Man, you really missed it! All the recordings of our Summit Investment Supercycle had to go offline last night. Too bad. But I have a great consolation prize for you: The full transcripts. Just click here to download the pdf file or read it online.
Meanwhile, back on the energy metals front, it turns out I am way too pessimistic.
In August, I told you there were 18 lithium-ion battery “gigafactories” being built or planned around the world.
That seemed reasonable. But what a difference just two months makes …
Now, Tesla has announced that it is going to build a new gigafactory in Shanghai. That’s on top of Tesla’s gigafactory in Nevada and its other facility planned for Buffalo. This makes TWENTY-FOUR such gigafactories being built or planned around the world.
That’s right. In the past two months, six more gigafactories hit the drawing boards.
And you know what? I don’t think we’re anywhere near done. I believe there are many more to come.
After all, look at the change in planned lithium-ion gigafactory capacity from 2014 to now. This chart from Benchmark Minerals shows how much capacity experts thought would be built by 2021 …
In 2014, experts thought a total of 39 gigawatt-hours (GWh) worth of li-on battery factories would be built by 2021. Now, today, that number has jumped to 372 GWh! That’s nearly a tenfold increase!
How did that happen? Well, Tesla’s new gigafactory in Nevada has a planned annual battery production capacity of 35 GWh. That’s nearly as much as the entire world in 2014.
And there are battery factories planned in China that make Tesla’s efforts look like small potatoes.
Which makes you wonder: Where is all that lithium going to come from?
I’ll tell you where some of it is coming from. From the companies in the Supercycle Investor portfolio. Recently, those picks were up 30% … 41% … and 112%. That’s AFTER I told subscribers to bank 112% gains.
The biggest open gain in the portfolio isn’t even lithium. It’s a cobalt miner … up 131%! It turns out lithium-ion batteries need plenty of cobalt, too.
I’m not here to toot my own horn. I’m just showing you the potential of these energy metals stocks.
I’ve told you about the amazing supercycle in lithium. It’s driven by the electric vehicle (EV) megatrend.
That megatrend is also driving cobalt prices through the roof. I told you about that, too.
And the miners that produce those metals? They have profit potential beyond the dreams of avarice.
Here is a chart of the Global X Lithium ETF (NYSE: LIT) …
This shift higher in demand has already begun. Lithium prices just hit a record high in China. Lithium carbonate prices in China moved up to $21.1-to-$26.3 per kilogram on Oct. 12. That’s up from $20.1-to-$25.3 per kilogram previously.
But ask yourself: How big could this supercycle get?
After all, in recent weeks, both Britain and France said that new internal combustion engine (ICE) cars will be banned by 2040. The Chinese government is pushing increased EV production by 2020, and is mulling a ban on sales of new ICE vehicles in the future as well.
So how much would demand for energy metals increase if the world shifted completely to EVs? Here’s a chart from Visual Capitalist …
Holy demand tsunami, Batman! We’d see lithium demand surge 2,898% … cobalt demand rise 1,928% … rare earths as a group up 655% … graphite up 524% … and nickel up 22%.
But surely, some might say, this would price lithium batteries right out of the market.
Even with the increase in lithium that we’ve already seen, battery prices have decreased from over $1,000 per kilowatt-hour (kWh) in 2010, to under $250 per kWh in 2016. That’s because A) lithium is a small part of a li-on battery and B) battery makers are getting more efficient over time.
Sure, in a 100%-EV world, lithium batteries would get more expensive. But not that expensive.
Now, I’m not planning on a 100%-EV world anytime soon. It might never be. But the big shift – this megatrend to transition to EVs – is coming. And it is unstoppable.
That megatrend is pushing the energy metals supercycle relentlessly forward. It is gathering momentum. The supercycle is shifting into higher gear. Even as you read these words.
There are so many ways to play this. Lithium miners … cobalt miners … nickel miners … battery makers … car manufacturers … companies developing new processes that make for even greater efficiencies.
If you haven’t started investing in this megatrend yet, the Global X Lithium ETF is a fine place to start. It’s been less than two months since I mentioned the LIT in an article. Since then, it’s up 19%.
All the best,