Share

Re-Lit

The World Bank and many other institutions have named lithium a lynchpin material for a low carbon, battery-powered future. This expectation led to lithium’s price increasing over 1,100% from the start of 2021 to the end of last year, but how certain is this future?

Lithium is a topic popular with investors, and it’s one we have covered in 25 March 2022’s edition of The Wrap: Lit

According to BloombergNEF, lithium-ion battery packs cost US$141 per kilowatt hour (kWh) in 2022 on average. Why is this important? Today’s battery prices are at price parity only with petrol and diesel premium cars. For the majority of middle-market internal combustion vehicles, experts believe EVs to only reach parity at US$100 per kWh. BloombergNEF currently estimates this to happen in 2026 at earliest – a timeline that has been pushed back a few times due to rising commodity prices.

Additionally, US$100 per kWh is understood to be at the limit of lithium-ion battery technology’s capabilities. Venkat Viswanathan, Associate Professor at Carnegie Mellon University, has said lithium-ion battery prices could still decline by 20% to 30% but may not get much lower. While the exact point where the technology will hit a wall is up for debate, the point is accepted by many. That being, lithium-ion battery technology will get us to the tipping point, but no further.

The risk for lithium investors is whether other technology will take its place as manufacturers look to cut costs. Some being discussed are the lithium-sulphur technology under development by Li-S Energy ($LIS) and hydrogen fuel cells, a topic discussed in 3 May 2022’s edition of The Wrap: H2. There’s also sodium-ion batteries – a lower-cost alternative with a highly accessible supply chain. While perhaps currently less attractive than lithium-ion due to its low energy density, Chinese battery giant, CATL, is looking to commence production as early as this year. 

Despite all this, lithium-ion currently remains the global market leader in EV batteries. Remember, this is a long-term risk, and the candidates for lithium-ion’s replacement are still a few years away from becoming viable — something for investors to make their own minds up on as time goes by.


Related


Want more?

You know what to do

Insights, trends and company deep dives delivered straight to your inbox.


Stake logo
Over 7,000 5-star reviews
App Store logoGoogle Play logo

Subscribe to our free newsletters

By subscribing, you agree to our Privacy Policy.

Stakeshop Pty Ltd, trading as Stake, ACN 610105505, is an authorised representative (Authorised Representative No. 1241398) of Sanlam Private Wealth Pty Ltd (Australian Financial Services Licence No. 337927) ('Sanlam') and an authorised representative (Authorised Representative No. 1241398) of Airwallex Pty Ltd (Australian Financial Services Licence No. 487221) ('Airwallex'). Stake is not authorised by Airwallex under Airwallex’s AFSL to arrange for clients to be issued with securities as Airwallex is not authorised under its AFSL for this purpose. Stake is not authorised by Sanlam under Sanlam’s AFSL to arrange for clients to be issued with a non-cash payment facility as Sanlam is not authorised under its AFSL for this purpose. Stake SMSF Pty Ltd (‘Stake Super’) is not licensed to provide financial product advice under the Corporations Act. This specifically applies to any financial products which are established if you instruct Stake Super to set up a self managed super fund (‘SMSF’). When you sign up to Stake Super, you are contracting with Stake SMSF Pty Ltd who will assist in the establishment of a SMSF under a ‘no advice model’. You will also be referred to Stakeshop Pty Ltd to enable your trading account and bank account to be set up in order to use the Stake Website and/or App. Stakeshop Pty Ltd will also run marketing and promotions to you under. For more information about SMSFs, see our SMSF Risks page.The information on our website or our mobile application is not intended to be an inducement, offer or solicitation to anyone in any jurisdiction in which Stake is not regulated or able to market its services. At Stake and Stake Super, we’re focused on giving you a better investing experience but we don’t take into account your personal objectives, circumstances or financial needs. Any advice given by Stake is of a general nature only. As investments carry risk, before making any investment decision, please consider if it’s right for you and seek appropriate taxation and legal advice. Please view our Financial Services GuideTerms & ConditionsPrivacy Policy and Disclaimers  before deciding to invest on or use Stake or Stake Super. By using our website or service in any way, you agree to our Privacy Policy and Terms & Conditions. All financial products involve risk and you should ensure you understand the risks involved as certain financial products may not be suitable to everyone. Past performance of any product described on this website is not a reliable indication of future performance. Stake and Stake Super are registered trademarks in Australia.

Copyright © 2024 Stake. All rights reserved.