The White Powder Americans Are Going Crazy Over

February 8, 2023

Can you guess what it is? 

Here’s a few hints…

It results in an energetic release, is hard to get your hands on, and is making suppliers mountains of money.

If you guessed lithium, you are correct! 

Lithium is the valuable white powder that is quickly becoming a global obsession as society strives to achieve a carbon neutral future. 

No alt text provided for this image
Source: Visual Capitalist

As a critical component in the production of batteries, lithium is essential to the rise of the electric vehicle (EV), and manufacturers are rushing to control production. 

One such manufacturer is General Motors (GM), who announced just last Tuesday that it intends to invest $650 million in Lithium Americas, a lithium production company operating out of Northern Nevada. 

This investment would mark the single largest investment an automaker has ever made to secure sources of raw materials to facilitate battery production. 

Here are three reasons why GM is making this investment: 

  1. Supply Chain Stability – Sourcing the raw materials critical to EV production directly from North America reduces trade issues and transportation disruptions
  2. Cost Control – Sourcing lithium locally through a mine they have ownership in would allow for cost consistency, which isn’t always the case when dealing with foreign suppliers 
  3. Job Creation – The construction of a mine in Northern Nevada is predicted to result in 1,000 jobs during production, and 500 during operation, fueling the American economy

GM isn’t the only EV manufacturer pushing for local lithium production. 

Back in July, Elon Musk shared on an earnings call that lithium mining is equivalent to printing money. 

“So it is basically like minting money right now. There’s like software margins in lithium processing right now. So I would like to encourage, once again, entrepreneurs to enter the lithium refining business. You can’t lose. It’s a licence to print money.”

Unlike GM, the Tesla founder is encouraging other entrepreneurs to pick up a shovel and take on the task of discovering, mining, and producing lithium locally, with the underlying promise that Tesla would be quick to purchase. 

Despite his words of encouragement, Lithium mining isn’t a turnkey operation. 

Projects can take more than 15 years to reach production, and the US is home to a comparatively small amount of Lithium when we look at other players in the industry, including Australia, Chile, and China, who are the 1st, 2nd, and 3rd largest producers, respectively. 

No alt text provided for this image
Source: Visual Capitalist

Even with an investment of nearly two-thirds of a billion dollars, Lithium Americas isn’t anticipated to reach production until the second half of 2026. 

The data is showing that until production ramps up, we’ll be in a global lithium deficit. 

That’s why your new Tesla is taking so long to arrive, and EV battery replacements are nearly as costly as the car itself!

Despite this, GM is still on track to reach its goal of producing 400,000 EVs from 2022 through to the first half of 2023 in North America, and Tesla stocks have managed to rally in 2023 following an abysmal 2022. 

One thing is for certain, EVs are flooding the market, and producers will do whatever it takes to get their hands on the lithium critical to production. 

I’ve got some questions for you: 

  1. Do you think GM is making a smart move investing in local lithium production? 
  2. Do you think companies who outsource production will come out ahead? 
  3. Are you investing in lithium? 
  4. If so, are you investing in local or foreign lithium projects? 

Fun Fact: Up until 2010, lithium was primarily used in the production of ceramics and glass. Today, more than 74% of global lithium resources are used in battery production. So for anyone who needs a little Wednesday motivation, if lithium can 10x its value in just over a decade, so can you! 

No alt text provided for this image
Source: Visual Capitalist

Would love to hear your thoughts in the comments below 👇👇👇