Selasa, 13 April 2021

Why a Supply Crunch in This Key Sector Is Good News for Us

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Why a Supply Crunch in This Key Sector Is Good News for Us

By Andrey Dashkov, analyst, Casey Research

Nick Giambruno

Regular readers will know we’ve been pounding the table on the electric vehicle (EV) megatrend for a while now.

That’s because EVs are simply the way of the future. It’s only a matter of time before they achieve widespread adoption – and it’ll happen sooner than you think.

According to Deloitte, EVs will make up almost one-third of all new vehicle sales by 2030 – that translates to roughly 31 million EV sales.

But there’s a problem. Right now, most EV batteries take over an hour to charge. That’s just not practical.

Imagine you’re late for work… running into your garage with barely a minute to spare – when you realize you forgot to charge your car overnight. The battery is completely drained.

You call a regular old taxi or Uber and ask yourself if you’re really living in the future.

Luckily, there’s a solution. I’ll tell you all about it below… and share why investors who get positioned now stand to make fortunes as the EV rollout picks up steam…

The Solution for Widespread EV Adoption

EVs are the future… and widespread adoption will happen. As our founder Doug Casey says, “there’s no doubt in my mind that electric vehicles are going to put an end to the internal combustion engine.”

But not with the charging problem standing in the way. In fact, over two-thirds of potential EV buyers list long charging time as a concern that prevents them from going electric.

So for EVs to become widespread, they’ll need better batteries. And the solution lies in something called solid-state batteries.

They can be fully charged in minutes – about the same amount of time it takes to fill up at a gas station.

But that isn’t the only benefit.

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These batteries provide about double the range (the amount of miles you can drive on a full charge) than that of current EV batteries.

They’re also safer, more efficient, and require fewer metals than current EV batteries – which means that the cars powered by them will be cheaper, and we won’t hear stories about EV batteries exploding and catching fire.

But there’s an obstacle for their application in EVs – and it’s creating a massive profit opportunity for us today.

The Lifeblood of These Batteries

These batteries require quite a bit of lithium – a key tech metal we’ve spilled a lot of ink on in these pages.

If you’re just joining us, tech metals are key materials required to build out some of the biggest advancements of our lifetime – including EVs.

My colleague and Casey Research commodities expert Dave Forest shared his view on these critically important metals in a recent interview with Daily Cut editor Chris Lowe:

Lithium, nickel, cobalt… [Tesla] can’t make a single car without these metals. They’re key components in rechargeable batteries that serve as “motors” in EVs. Without these metals, these batteries can’t hold a charge.

Lithium is key to the EV rollout. And some of Dave’s lithium plays have returned 283% and 113%.

With gains like that, you might be thinking you’ve missed the boat. But it’s not too late to buy in – because the market’s about to face a massive supply shortage.

Supply Crunch Will Send Lithium Soaring

Between the EV rollout… and the lithium already used to power everyday devices like laptops and smartphones… demand for the metal is soaring.

And there’s not enough new supply to meet demand.

Battery demand is expected to grow by 466% by 2030. And right now, we only have enough lithium in reserves to power enough EVs to make up about 15% of cars on the road. There’s demand for double that – remember, by 2030 about 30% of cars on the road will be EVs.

One of the main reasons for the lithium supply crunch is the lack of investment in new mines, and supply chain issues. Dave again…

At the same time, my colleagues in the mining industry are struggling to find supplies of these [tech] metals. In some cases, we mine them in only a handful of countries. Many of them, such as Indonesia, the Philippines, Argentina, and the Democratic Republic of the Congo, aren’t very stable.

That sort of problem can’t be solved overnight. And it takes years to bring new mines online.

Goldman Sachs predicts that the lithium market will be in a state of deficit by the end of this year.

That’s great for the lithium price. In the last 12 months alone, it’s soared by 129%. And that’s just the beginning of this rally.

As the sheer scale of EV adoption outstrips supply… that will put a lot more upward pressure on the lithium price.

How to Profit

That means investors who get positioned now will reap all the benefits as that happens… An ETF that holds a diversified portfolio of lithium mining companies is a great way to start.

The Global X Lithium & Battery Tech ETF (LIT) holds a portfolio of 41 companies that includes lithium mining companies, battery-makers, and carmakers.

Just remember to position size accordingly, and never bet more than you can afford to lose.

Good investing,

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Andrey Dashkov
Analyst, Casey Research


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