With rising awareness about greenhouse gases and their effect on global climate, auto biggies are fast shifting gears to e-mobility and the number of electric vehicle (EV) model launches is rapidly increasing. Amid the rising popularity of EVs, the demand for lithium has increased exponentially. Lithium batteries are preferred by electric car manufacturers, and are used by various auto giants including General Motors GM and Ford F, Toyota TM, and Tesla TSLA.
Last week, General Motors unveiled the ‘Ultium Drive’ system, powered by lithium-ion cells, which would help reduce cost and improve the performance of the battery. Tesla’s Battery Day is also right around the corner and the company is expected to make major announcements, which will be closely watched by traders and analysts of industrial metals. With all automakers accelerating their goals toward an electrified future, the lithium market prospects look rosy. Before taking a look at the upbeat lithium market scenario, let’s delve deeper into what you can expect from Tesla’s much-awaited Battery Day.
All Eyes on Tesla Battery Day
Tesla’s highly-anticipated battery day will be held on Sep 22. Investors are expecting the company’s CEO, Elon Musk to unveil some groundbreaking technology and battery innovations, which will further solidify Tesla’s position as the leading EV maker. As usual, Musk is doing his best to further pique everyone’s curiosity and excitement. He even took to Twitter to promise that the event will be ‘insane’, with many exciting announcements.
The company stands tall among rivals in the EV space on the back of its range and performance due to the cutting-edge battery technology. Tesla’s Lithium-ion batteries are manufactured through its joint venture with Japan-based tech giant Panasonic. In June 2020, the red-hot EV maker entered into a three-year deal with Panasonic, per which the latter would manufacture and supply 2170 lithium-ion battery cells at Tesla’s Gigafactory in Nevada. Lately, Tesla has begun sourcing cells from CATL and LG Chem. Meanwhile, the firm is also working on two new battery production facilities — one in Fremont and the other in Germany.
Last year, Musk said that the company is working on new battery packs that will last for 1 million miles. He said “The new battery pack that is probably going to production next year is designed explicitly for 1 million miles of operation.”Industry watchers are keenly waiting for Tesla’s Battery Day, wherein the company is likely to make several announcements about its efforts to minimize cost and enhance the range of batteries. The “million-mile” battery is expected to debut at Tesla’s Battery Day event.
There have been a lot of speculations regarding what to expect from this much-hyped event. Industry observers are expecting Tesla to reveal specifications about its own new type of battery cell that it has been developing. The firm’s prototype manufacturing line for battery cells at the skunkworks lab in Fremont is generating a lot of curiosity. The team is leaving no stone unturned to boost the batteries’ cost efficiency, performance, longevity and charging speed. It aims to come up with more than 70% improvement in the energy density of battery tcells. High expectations are attached to the firm’s burgeoning battery business. Industry enthusiasts are bracing for important updates on the company’s ‘Roadrunner’ battery technology, which comprises its in-house designed battery cell manufacturing system to boost production volume and lower cost.
According to many reports, Tesla’s ‘Biscuit Tin’ cell is likely to be a major highlight of the event and be instrumental in reducing battery prices to less than $100/kWh. Another question running on people’s minds is whether the company will eliminate the usage of cobalt in battery cells. As Cobalt is expensive and the supply chain is challenging, chances are high that the company may choose to avoid cobalt, and increase the nickel content and include manganese instead. The successful deployment of a cheaper battery will lower the costs of cars, making them more accessible. Along with innovations in batteries, manufacturing advancements are also expected to be a major part of discussion during the Battery Day event.
Well, we will have to wait one more day to figure out whether Tesla’s Battery Day will live up to its hype and be as electrifying as expected.
Lithium Prospects Shine Brighter Than Ever
The global lithium-ion battery market is expected to blossom on the back of rising electrification of vehicles. Per International Energy Agency (“IEA”), global EV sales in 2018 were 2.1 million units, marking a year-over-year rise of 64%. Around 2.2 million units of EVs were sold in 2019, surpassing 2018 record levels. IEA estimates electric cars to account for 3% of global vehicle sales in 2020, indicating an increase from 2.6% in 2019. Per IEA, EVs on the road will increase to 36%, with about 245 million battery-powered cars by 2030. Expansion of battery manufacturing capacity and reduction in costs are likely to buoy the EV industry’s prospects, thereby boosting lithium demand.
Importantly, more than 50% of all the lithium produced is deployed in rechargeable batteries, which are expected to increase on the back of widespread adoption of green vehicles. In fact, the demand for lithium for usage in EVs is likely to further dwarf the existing supply of this metal in traditional industrial purposes including ceramics, polymers and glass ceramics.
According to Allied Market Research, the global market for Lithium-ion battery market was valued $36.7 billion in 2019 and is projected to hit $129.3 billion by 2027, at a CAGR of 18.0% from 2020 to 2027.
3 Stocks to Watch Out for Amid High Lithium Demand
Albemarle Corp. ALB: One of the leading producers of Lithium, this Charlotte-based company has battery-grade lithium-producing plants in Europe, Australia, China, Chile and the United States.Albemarle remains focused on strengthening the lithium business. It should also gain from synergies from the Rockwood acquisition and cost-cut actions. The company currently carries a Zacks Rank #3 (Hold) and has an expected EPS growth rate of 8% for the next three-five years.
EnerSys ENS: Headquartered in Pennsylvania, EnerSys engages in manufacturing, marketing and distribution of various industrial batteries. Solid product portfolio, new product offerings, acquired assets and shareholder-friendly policies are key strengths of EnerSys. Amid the changing dynamics of the industrial battery landscape, the company remains focused on the development of Thin Plate Pure Lead and advanced Lithium-ion technologies. It currently carries a Zacks Rank #2 (Buy) and has an expected EPS growth rate of 10% for the next three-five years.
Panasonic Corporation PCRFY: Panasonic is one of the key players in the development of next-generation lithium-ion batteries for green vehicles. Continuous research and the cutting edge technology have kept Panasonic at the forefront of battery development. Its advanced Lithium-ion battery tech offers improved energy density, lower costs and improved driving range. Partnerships with auto biggies like Tesla and Toyota are likely to boost the firm’s prospects. Notably, the company is targeting zero cobalt in its battery cells and plans to commercialize cobalt-free batteries in a few years. Panasonic currently carries a Zacks Rank #3. The Zacks Consensus Estimate for its fiscal 2022 earnings indicates year-over-year increase of 120.8%.
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