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Haplo

16,980 Posts.

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30/08/18

07:28

Post #: 35280968
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Originally posted by nzsyrahman ↑

This could be a bigger issue for the Li market than many people realise - and very positive for hard rock Lithium producers. Put yourself in GE's shoes... battery quality is a non-negotiable, as is the necessity of not abdicating a place in the EV and battery storage revolution underway. So what will they do? - for one, want to be less dependent on China for batteries - so they will look for suppliers they can rely on - Japan, S Korea. But they may also look at doing a Tesla style approach in the US. All this means is that the ability to produce good quality batteries needs good quality feedstocks of lithium. The quality issues in China are to do with their brine lithium which I understand is not as good as brine Li coming out of S America - hence the drop in internal spot prices in China, which has contributing to spooking the market (in the absence of alternative pricing transparency). The Chinese CAN make high quality batteries - but they need the good quality material from Aus if they are going down the hard rock route. All this will make the major car manufacturers who are depending on China very nervous from a quality/reliability perspective (hello BMW...?).

I am seeing all the pieces coming together (this, plus others such as the water issues in the Atacama) which will all lead to the Lithium 3.0 bull run - here's hoping. It's long overdue! KDR and other other Aussie Li Stocks are beautifully positioned, and current way underpriced.

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I think the main take away from this is what you already touched on. Car manufacturers have to develop their own supply and battery chain for their EV vehicles.

Relying on a third party for the supply of batteries could very well mean bankruptcy for the brand if they are not able to compete at this important pivotal point in the EV transition. This really highlights Tesla's advantage in that it has already taken steps to secure their chain.

The GM batteries were supplied by A123 Systems. We don't know yet what part of the battery makeup caused this but it will be interesting to learn more on the failure.

Haplo

KDR Price at posting: $1.19 Sentiment: Buy Disclosure: Held
11 Upvote

1 Great analysis

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