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Tesla’s inventory surge is nice for lithium miners and battery makers

Lithium is a key part for batteries in electrical automobiles. The Global X Lithium & Battery Tech ETF (LIT), a fund that owns Tesla (TSLA) and different corporations within the electrical battery enterprise, is up 15% in 2021 and it has soared greater than 65% in simply the previous three months.
“You can’t have electric cars without batteries and you cant have batteries without lithium,” mentioned Keith Phillips, CEO of Piedmont Lithium (PLL), a lithium miner whose inventory has surged practically 35% up to now in 2021.

Although electrical automobile batteries produce other metals that may be interchangeable, comparable to nickel, cobalt and manganese, “you’re always going to need the same amount of lithium,” Philips informed CNN Business.

Lithium is the lightest steel within the universe and likewise has a excessive vitality density, which suggests it is ready to retailer extra vitality — which is vital for an electrical battery.

“Nothing can do what lithium does for portable charging,” Phillips mentioned.

The rising world demand for electrical automobiles helps corporations that mine and produce lithium in addition to the producers of the lithium-ion batteries which can be wanted for automobiles and vehicles 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,” mentioned Pedro Palandrani, disruptive expertise analyst at Global X.

Shares of American specialty chemical substances firm Albemarle (ALB), which has lithium manufacturing amenities in Nevada and is the highest inventory within the lithium ETF, has surged practically 25% this yr alone and has nearly doubled prior to now three months.

Albemarle mentioned final week it plans to take a position $30 million to $50 million to double the present manufacturing at its Silver Peak, Nevada web site by 2025.

The world’s prime lithium mines are in Australia, Chile and Argentina. So US automobile corporations are searching for extra native sources of the steel.

“As global demand for electric vehicles grows, North American automotive manufacturers are seeking to regionalize their supply chain for greater security and sustainability,” Albemarle mentioned in a press launch.

Commercial automobiles and China are huge development alternatives

The electrification of the automotive trade is not only for client sedans and SUVs. There may very well be an excellent greater alternative in offering lithium-ion batteries to huge industrial companies that make vehicles for giant company fleets, in line with Lionel Selwood, Jr., CEO of Romeo Power.

Romeo Power makes batteries for business automobiles. It went public on the the tip of final yr by a merger with a particular objective acquisition firm and the inventory has doubled because the deal was introduced in October.

Selwood mentioned he has little interest in moving into the extra aggressive enterprise of constructing batteries for client automobiles, however he mentioned the rising demand for electrical automobiles — due to corporations like Tesla — helps his agency as a result of that makes it cheaper to provide lithium-ion batteries.

“We’re building a business for commercial customers so we can get bigger contracts,” Selwood informed CNN Business. “We’re piggybacking off of global consumer demand for electric vehicles since that brings prices down to make batteries.”

Global X’s Palandrani informed CNN Business that Tesla deserves a whole lot of credit score for serving to to make the electrical automobile enterprise go mainstream with each customers and traders. With that in thoughts, his agency additionally runs the Global X Autonomous & Electric Vehicles ETF (DRIV), which counts Tesla as its prime holding.

But he added that traders cannot ignore the opposite corporations within the trade which can be benefiting from the pattern, particularly in China. As such, the lithium ETF additionally owns electrical automobile maker BYD, battery producer CATL and miner Ganfeng.

“We’re talking about the disruption of transportation,” Palandrani mentioned. “It would be myopic to think that Tesla is the only important company in the industry,”

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