Sector NewswireTM
Sector: Mining - Metals and Minerals, Energy :
News Release - June 3, 2016 4:20 PM ET
Volkswagen’s Proposed New Gigafactory Affirms Trend Toward Economies of Scale for Lithium-ion Batteries -- American Lithium Corp. Advancing Major (18,552 Contiguous Lithium-laden Acres) Lithium-Brine Project in Nevada
- American Lithium Corp. (TSX-V: LI) (US Listing: MNIKF) (Frankfurt: 5LA) Announces Phase 2 Exploration Drill Program for Fish Lake Valley Lithium-Brine Project, Esmeralda County, Nevada in H2-2016 and NI 43-101 Report Planned for Q4; the project exhibits hallmarks of major lithium resource presence with the footprint, scope, and scalability that will allow the Company to create a large critical mass presence. The Company is spearheaded by an experienced management team that is no stranger to major success.
NEW YORK, NY, June 3, 2016 /Sector Newswire/ - Volkswagen is expected to vote, this June 22nd, to approve a plan to build its version of a Gigafactory to produce lithium-ion batteries. The factory is needed to make VW’s goal of building 1 million electric cars in the next 10 years reality. Dusseldorf-based business newspaper, Handelsblatt, broke the news last week that VW appears to be poised for a gigantic down-payment on the new future with a possible US$11 billion battery factory, larger in production capacity than Tesla’s Gigafactory.
Figure 1. Tesla's Gigafactory under construction in Nevada. Tesla's Gigafactory is expected to produce 50 Gwh in annual lithium-ion battery production by 2020. Tesla's Gigafactory is not a one-off, several other large-scale facilities coming online in the next five years will likely take global capacity much higher. | Goldman Sachs has labeled Lithium "new gasoline". Lithium-ion batteries for electric cars, and energy storage systems have supplanted laptops, smart-phones, tables, and power-tools as the main drivers for demand. Driven by the rise of battery gigafactories, game-changing Powerwall, and energy storage businesses, the world is now at the beginning of a lithium super-cycle that is all about securing new supply. Despite higher lithium prices, battery prices have fallen dramatically, and are expected to continue falling as new players enter the market and gigafactory-style economies of scale come online. The economies of scale are expected to make unsubsidized electric cars as affordable as gas cars in the next six years, spurring widespread adoption. Goldman Sachs estimates electric vehicles (currently at ~3% penetration) will achieve 22% market penetration by 2025, the firm further estimates that a 1% increase in penetration should increase lithium demand by 70,000 tonnes of lithium carbonate equivalent (LCE) per year (that figure represents close to half of current global demand for lithium). Goldman Sachs believes that the lithium market could triple in size by 2025 just on the back of electric vehicles alone, there will also be a rise in hybrids on top of that.
Tesla produced less than 50,000 cars in 2015, however that is about to change as it ramps up to produce a more mass-market Model 3 (under US$40,000 retail, targeting the middle class) -- the new Model 3 already has ~400,000 pre-orders (as of April 21, 2016), and according to Benchmark Mineral Intelligence when that number hit 325,000 pre-orders (within a week after launch) the firm calculated that number alone will increase demand for lithium hydroxide by 20-30%. Elon Musk himself mentioned during the unveiling of the Model 3 that Tesla will be gobbling up much of the world's lithium supply with plans to produce 500,000 EVs per year. "In order to produce a half million cars per year…we would basically need to absorb the entire world's lithium-ion production." Tesla's soon-to-be-completed Gigafactory will produce more lithium-ion batteries than the rest of the world combined. This is only one company, and there are many players making an entrance; VW (as mentioned above), BMW has announced it is getting into the electric car business, Nissan has announced it plans to produce 150,000 vehicles per year, General Motors wants to be the first to mass produce an affordable version via its US$30,000 Bolt at the end of 2016.
An upsurge in future lithium demand and tight market conditions has lead to an increase in spot prices from approximately US$7,000/tonne in September 2015 to over US$20,000/tonne in some instances more recently. However big industry players do not generally buy on the spot market as there is no commodity market for lithium products (like those for copper or silver), prices are set by negotiation between producers and customers subject to customer specific needs and price trends. These, in turn, are driven by big players in the industry. Thus the way for investors to take advantage of lithium demand is to focus on the most prospective upcoming sources of lithium that will attract majors for an eventual off-take agreement, investment, and/or acquisition.... | |