PRICES: Lithium prices are off their highs (see chart). This is stoking fears on electric vehicle demand in China, its biggest market, as it reopens and EV subsidies are cut. Lithium declines are to be expected .They are welcomed by EV makers, but are also unlikely to derail the miners. Tesla‘s (TSLA) Wednesday investor day could see a mass-market Model 2 announcement. This will need more and lower cost lithium to be competitive. Whilst the lithium miners are already priced for pain, with low valuations. But with Li2CO3 prices still well above average levels, most volume locked into long term contracts, and EV demand growth barely started. @BatteryTech.
LITHIUM: Prices are cooling as new supply builds and questions rise over EV demand. With China curbing EV subsidies and battery giant CATL lowering prices. Not dissimilar to Tesla’ price cut. But leading miner Albemarle (ALB) see’s the subsidy phase out having little impact. It forecasts 40% China growth this year and biggest challenge managing strong growth. Peer Livent (LTHM) is similarly bullish. Guiding for 20% sales volume and higher realized prices. Both are already braced for lower prices, with P/E valuations around 10x. This is a fraction of EV maker’s. Lower prices could also support EV adoption and hold off substitutes in the long term.
TESLA: Its 60% stock rally this year faces a key test with the annual investor day at its Texas gigafactory. We’ll see updates on the cyber-truck and roadster timelines, and factory expansion locations, from Mexico to Indonesia. But focus will be on the 3rd master plan. Updating the 2006 and 2016 versions will go far in answering whether Tesla can stay ahead of the rising global EV competition. Scaling car production and its supply chain to produce a cheaper mass-market Model 2 car. This will be key to make its 15-fold 20 million car annual 2030 production target.
All data, figures & charts are valid as of 27/02/2023