The lithium industry just got a supercharge electricity production in india


For the past several months, the lithium industry and the companies in it have been getting pretty beaten down. As I write this (on Thursday, which is currently today but will be yesterday by the time you read it), Albemarle, the biggest producer, is down over 20% in 2018.

Analysts have been drumming up fear since late last year. They’ve been reporting that lithium demand is not growing. They’ve said producers are extracting too much and there will be an oversupply very soon. They’ve told us prices for the metal will drop astronomically and the companies that mine it will go bankrupt.

Tesla is worth $52.292 billion as I type. So far, Volkswagen’s awarded about $47.7 billion in contracts to suppliers. But that number could get as high as $60 billion in short order. That’s a pretty big bet on the future of driving if you ask me.

And VW needs every one of those battery cells, too. This isn’t some power play to lock up supply and make it tougher for competitors to get them. By 2025, the company plans to have 80 new plug-in EV models on the road. And it plans to sell about 3 million of those EVs annually by that time.

Outside sources are predicting massive moves in the Chinese EV market as well. According to analysts at TechSci Research, China’s EV market is expected to grow by 30% per year until 2022. This research was based on 2016 data — the most recent full year available — and pretty much projects that China will become the Detroit of EVs.

That’s the largest population in the world and one of the biggest economies, too. And that’s just one country. China’s not the only place that’s trying to clean up its fleets and bringing serious demand for lithium with it, too. It’s a Global World

And they’re not the only ones seeing demand skyrocketing in the near future. INN Daily reported that global demand is expected to triple over the same period. It cited the growing prevalence and mainstreaming of electric vehicles as the largest driving factor.

And they were led by the lithium segment with net sales of $298 million, or 36.3% of overall revenues. That represented growth of nearly 40% over the previous year. Kind of makes you wonder about that demand slowdown and oversupply that analysts were talking about.

I call that a buying opportunity. It’s textbook value investing. Everyone is scared. So we should be bold. Albemarle and its industry peers have fallen out of favor with the crowd. But when the crowd runs one way, intelligent investors run in the opposite direction.

After graduating Cum Laude in finance and economics, Jason analyzed complex projects and budgets for the U.S. Army. Then, at Morgan Stanley, he led the assistants’ team for the North American repo sales desk, responsible for hundreds of multibillion-dollar trades every day. Jason is the assistant editor for The Wealth Advisory income stock newsletter. He also contributes regularly to Wealth Daily. To learn more about Jason, click here.

P.S. Briton and I are getting ready for our cannabis-investing workshop at MoneyShow Las Vegas next week. We’ve secured FREE admission for all Wealth Daily readers. You can simply click this link to secure your spot. We’re looking forward to seeing you there. But if you can’t make it, we’ll be recording it and will make the video available afterwards. You can access it after the conference by following this link.