Warren Buffett And Elon Musk To Spark A Lithium Boom – by James Stafford (Oil Price.com – July 28, 2015)

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The age of electrification across the transportation sector, the solar panel revolution, and Tesla’s battery gigafactory are igniting a battle for the cheapest battery. That will transform lithium into a boom-time mineral and the hottest commodity on the energy investor’s radar.

It has been easy to take lithium for granted. This wonder mineral is the backbone of our everyday lives, popping up in everything from the glass in our windows to our mountains of electronics.

And while investors have long appreciated the steady rise in demand for this preferred mineral, the number of new applications continues to multiply. Smart phones, tablets, laptops, and other consumer electronics demand more lithium. But the largest driver for future lithium use will be in electric vehicles and home batteries for solar panels. That has lithium on the verge a boom for which supply can no longer be taken for granted.

Not since the shale boom have we seen a market transformation of such significance. Lithium has long been used for a variety of mundane purposes, and while the variety is spectacular—with applications in everything from glass, ceramics and greases to a line-up of industrial process—it has flown under the radar for most investors.

Supply has always largely managed to keep pace with steadily rising demand for lithium, and while the mineral is slated for growth with or without the ‘battery explosion’, Tesla’s gigafactory will spark a phenomenal spike in demand that will be no less exciting than the shale boom.

Not only will battery gigafactories change an already attractive lithium demand picture, but the suppliers themselves will change, making way for newer entrants—with more foresight and better technology–that will provide some of the best investment opportunities in the sector.

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The lithium story cannot be told without first telling the Tesla story. Tesla Motors (NASDAQ:TSLA) is developing a cheaper line of electric cars for release later this decade, and to achieve this it is constructing a $5-billion gigafactory to build 500,000 electric cars with the objective of lowering the cost of batteries by at least 30 percent.

Moreover, around one-quarter of the plant’s capacity may be for Tesla’s stationary storage business, which also sells backup batteries for homes, businesses and utilities—all fueled by lithium.

According to Tesla’s brainchild, Elon Musk, demand for stationary storage batteries has skyrocketed to the point that an expansion of the gigafactory may have to be considered before it is even built.

Musk is eyeing a “complete transformation of the entire energy infrastructure of the world to completely sustainable zero carbon,” and what he’s talking about here is lithium-battery production on a mind-blowing scale. Tesla is planning to produce more lithium-ion batteries in this factory than in the entire global marketplace combined.

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