I expected a neutral discussion, but it seems like another case ofrelying on the HOPE strategy. Remember the lithium rally a few years ago? Thehype was driven by ambitious EV adoption staged targets set by major manufacturers,countries, or states aiming for 2030 or 2035. This narrative of a tight lithiumsupply fueled speculation in lithium spot prices.
However, traditional car manufacturers are signaling that they can't meetthese EV rollout targets. They have overestimated their capability and capacityto compete with Tesla and Chinese EVs. To slow EV adoption, they’ve launchedmassive smear campaigns, which means less battery demand as forecast.
Price is determined by supply and demand, a basic principle we all knowand should focus on. Here are some overlooked factors that impact S&D:
- Battery Density Improvements: Top battery makers like CATL and BYD have made significant advancements, resulting in fewer materials needed for the same power output.
https://www.youtube.com/watch?v=isgaQHVm5Y0
https://www.whichcar.com.au/news/byd-new-blade-battery-promises-1000km-range
- Battery Recycling: Recycling old batteries back into the supply chain is becoming more common. CATL predicts no need for new ore after 2042, which seems ambitious but noteworthy.
https://www.catl.com/en/news/6201.html
https://www.eco-business.com/news/recycling-can-meet-china-battery-mineral-needs-by-2042-catl-boss/
- New Suppliers: Many new suppliers, often backed by private equity or government funds and not publicly listed, aren't captured in traditional studies on the lithium supply and demand curve.
- Plug-in Hybrid Advancements: Companies like BYD, Geely, and others are producing hybrids that can run up to 80km on a single charge, which is sufficient for most daily commutes. These use fewer battery materials and could see further range improvements.
https://bydautomotive.com.au/sealion-6
https://www.youtube.com/watch?v=1Ll_DTW8iv0
- Lithium Abundance: Lithium isn't rare; timing is the main issue. As Elon Musk suggests, lithium is extremely abundant on earth. What we have seen in the past few years is a bottleneck problem in extraction and processing. This is easing.
- Lithium is not rare it is just like iron, coal, or copper. The dream of a return to its peak is slim.
https://www.youtube.com/watch?v=Vypl_LQBARE
Given these factors, the glory days of lithium may be behind us. It’sessential to consider these dynamics when discussing the future of lithium andEV markets.
HOPE enthusiasts like to cheer on about Liontown’s first production.Investors rate producers by their return, often using metrics like PE anddividend yields. Compare LTR to other known producers of energy and materialssuch as RIO, BHP, MIN, ALB, PLS, YAL, and WHC. What would be the fair value ofLTR relative to its PE and dividend?
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