Electric cars are often bought for practical reasons.
The “fuel” is cheaper. There is less mechanical maintenance. They’re quieter.
But people that buy a Ferrari sports car don’t drop a fortune for practical reasons.
The company is notorious for building the most expensive sports cars. And they’ve been active in the biggest car races in the world for decades.
Also, their cars are horrible gas guzzlers. Many Ferrari models barely get 16 miles on the gallon even on a highway.
But now, even climate-conscious consumers can add one to their car collection.
Because Ferrari just announced they’re adding their first all-electric sports car to their offering. | | The price tag: A cool 500,000 euros ($535,000).
For Ferrari, a low price is not the point.
It's about the prestige.
Ferrari’s Mainstream Move
Ferrari might produce excellent sports cars. But those that buy them aren't just looking for quality.
They want to be looked at. They want to be admired for having the means to afford an expensive car like that.
And they know how to move their market cap and drive revenues... | | Not everyone can have a Ferrari and for good reason.
The company knows its customers and the market – not to mention how to make money for their shareholders.
So, this pivot is no surprise.
And for electric cars, this move means a further step into the mainstream and a step towards fully replacing gas-powered vehicles.
The lithium price has dropped significantly from its 2022 high of $80,000.
But that is by no means the end of the lithium bull market.
In fact, this correction will most likely turn out to be the biggest opportunity for new lithium buyers to get in on the best lithium explorers on the cheap.
Here are just a few reasons why lithium will dominate headlines in the coming years…
Lithium Accelerator #1:
Rising EV sales worldwide
Even though the media hype has slowed down, electric cars are still quietly taking over the market: - Companies have sold more EVs in 2024 than ever.
- EV sales went up 60% from 2022 to 2023.
- In China, 45% of all cars sold this year are electric.
Current sales numbers are on track to reach 50% of all new car sales by 2035 in the entire world.
And this will be further accelerated by global EV production and seller mandates…
Lithium Accelerator #2:
Governments are forcing the gas → EV conversion
Whether you agree with their methods or not, governments around the world are helping speed up the electric vehicle conversion: - The UK was the first major economy to announce a ban on gas cars by 2030.
- 12 U.S. states are working on legislation to ban new gas cars by 2035.
- Canada also wants to phase out gas cars by 2035.
- The European Union passed a ban on new gas cars for all European countries by 2035.
Case in point, Ferrari and other car makers know what’s happening in Europe… - Europe's ultra-fast EV charger network has exploded, growing 7x in just 3 years.
With 89,000 fast chargers now making up 15% of the public network, EV drivers enjoy unprecedented charging convenience. | | | Lithium Accelerator #3: Low lithium prices will create a production bottleneck that will drive up prices – again
For most of the past few decades, the lithium price remained relatively stable at around $6,000.
And then came 2022, when the entire world started talking about electric cars. The spike in demand led to an all-time high in the lithium price of $80,000 per metric ton.
Today, the price hovers around $12,500 per metric ton. | | Does that mean the lithium hype is over?
Not at all.
In fact, a new study using data from the International Energy Agency says that prices could soar 1,500% by 2050.
That’s a long way away, but even a fraction of that price rise gives a BIG boost to lithium stocks.
What fueled the shortage panic of 2022 was a lack of production capacity, not a lack of lithium deposits
The acceleration of the EV trend took many by surprise.
Especially because it was fueled by world governments eager to offer incentives for buying an EV to satisfy their green energy agendas.
Lithium producers simply couldn't keep up with this extremely high demand.
It takes years to set up a new lithium mining operation.
Even if you extract lithium using the other popular method, called “brining,” this process will still take you 12-18 months until the lithium ready to use.
Lithium production is starting to pick up again, and that has contributed to lower prices.
But as you’ve seen above, EV sales are still growing every year.
The energy transition is happening. And no one can stop it.
The low lithium price might force some lithium producers out of the market. And that will create another bottleneck that will drive up prices again.
This is the nature of the resource price cycle.
At that point, anyone who is already invested in promising lithium explorers will be printing money
That's why we’re glad we found a lithium company that meets our expectations of a successful small cap exploration company.
That could be sitting on something big (and we’ll find out very soon).
I'm putting together the final touches in a report on this company and will share it with you very soon.
Sincerely,
Marin Katusa and the KR Special Situations Team | | | |
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