Lithium ETF Plays Growth of Electric Cars and Mobile Electronics

By John Addison (10/26/10)

You may be reading this article thanks to the lithium battery in your notebook computer, smartphone, or other mobile device. Demand for lithium is forecasted to double in this decade thanks to a wide range of applications for this metal that is half the weight of water: materials, glass, pharmaceuticals, mobile electronics, power tools, hybrid cars, and electric cars.

Currently, electric cars cost more to purchase than many gasoline-powered cars, but less to fuel. Electric charging is equivalent to fueling with gasoline at 75 cents per gallon in many situations. Nighttime charge rates are even lower.

In 2012, Ford (F) will deliver about 100,000 lithium battery packs in its electric vehicles, newplug-in hybrid, and in all hybrids. Nissan (NSANY) will bring on-line a new battery plant in Tennessee that can make 200,000 lithium battery packs annually for its LEAF and hybrids. These volumes, improved battery chemistry, and streamlined supply chains will drive down the cost of lithium batteries. Automotive lithium battery packs currently cost about $700 per kilowatt-hour. By the end of the decade, automakers are optimistic that they will lower the cost to $250/kWh, at which point electric cars will be less expensive to buy than most gasoline cars.

What do the financial markets make of lithium? To find out, I interviewed Bruno del Ama, CEO of Global X Funds. His exchange-traded fund, Global X Lithium ETF (NYSE: LIT), was launched on July 23, 2010, at 16. It has already soared to 20. For some investors, lithium is the new gold. 10 of the fund holdings are in lithium mining and processing companies; 10 in lithium battery makers.

The fund is dominated with large mining firms such as Sociedad Quimica y Minera de Chile (SQM), FMC Corporation (FMC), and Rockwood Holdings (ROC). The fund is not a dream for environmentally and socially conscience investors. These companies mine a range of metals, using energy intensive processes, chemicals, and put miners in harm’s way.

The fund’s largest lithium battery company holdings include Saft, Ener1, ABT, GS Yuasa, and A123. Saft in a joint venture (JV) with Johnson Controls supplies Ford for the Transit Connect Electric and Mercedes hybrids. GS Yuasa supplies the current Japanese EV leader, Mitsubishi; GS Yuasa is well positioned to be Honda’s supplier for new electric and plug-in hybrids. Ener1 is betting on the Think. A123 is supplying Fisker and non-automotive applications.

The fund does not include the battery companies most successful in lithium: NEC, Panasonic, Samsung, and LG Chem. These diversified giants are excluded because their lithium battery business is less than the 15 percent minimum to be included in LIT. NEC is in the AESC joint venture with Nissan. Panasonic supplies Toyota and Tesla. Samsung is in a JV with Bosch to supply makers such as BMW. LG Chem’s Compact Power is supplying lithium batteries for the Chevrolet Volt and the Ford Electric.

Scientific American reports a 500-year supply of lithium, compared with only decades of available cooper. Demand for lithium will increase as we expand from devices that only need one battery cell, to notebook PCs needing the equivalent of 8, to hybrid cars that use the equivalent of 125, to the Nissan LEAF, which uses the equivalent of 3,000.Reuters Lithium Facts

It would take 60 million cars to use the current annual production of lithium. Although there is plenty of lithium, prices will increase to keep up with the growing demand. Since a typical electric car battery pack only uses 4 pounds of lithium, the price will have little impact on the total battery cost.

There is no guarantee that today’s lithium ion batteries will be the leaders in future decades. Labs to start-ups are working on lithium air, zinc air, fuel cells, ultracapacitors, and hybrid energy storage. It is challenging to overcome lithium ion’s cost and scale advantages. More energy can be stored in an ounce of this metal than any practical metal alternative.

By 2020, the California Energy Commission forecasts 1.5 million plug-in cars on California roads. Clean Fleet Report forecasts 10 million for the USA. Cars, mobile electronics, and many applications will fuel the demand for the lightest of metals and create growth opportunities for the leading battery suppliers.

