a huge opportunity for companies across the electric vehicle supply chain. Investors need to think more about that and not just about Tesla. Electric vehicle penetration could reach 50% of the auto market by 2030,” said Pedro Palandrani, disruptive technology analyst at Global X.
Albemarle said last week it plans to invest $30 million to $50 million to double the current production at its Silver Peak, Nevada site by 2025.
The world’s top lithium mines are in Australia, Chile and Argentina. So US car companies are looking for more local sources of the metal.
Commercial vehicles and China are big growth opportunities
The electrification of the automotive industry isn’t just for consumer sedans and SUVs. There could be an even bigger opportunity in providing lithium-ion batteries to big industrial firms that make trucks for large corporate fleets, according to Lionel Selwood, Jr., CEO of Romeo Power.
Selwood said he has no interest in getting into the more competitive business of making batteries for consumer vehicles, but he said the growing demand for electric cars — thanks to companies like Tesla — is helping his firm because that makes it cheaper to produce lithium-ion batteries.
“We’re building a business for commercial customers so we can get bigger contracts,” Selwood told CNN Business. “We’re piggybacking off of global consumer demand for electric vehicles since that brings prices down to make batteries.”
But he added that investors can’t ignore the other companies in the industry that are benefiting from the trend, especially in China. As such, the lithium ETF also owns electric car maker BYD, battery manufacturer CATL and miner Ganfeng.
“We’re talking about the disruption of transportation,” Palandrani said. “It would be myopic to think that Tesla is the only important company in the industry,”