The Chinese is hitting multiple birds with one stone by creating a price suppression in lithium production industry;
1) They get cheap lithium for manufacturing their batteries, even at the cost of miners in Australia now. And they produce cheap batteries and cheap EVs.
2) When they manufacture cheap batteries, the west (inc. Korean and Japanese) can't compete with the Chinese and can't develop their own battery manufacturing plants. So the western auto OEMs have to buy batteries (cells) from the Chinese battery manufacturers.
3) Even if a western company can build a battery manufacturing factory, it has to buy the lithium chemical from a Chinese refinery/converter. So they still remain dependent on the Chinese products.
4) The Chinese battery manufacturers are making huge profits (as seen on latest CATL report) while the western battery manufacturers can't even make enough money to put into new research work, new upstream investments (refinery, lithium mine, etc).
5) So the western battery manufacturers staying behind in technology while Chinese companies can invest and employee tens of thousands of people in their research divisions.
6) Also that causes the western battery manufacturers are losing their ties with the upstream chains like; chemical plants, refineries, converters, lithium mines, etc.
7) As a strategic result, China want to take over the world auto industry by making cheap cars.
8) Auto manufacturing is a fundamental industry in the west. Millions of people are employed in the industry in the US, in the EU, Japan and Korea.
9) But it will not be limited to the death of auto industry in the west, the side industries which make parts for auto industry are also making other products for other industries will also be affected and they will close their plants.
10) It will also not be limited to that as well. The new technologies like AI robots, new EV planes, new flying cars, etc, whatever you can think will be manufactured by the Chinese.
Non of these are going to happen though. The west will not let it happen. They have been slow and lazy so far but the economic culture and capital they have accumulated over the last 500 years is nothing close to Chinese's accumulation in last 25 years.
As an example for capital, there is US$ 2.7 trillion (AU$4.2 T) in the Australian superfunds. The money in China's reserves is US$ 3.3T. You can imagine what is sitting in the funds of other western countries (inc. Japan and Korea).
LTR Price at posting:
63.5¢ Sentiment: Hold Disclosure: Held
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