By John Addison. Publisher of the Clean Fleet Report and conference speaker. Disclosure: author owns shares of LIT.

4 replies
  1. 상율
    상율 says:

    The yellow and purple Audi A2 car took around seven hours to complete the 600-kilometre (372-mile) stretch, even had the heating on.

    Driver Mirko Hannemann, the chief of DBM Energy, drove the distance at 90 km/h (55 miles per hour) on average, had the heat on and was able to whisk around a few more miles in the city. When the A2 electric finished, it still had 18% of the initial electric charge in the battery.
     
    It has a lithium-metal-polymer battery. DBM Energy, the company that built the battery and electric motors into the Audi A2, said the battery would function for 500,000 kilometres.
     
    A representative of the car said the Audi still featured all the usual creature comforts such as power steering, air-conditioning and even heated seats as well, so it was not like the car was especially made for long distance record attempts
     
    The German engineers said their car was special because the battery was not installed inside the luggage area, but under the luggage area, meaning the full interior space of the car was still available
     
    The battery, based on what DBM Energy calls the KOLIBRI AlphaPolymer Technology, comes with 97 percent efficiency and can be charged at virtually every socket. Plugged into a high-voltage direct-current source, the battery can be fully loaded within 6 minutes
     
    What's more important, the technology which made the trip possible is available today.
     
    German Economics Minister Rainer Bruederle, who subsidized the drive, said it showed electric cars are not utopian but really work.

  2. Debbie Lewis
    Debbie Lewis says:

    Suggested for reposting:

    "

    Just like the 2008 recesssion and the wall street/bank scams; nobody in DC will investigate this because people from both parties will go to jail:

    For each 1/2 MPG of improvement in vehicle efficiency per model of car, Detroit insiders lose 4 billion dollars in oil industry kickbacks. 100 MPG cars have been demonstrated for decades but Detroit has refused to make them because of the kickbacks. But now the insiders are switching to electric because oil is running out and causing too much cancer. BUT: A large part of the electric car projects are just a scam to get a certain group of VC's to control the lithium fields in Afghanistan! He who controls the electric cars controls the trillions of dollars of lithium revenues. It is just like oil all over again. The U.S. Department of Energy had one guy, who George Bush appointed running $25B worth of taxpayer money. He was working with 3 other guys in this small group who gave the money only to hooked n car companies who they could control the battery orders for and thus control the Lithium profits. Steve Rattner has written his book: Overhaul to try to save his name and makehimself lok like a hero yet the SEC has charged him with investment fraud and bribery of officials. The press says he is a crook who operated for back-office investors like these:

    Dmitry Medvedev Came to Silicon Valley on June 22, 2010 and met with some of the venture capital companies that helped lobby the leverage for the electric car companies that just got funded. Only the car companies got funded that would play in this scheme and who have interests in Global X Lithium ETF (NYSE: LIT), Sociedad Quimica y Minera de Chile (SQM), FMC Corporation (FMC), Rockwood Holdings (ROC) and similar lithium gatekeepers.

    Ener1 Battery Systems who got zillions of the dollars from DOE per the Loan Guarantee and ATVM Director Lachlan Seward, formerly with Chrysler, who cut out all of the non-Detroit loan applicants.

    Is controlled in part by Russian “business man” Boris Zingarevich.

    Who is best friends with the Russian Dmitry Medvedev, who arranged for all of Russia to extend current agreements signed with foreign automakers between 2005 and 2008 granting preferential duties on imported components for eight years in return for sourcing 30 percent of parts locally, according to the Industry and Trade Ministry. Once those arrangements expire, the carmakers would need to commit to buying 60 percent of components in Russia within six years to get more tax breaks.

    Dmitry also appears to own interest in lots of Lithium processing and mining company technology in Russia which is pretty close to Afghanistan.

  3. Samual
    Samual says:

    if we talk about the current situation, electric cars cost more to purchase than many gasoline-powered used cars for sale, but less to fuel. Electric charging is equivalent to fueling with gasoline at 75 cents per gallon in many situations. Nighttime charge rates are even lower.

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