US Automakers Must Secure Lithium

Dear Shareholders & Friends,

It is well-publicized that Chinese and European car manufacturers are setting ambitious targets for the electrification of their vehicle fleets; however, their American counterparts are now following suit. Like Volkswagen, General Motors, the largest American vehicle manufacturer, will only produce pure battery-electric vehicles (“BEVs”) and plug-in hybrids (“PHEVs”), cars that have larger lithium-ion batteries than first-generation “mild hybrids” which are to be abandoned.

 

In the next four years alone, GM plans to introduce 20 BEVs and PHEVs to the market. An electric pickup truck is expected to be unveiled as early as 2021. GM has agreed with the UAW, the union representing almost 50,000 of its workers, to invest $7 billion (6.3€ billion) in electrification in the coming years. Earlier this month GM and LG Chem, a South Korean battery cell manufacturer, announced a joint venture whereby they will invest $2.3 billion in an EV battery factory in Ohio. This factory is to have an initial capacity of 30 gigawatts which can be further expanded. This corresponds to the size of Tesla's Gigafactory in Nevada, the largest production facility for car batteries to date.

Investments of $11 billion

The EV offensive is also gaining momentum at competitor Ford. By the end of 2022, a fully electric version of the world’s best-selling pickup truck, the F-150, will be on offer. Prototypes have already been sighted. In total, America’s second largest car manufacturer wants to invest $11 billion to rollout two dozen BEVs and PHEVs. The first fully electric vehicle will be an SUV inspired by the Ford Mustang, called the Mach-E.

In terms of turnover, GM and Ford together are about as big as VW. The VW group intends to sell around 500,000 BEVs with its twelve brands as early as next year. Even if the American competitors’ goals are only half as ambitious as the Germans’, they will soon be able to build and deliver hundreds of thousands of BEVs and PHEVs to the US market alone.

Against this backdrop, American carmakers must now focus their attention on securing the entire supply chain for the batteries they require. This starts with battery raw materials such as nickel, cobalt and lithium. In the case of the light metal, it is essential to fall back on the deposits in Canada. These are only a few hundred kilometers away from Detroit. The lithium-bearing salt lakes of South America, on the other hand, are several thousand kilometers away from the American car factories. Moreover, in contrast to countries like Chile, Canada is politically stable. Delivery failures due to political unrest are not to be expected in the Great White North.

The government in Washington, D.C. has also recognized the importance of lithium, including it as one of the 35 critical metals that US President Donald Trump considered decisive for national security.

With its hard rock lithium project in the Canadian province of Ontario, Rock Tech Lithium is predestined to soon supply the American automotive industry in the Great Lakes region. The deposit not only has an excellently developed infrastructure but is just a stone’s throw from GM and Ford.

For our German-speaking audience:

Recently, I visited Aktionar TV for an interview about electric vehicles and their impact on raw material supply chains. Please watch the video below:

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