I was told yesterday that the biggest hurdle for Tesla is making its vehicles cool enough for the public.
I know that’s wrong.
Look, here’s what it comes down to…
The problem for billionaires like Elon Musk isn’t convincing people to drive his electric vehicles, but whether or not he’ll be able to make those EVs in the first place.
For Tesla, it’ll become a full-blown crisis in short order…
And if you heard Elon’s cry for help last year, it would’ve given you a clear-cut path to investing in the lithium revolution.
When the mighty Musk unveiled his Model 3 back in March of 2016, he uttered these infamous words:
In order to produce half a million cars a year… we would basically need to absorb the entire world’s lithium ion production.
Maybe he was talking off the cuff, hoping that such a bold statement would whip the millions of Tesla shareholders into a frenzy of excitement.
If I were a shareholder of Tesla when he made that statement, I would not have jumped for joy.
I would have cringed.
What he did was declare open war on every other major player looking to slice off its own piece of the lithium revolution.
And like I told you recently, that includes taking on Warren Buffett in a head-to-head battle.
Sure, we could talk about the other players, which includes a list of every major automaker on the planet.
But if we really want to dig into this opportunity, I suggest going one step further.
All we really need to do is stay one step ahead of this billionaire battle…
And it’s much easier than you might first think.
So You Want to Invest in Tesla? Don’t.
First, let’s catch everyone else up on Tesla and BYD’s supply conundrum.
It all starts with the Lithium Triangle.
This area, encompassing parts of Argentina, Chile, and Bolivia, holds roughly half of the world’s total lithium reserves.
Right now, there are several ways to extract lithium: brines, spodumene, and clay.
We talked about two of these methods back in 2015.
Of course, about 66% of global lithium resources are found in brine deposits, so you can see why companies are scrambling to develop these projects — particularly in the Lithium Triangle and the United States.
What’s the concern?
Up until now, lithium production has been dominated by just a handful of major players.
I’m talking about four companies controlling nearly all of the world’s lithium supply.
That’s right, dear reader, and things get even better for these lithium oligarchs…
Not only do they have supply locked down, but they also set their own prices!
You can probably guess what happened the moment these producers realized they have both Musk and Buffett backed against the same wall.
Believe me, there’s no shortage of buyers.
Call it the dawn of a new OPEC… or is it?
You see, there’s a new group of producers that are threatening these lithium barons.
Reuters reported over the summer that the global supply of lithium carbonate equivalent (LCE) is expected to grow to 235,000 tonnes this year and increase by another 60,000 tonnes throughout 2018.
One of those lithium barons, SQM, estimated that demand will surpass 500,000 tonnes by 2025.
Let’s be clear… the safe move for investors has always been diversification.
One way to do that is through the basket of stocks held by the only ETF for lithium: Global X Lithium & Battery Tech ETF (NYSEArca: LIT).
Playing it safe, you would have enjoyed a nice 61% gain on your LIT position so far in 2017.
Then again, members of my Energy Investor community would have more than doubled THOSE gains on just one tiny, up-and-coming lithium stock during the same period.
They’ve enjoyed a 153% run-up so far in 2017.
And it’s ready to surge again.
I think it’s time you joined them.
Until next time,
@KeithKohl1 on Twitter
A true insider in the energy markets, Keith is one of few financial reporters to have visited the Alberta oil sands. His research has helped thousands of investors capitalize from the rapidly changing face of energy. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital as well as Investment Director of Angel Publishing’s Energy Investor. For years, Keith has been providing in-depth coverage of the Bakken, the Haynesville Shale, and the Marcellus natural gas formations — all ahead of the mainstream media. For more on Keith, go to his editor’s page.
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