Special Report: It’s an extremely good sign when one of the biggest local bears in the lithium sector suddenly turns bullish on the battery metal.
Late last year Macquarie claimed the lithium market was “sleepwalking into a tsunami of oversupply”.But more recently it has backflipped on those predictions given German car giant Volkswagen’s aggressive push into electric vehicles (EVs).VW board member Stefan Sommer told Reutersthat the company would need 150 GWh of battery production in both Asia and Europe by 2025, and double that by 2030.He said the plan was to buy more than $US56 billion of (lithium loaded) battery cells and that to date, it had identified Northvolt (Sweden), SKI (Korea), LG Chem (Korea), Samsung (Korea) and CATL (China) as “strategic partners”.After a bit of number crunching, this is Macquarie’s expectation now: “Assuming an average battery size of 60Kwh, that implies 5m units of full EVs by 2025 and 10m by 2030. Global EV sales were less than 2m units last year.”Other big carmakers are also fast tracking their EV schedules in order to help meet demand.Last month Toyota revealed it would bring forward its target of having half of its global sales from EVs to 2025, five years earlier than anticipated.Lithium sell-off hitting reverseThe good news for lithium players is that the sell-off in stocks thanks to Macquarie’s predictions of mass oversupply is widely expected to be reversed in the 2020s.There are several lithium players at the starting blocks, but experts predict not all of those projects will get away.
AGY Price at posting:
10.5¢ Sentiment: Buy Disclosure: Held
