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Electric Vehicles Lead to Lithium Miners & Batteries

The Blue Water Team

Electric vehicles (EVs) are gaining traction among traditional car manufacturers and governments. As demand for EVs grows, investment opportunities are also growing in the two fields essential to EV success--Lithium production and battery manufacturing. 

EV popularity is growing among traditional auto manufacturers.

EV sales grew 45% in 2020, eclipsing ICE vehicle sales, which fell 14% in the same time period. In response to these trends, traditional automakers are pursuing EV production, including an all-electric Ford-150 and financial commitments to the development of EVs. 

Government support is driving EV growth. 

Governments are also helping support the growth of EVs, such as the $174 billion for EV support included in President Biden's American Jobs Plan. This support includes plans to encourage both producing and purchasing electric vehicles and includes tax credits, funding, and incentives. International governments, such as Germany and China, are also providing subsidies and initiatives to support the development of EV technology. 

Battery production and demand present unique challenges. 

As demand for EVs skyrockets, demand for the lithium-ion batteries that power electric vehicles is also set to increase. Battery manufacturing capacity in the United States, however, currently falls short of anticipated needs-Only 12 factories capable of producing more than GWh worth of batteries per year currently exist here. 

As a result, a drive is beginning to increase battery production capacity in the United States, and globally. Between increased production by battery makers such as LG and car manufacturers committing to battery production themselves, the industry could see an increase of 402% in the next decade. 

Lithium demand is increasing in the EV industry. 

Lithium, essential for the production of EV batteries, is beginning to see an uptick in its prices and value, after an initial decline in prices that led to a decrease in lithium production. However, lithium demand should increase 200% in the next 5 years, and with the increase in prices, lithium producers are ramping up their production. EV production could depend on whether or not lithium production can meet demand over the next few years. 

Over the next few years, there could also well be an "arms race" intent on creating domestic supply chains that provide everything a nation needs to manufacture electric vehicles. Ongoing investment in batteries and lithium can help to drive success in these areas. For investment opportunities in electric vehicles, check out our list of transportation technology funds.