The Tokenist | Oct 13, 2023 03:40PM ET
Tesla (NASDAQ:TSLA) may be the trendy stock, but what about lithium stocks?
It is almost set in stone that governments worldwide will push out gasoline-powered vehicles. The European Union (EU) has set a 100% zero-emission car sales starting from 2035. California joined the trend with the same deadline. Even sooner, the UK has set a 2030 deadline.
The gasoline-to-EV trend is perhaps the most telling in Norway. This oil-rich country has the highest percentage of EV sales globally, having broken the record in 2022, with nearly 80% of new car sales in the electric category.
For stock investors, the trend outlines a new resource resurgence. Companies in charge of extracting lithium for car batteries are poised to become the new oil barons.
By 2025, global lithium supply is set to outpace demand, according to BMI, Fitch Solutions research division. In their report, China alone, the world’s largest lithium processing nation, will have a 20.4% YoY lithium demand up to 2032, compared to only 6% supply growth.
The pressing question is, which companies are best positioned to keep up with the rising lithium demand? But before getting into that, let us remind ourselves why we are seeing lithium stocks decline this year.
h2 Lithium Stock Dip Despite Forecasted Demand?/h2Lithium demand may be forecasted to outpace supply in the long run, but global inflation has done much to deplete consumer resources. With excess US savings returning to pre-lockdown levels, it is no wonder Tesla had to cut EV prices multiple times this year aggressively.
Additionally, EVs still essentially belong in the luxury car category, averaging at $53k per car as of September 2023. This is why hybrids continue to outsell EVs this year, at 1.4 million vs 1.2 million respectively, per GlobalData. And why both Toyota (NYSE:TM) and Ford (NYSE:F) are doubling down on hybrids instead.
Combined with recessionary concerns, investors have turned to selling off risky assets such as lithium stocks. In September, global lithium-ion cell prices dropped under $100 per KW/h for the first time in two years.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.