Why Lithium Bets are Fundamentally Attractive Investments Amid EV Revolution
Lithium might as well be the next gold, given the ever-growing demand for the industrial metal amid the electric vehicle revolution. Immediate estimates indicate that lithium demand will more than double to 820,000 tons on strong demand for lithium batteries. The transition to clean energy has also seen a significant increase in lithium for batteries used to store solar and wind energy.
Lithium Demand Growth
As the need to reduce oil dependence and ramp up EV infrastructure rises, lithium's demand is expected to edge higher. There is no replacement for lithium in the way the world generates stores and uses energy presents a unique investment opportunity as lithium prices are expected to increase.
Continued lithium supply challenges are more than expected, a development that could see the commodity price ratcheting higher, leading to big returns for investments made today. Electric vehicles receiving policy support is one of the factors expected to spur a strong demand for the commodity.
With many jurisdictions led by the U.K and California plotting bans on the sale of new gasoline vehicles by 2030, Lithium and lithium stocks outlook are increasingly looking bullish. Unlike in the past, Tesla is no longer the only company spearheading the electric vehicle revolution.
Growing EV Sales on Lithium Demand
Almost all the big auto companies have made substantial investments towards the production of electric cars. The likes of General Motors, Toyota, and Volkswagen have already set aside billions of dollars to be used to develop electric vehicles. The investments come amid strong demand for electric cars in the market.
In the most recent quarter, electric vehicle sales made up 22% of new vehicle demand in Germany alone. In Norway, EV sales accounted for more than 50% of total sales. Similarly, EV sales were up by more than 25% in 2020.
Amid the strong demand for electric vehicles, lithium demand is expected to grow by more than 20%. Lithium prices have also started rising to 8,500/t LCE at the start of the year. According to the National Bank of Canada, Lithium prices could clock record highs of 15,000/t given the strong demand for the commodity in fueling the EV spectacle.
For investors eyeing investment opportunities in the burgeoning Lithium space, many Canadian stocks continue to offer exciting exposure.
American Lithium (TSXV:LI) has been on a fine run in recent months as investors take note of the tremendous opportunities around the much-sought Lithium commodity. Nevada focused lithium acquires and develops lithium projects. Its lead project is currently in Nevada, the U.S, where it holds the Tonopah Lithium Claims. It also owns the Ridge vanadium project in the state.
While the lithium stock has raced higher, it is still trading at a great discount relative to tremendous opportunities around strong demand for lithium.
Noram Ventures (TSXV:NRM) is another Canadian lithium stock focused on lithium exploration and development in Nevada, U.S. The company has set out to become a low-cost supplier for the Lithium-ion battery industry. The stock’s share price has started edging high at the back of a steady positive news stream mostly made up of positive lithium exploration news.
Quantum Minerals (TSXV:QMC) is another lithium stock for the future on expanding battery demand. The company is mostly focused on properties in Manitoba under the flagship asset Irgon lithium property.