Tesla’s Electric Vehicle Revolution Heats Up Lithium Exploration & Production
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The evening of the “debut” Elon Musk ushered 3 Tesla Model 3 prototypes rolled on stage. And there he announced to his rabid fans that Tesla had taken in more than 115,000 reservations that day, each with a $1,000 deposit sight unseen. The crowd went wild, the press ate it up!
In the ensuing weeks reservations have risen to about 400,000 almost 4X the total number of EV’s Tesla has produced over the last 8 years. As the sparkle come off this accomplishment everything has to go right if Tesla is going succeed.
A recent article that appeared in TIME.com said, “Lithium is facing the over-charged demand.”
I have been following the Lithium-ion battery phenomenon since 2009, and like the article in TIME.com says, it, Lithium (Li) the world’s lightest metal might be on its was to becoming the gasoline for which the feeding frenzy has just started. And savvy mining exploration companies are “staking” potential new Lithium (Li) targets in the State of Nevada, the biggest and richest of which are not far from Elon Musk’s multi-billion dollar “gigafactory” where he intends to produce low cost Lithium-ion batteries and expected to demand 1000’s of tonnes of Lithium.
The Model 3 is lauded an engineering marvel that is years ahead of its time. Some fans compare it Apple Inc.’s (NASDAQ:AAPL) iPhone.
The Model 3 represents the 1st time an electric car does not have to apologize for running on batteries in this case Lithium-ion batteries. Consumers and experts alike in the past held that electric cars always run slow and would never be objects of automotive desire.
Tesla proved that wrong by posting some of the fastest times from 0 to 60 mph in the world with its not so affordable Model S.
The Big Q: How far can you go before having to plug it in again?
The Model 3 offers the cheapest range available for any electric car. This may be one of the most important features of the car, if it is to bring the electric automobile to a mass market. The Tesla data: Vehicle cost per mile of battery range is $163, Range in miles per charge 215, MSRP $35,000+
Battery cost can make up to approximately 23% of the price of an EV.
The company has been spending a lot to cut this expense, including building the biggest Lithium-ion battery factory on earth in the US State of Nevada, near Reno, dubbed the “gigafactory” and launching a standalone battery-storage business for homes and small business.
Tesla is now making finished battery packs at or below $250 per kilowatt hour, less than the industry average, according to analysts. If Tesla can shave an additional 30% off its battery cost, it should be able to sell the Model 3 with a 20% gross profit margin including subsidies, not counting for discounts to buyers as sales lag due to technical production and delivery issues.
When a long range battery dies what does the driver do?
Tesla is focused on building a charging network with fastest chargers. Mr. Musk calls it the Tesla Supercharger, saying can provide 170 miles of driving range in 30 mins, and owners of the Model X and S can use them all without charge.
Tesla cannot afford delays, below is why, as follows:
- Tesla has relied on wealthy fans who were not in a rush.
- Many Model 3 buyers will not want to wait.
- The backlog of 400,000 reservations could grow before the launch scheduled late in Y 2017.
- Delays will happen, orders cancelled, deposits returned.
- General Motors Co.’s (NYSE:GM) Chevy Bolt will beat Tesla to market with an electric car that can drive 200 miles on a charge for less than $40,000. .
- The big issues for Tesla is that the $7,500 federal subsidy for electric cars, which brings the base Model 3 price to $27,500, is going to expire soon.
- And BMW and Volkswagen (OTCMKT:VLKAY) are coming with their entries into the sector, they are the most advanced and well financed automobile manufactures in the world and can finance their cars for their buyers.
- Affordable Lithium-ion batteries are a Key element.
No question, things need to come into alignment and go right for the Tesla and the Model 3 to succeed
One automotive analyst puts it this way, “The battery factory must flourish, costs must come down, car-manufacturing capacity must scale at an astonishing rate, and all of it needs to arrive on time.”
Mr. Musk says he can sell 500,000 cars a year by Y 2020 worldwide
So, in order for Tesla to meet its Y 2020 forecast, it will need to make up the difference with the rapid deployment of the Model 3.
That means that Tesla needs to sell more units than the class-leading BMW 3 Series and with no dealership representation.
Almost every major automaker has an electric-car program that is moving forward. Ford Motor Co. (NYSE:F) is investing billions of dollars in its EV program.
That should translate to more demand for Lithium in the sector.
Not only does competition spell trouble for Tesla, but electric cars have to replace the internal combustion engine, and cheap gasoline that is available almost everywhere.
Mr. Musk and Tesla can take credit shining the light on the EV sector’s possibilities, but it will be very difficult for him and his fledgling, federally subsidized company stay in the game with the world biggest automotive manufacturers and marketers.
What automotive ‘Fuel” revolution means is more and more Lithium is needed now and this need should continue to grow in the future to facilitate reliable, sustainable motoring worldwide.
Grass Roots Companies are focusing much of their exploration for Lithium in the US State of Nevada
Lithium is not scarce, but it tends to be deposited in low concentrations. The biggest challenge is finding high enough concentrations to make it cost-effective to produce.
Brine deposits are less expensive to mine than hard-rock deposits, that is due to significantly lower capital and operating costs associated with solar evaporation ponds. The Sun does a lot of the work.
Recently I learned that a junior mining company acquired claims to explore for Lithium brine projects in the State of Nevada not far from Elon Musk’s “gigafactory”.
And that the US State of Nevada is becoming a Hub for manufacturing for energy storage, clean energy and greener transportation solutions.
Nevada Energy Metals (TSX-V:BFF ,OTCMKT:SSMLF, Frankfurt:A2AFBV) announced that it has acquired 87 claims (covering 704 hectares) in Clayton Valley, located in Esmeralda Country, Nevada.
Malcolm Bell, lead consultant for project acquisitions said, “Nevada Energy Metals’ statewide evaluation of playa formations hosting potential for economic brine deposits. To date, a number of highly attractive prospects have been investigated and approved for immediate acquisition. Our corporate objective is to own 100% of all newly acquired projects with little to no cash, share or royalty considerations or exploration commitments payable to third parties. Our mandate is to be the prime Nevada project generator negotiating joint venture partnerships to make all future exploration expenditures while maintaining the ability to “cherry pick” several projects to develop 100% in house.”
Stay tuned….
Paul Ebeling
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