Elon Musk, the dazzling driver of the car manufacturer Tesla, never shies from a clear estimate. For example, he has said that lithium only gives the batteries that supply their electric vehicles with energy that extra something. At little extra sounds nice – but also avoidable. But it is not. Rather, lithium is the thing itself. Since, without the alkali metal, they do not work right now. The price development of lithium carbonate also shows this: since 2014, prices have more than tripled. It is demand that pushes the price upwards.

This has also been recognized by investors such as Blackrock and Capital Group; they have recently invested in smaller lithium manufacturers. Auto manufacturers and battery manufacturers are also rumoured to be interested in buying lithium suppliers. It is easy to secure what you need. Is this the market scenario that iron ore ran through at the turn of the century, a “super cycle” with steadily rising prices? Possibly. At that time, China’s great appetite for iron ore, among other things, pushed raw material prices further and further upwards. “It took many years for the supply of iron ore to match demand,” said Reg Spencer, analyst at Canaccord Genuity.

Even before the lithium is on the market, it must be discovered, must be sponsored. That takes time and costs a lot of money. According to Spencer’s estimate, if one were to increase the volume of subsidies from South America and Australia, the bill would amount to three billion dollars. Accordingly, investors and investors are not the only ones who care.

In London, a lithium conference took place. According to one of those present, a Volkswagen representative, the supply of lithium and cobalt, also important for batteries, was the VW Group’s biggest concern. And BYD, specializing in electric cars, among other things, said that they are talking to Chilean suppliers about possible agreements to secure an offer. An offer that meets a growing demand.

Because more and more electric cars are driving across the streets. In 2025, 14 per cent of the world’s electric vehicles are to be operated electrically, while for Europe the share will be 30 per cent. Among other things, the cost of an e-car and a conventional vehicle should be even in just a few years.

The demand for energy storage is also driven by other sources. Households, for example, can be the customers of small energy reservoirs. The increasing importance of renewable energy is, however, one of the main reasons for increasing fluctuations in the energy grid. A lot of wind or sun allows a lot of energy to flow, overcast skies and lulls, in turn, cause a slump in electricity. Energy storage devices can absorb the surplus energy and feed it into the grid as soon as the demand is there. In Germany, for example, the falling prices for solar modules combined with the higher prices for electricity from the grid have led to a growing interest in these domestic battery reservoirs. There is something moving, as the figures show. In 2005 the large battery parks saved only 6 megawatt hours; today it is 4,000 worldwide – but this is only enough for the energy demand of 130,000 households per day.

However, demand has already caused the cost of batteries to drop. The price per kilowatt hour was at 1,000 dollars in 2010, according to BNEF. In 2016, it was 273 dollars; in 2030 it should again be 73 per cent less. 150 dollars is considered the price that would trigger mass production. Lithium, currently the state-of-the-art energy storage system, is always present in these.

Two things are still missing, however. On the one hand, the political start-up aid. Among other things, thanks to the low price of oil, petrol and diesel are cheap and consumers are still traveling with their conventional vehicles. In the US, for example, Ford sold six F-Series trucks for each e-car.

In 2040, therefore, only 10 per cent of the world’s cars will be powered by electricity, while a further 20 per cent will be hybrids, according to Facts Global Energy. Political support can change a lot. Since, for example, Norway has been helping e-car buyers, many buy an electric vehicle in addition to a conventional one in order to save money. As to how it looks without support, Denmark provides an example. There, the subsidy was cancelled at the beginning of 2016. Sales promptly fell by 80 per cent.

It is exactly this which makes the topic a zeitgeist topic. The will for environmentally friendly mobility and for dealing with energy in politics is there, at least in principle. Technical developments are going in the right direction. And mass production is foreseeable. This together makes for a zeitgeist investment.

Robert Ruthmann
Robert Ruttmann

I consider the increase in e-mobility as one of the key events of our time and I think most estimates of future growth rates may be too conservative. A driving force here are the falling costs of storage capacity.

Giles Keating
Giles Keating

Batteries solve the problem of renewable energies, which can not always generate energy according to the demand. It’s the problem of the load peaks – that is, the power consumption varies greatly during the day.

Zeitgeist allocation

Published on 13.10.2016

Description Instrument ISIN TER Allocation
TESLA Inc Stock US88160R1014 0% 15,00%
GS Yuasa Corp Stock JP3385820000 0% 10,00%
Panasonic Corp Stock JP3866800000 0% 10,00%
BYD Co Ltd Stock CNE100000296 0% 10,00%
EnerSys Corp Stock US29275Y1029 0% 10,00%
Hitachi Chemical Co Ltd Stock JP3785000005 0% 8,00%
Evonik Industries AG Stock DE000EVNK013 0% 8,00%
FMC Corp Stock US3024913036 0% 8,00%
Merck KGaA Stock DE0006599905 0% 8,00%
Johnson Controls plc Stock IE00BY7QL619 0% 6,50%
SolarEdge Technologies Inc Stock US83417M1045 0% 6,50%

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