This is aninteresting read from 1ronnie. I edited number 10...

This is aninteresting read from 1ronnie. I edited number 10 format wise only because itappeared in a different post but I didn’t alter the content. it's an educational forum 1ronnie runs, it's brilliant as you can see by the content.

"...andHere's why I am not bullish or mildly bearish about lithium stocks prospectsover the next 12 months or more

1. INDUSTRY ACTION. Watch theactions of lithium producers, not what they say. ALB the lithium industryleader has cut production plans, layoff workers, raised a billion dollars, allsuggesting to expect a lithium industry consolidation mired by lower thanproduction cost lithium pricing not to be transitory but to be more protracted.No large company would go to such extent if they expect lithium price torecover significantly after just a few months. And we have seen the samecutbacks across lithium companies in Australia, sharing the same sentiment.
2. EV GROWTH STALLING. When I meanstalling, I am not saying there is no growth, but high >50% growth has nowdwindled to lower double digit growth. And the EV growth scene is different inChina compared to US/EU. We've recently seen Tesla suffering a 8% decline indeliveries. EV growth in China comes on the back of price slashing whichprompted price sensitive consumers to flock towards EV. And Chinese EV makerscan only sustain such lower prices only because there is battery oversupply inChina and critical minerals like lithium have fallen significantly. If batterycosts move higher due to higher lithium prices ahead, it would make it moredifficult for Chinese EV makers to sustain low prices and therefore demandgrowth could be equally compromised. No company would want to slash pricesunless the industry is in such a dire state, so China's EV growth is nothing tocelebrate for lithium's prospect because it is driven largely via competitiveprice cutting and on the back of low battery costs, which represent 30% of theEV cost.
3. NEW GLOBAL SUPPLIES. Newglobal supplies are coming onstream from various parts of the world tochallenge Australia's current dominance. Over the next few years, new suppliesare coming out of Canada, US, Zimbabwe (China), Chile (US/China), Bolivia(China), EU. Original projections re: demand and supply would need to bere-assessed because original demand projections could be overstated andoriginal supply understated. It is more likely there would be a surplus withinthe next 12 months at least but the surplus could actually widen if EV growthis stymied. Exxon has also stated that its planned 2027 lithium productioncould go ahead.

4. GEOPOLITICS hasentered the EV space, not just semiconductors. Biden has indicated a Chinathreat from EVs registering personal data that could be compromised while Trumphas vowed to slap a 100% tariff on China EVs coming in from Mexico. Bottomline- US is scared shitless about the Chinese EV invasion into US soil, whichElon himself acknowledged could wipe out the US car industry. EU is also on thewatch and would do everything to ensure that its all important auto industry isnot jeopardised. All that could only mean that China's EV growth could beconfined to largely in China and parts of Asia and we know China EVs accountfor the larger portion of the EV pie. Secondly, a Trump presidency could seeparts of the Inflation Reduction Act (IRA) to be unravelled, including possibleremoval or dilution of EV subsidies. We have already seen EV subsidies beenreduced in China (which led to price cutting) and in the EU (which led to anerosion in take-up).
5. HYBRIDS have taken the USmarket by storm, as Americans have become somewhat wary about being early inadoption of EV. Ford and GM have scaled back and deferred their EV all-in plansand are progressing towards hybrids. These moves only serve to reduce thepotential for EV penetration rates to go higher as originally projected asTesla would continue to focus on higher end EV market.
6. EVOLVING BATTERY TECHNOLOGY.China is moving at such a fast pace in its technological innovation in the EVand battery space that they're more likely to develop an EV battery that willdeliver greater range and reliability at lower cost in a shorter time thaneveryone would expect. This may not be just sodium-ion batteries but newer onesthat could limit the use of expensive lithium material. While this can just beconjectures, but we know that China can truly deliver battery innovation veryquickly. China's interest is in producing unrivalled quality EVs at low cost,its interest is not in ensuring critical minerals like lithium prices go higheror stay higher; on the contrary, their interests would be best served by lowerlonger term lithium prices, and if they can't stay low enough, they would bemore likely to accelerate lithium substitutes in EV battery technology. Sogiven this, it is very unlikely for lithium prices to ever return to previouslevels seen in the past 3 years.

7. EV GROWTHMAY NOT BE SYNONYMOUS WITH LITHIUM DEMAND & PRICING GROWTH
It is my belief that lithium demand and lithium pricing growth would not keeppace with global EV growth over time. Because less of it would be used per EVand lithium pricing could be capped to enable to the EV industry to achievehigher penetration rates - while Govts could increase the carbon costs for ICEvehicles to make them on par with EVs to promote EV sales, that won't be enoughunless EV production costs can be reduced over time. And EV production costscan be reduced enough if it continues to rely on heavy lithium usage at highlithium pricing.
8. AUSTRALIA HAS NO VERTICAL INTEGRATION
Australian lithium has a major disadvantage because it has no verticalintegrated industry. China's EV can be produced cheaply because it has accessto its own lithium, lithium processing, EV battery production. US can rely onlithium produced in US in a year or two, the EU likewise, so Australia wouldhave to export their lithium with no domestic customers. Add the higher cost ofAustralian production and the tyranny of distance to export markets, ourlithium producers would end up being price takers, not price makers and have tocontend with lower margins.
9. PROSPECT OF GLOBAL RECESSION.
If and when we have a recession, consumers would be hamstrung to buy basicnecessities let alone expensive EVs or a change of vehicles. It would be morelikely consumers would resort to buying 2nd hand EVs which are selling at steepdiscounts to their original prices. So, if and when we have a recession, thatwould put paid to EV growth, including in China

10. TESLA STOCK PRICE

Teslastock price has a strong correlation to lithium stocks in the US. Lithiumstocks Holders may want to poo-poo what the Goldmans & Citi prognosis onthe outlook of lithium and lithium stocks, but their views do matter becausethey move markets, and as long as their outlook remains negative, it simplyemboldens shorters to profit from downside moves in the interim.TESLA: Why things are different this time?When $TSLA bottomedin Jan 2023, its PE (NTM) was 20.3 which made it a reasonable valuation tobottom at. (see below)However, today if $TSLA reaches$100 again, its PE ratio would be 35.At PE of 35,it would not be as cheap as it was at PE of 20.On top of that, Tesla's growth has slowed down if not gone negative. AndEPS is expected to decline from 4.30 to 2.86 A growing company at a PE of 20was a better buy than a shrinking company at a PE of 35.