BYD is ramping blade production from 6GWh to 20GWh. Yahua supplies BYD and GXY supplies Yahua. So we have a direct line to massive growth in the short term and every COVID turned trader with no understanding is running for the hills allowing shorts to cover. Well played by them. Selling when the future has never looked so bright. The beauty of panic!
Price spike in 2021 still in play! Just will take a little while for people to realise they got hoodwinked. Can't blame them, I was in shock for a little while too. On Sept. 23, lithium producer stock prices plunged following the Tesla (TSLA) battery day event held a day earlier on fears of lower lithium prices after Tesla CEO Elon Musk claimed, "There is a massive amount of lithium on earth...there really is enough lithium in Nevada alone to electrify the entire U.S. fleet." We appreciate Tesla's goal to secure its raw materials supply. However, we disagree with the claim that Tesla will be able to supply all its own lithium. While we view lithium as an abundant resource, with lithium present in ocean water, nearly all of the world's lithium is not economically viable to extract at current prices. Further, we forecast Nevada supply will be able to meet less than half of U.S. electric vehicle lithium demand in 2030. Based on current projects, we forecast about 50,000 metric tons of annual production in Nevada will be online by 2030. However, based on our 15% 2030 U.S. EV adoption rate, we forecast nearly 110,000 metric tons of lithium demand from U.S. electric vehicle sales. Finally, we view Tesla's 2030 production target, of three terawatt hours of battery capacity by 2030, as a positive for lithium demand. This translates to roughly 2.7 million metric tons of lithium demand, which is 9 times 2019 lithium demand. This is also 800,000 metric tons above our global 2030 lithium demand forecast of 1.9 million metric tons, which includes Tesla and other battery producers. Even if Tesla was to produce some lithium, we think greater demand would sop up the new supply, leaving our long-term lithium price forecast intact.
As such, we see no change to our outlook for lithium. We continue to forecast lithium prices will begin to rise in late 2021. We maintain our $125, $13, and $57 per share fair value estimates for Albemarle (ALB), Livent (LTHM), and SQM (SQM), respectively. Our narrow-moat ratings based on cost-advantaged lithium production for all three producers remain intact. We view the sell-off as an opportunity for long-term investors
GXY Price at posting:
$1.17 Sentiment: Buy Disclosure: Held
