Tesla’s Battery Day revealed their plans to improve EV costs and performance, including localisation and expansion of manufacturing facilities, battery technology advancements and further vertical integration upstream into raw materials. In Galaxy’s view these plans are positive for the industry and support the inevitable EV-led lithium demand surge.
Tesla plans to meet significant EV demand growth by increasing their battery manufacturing capacity, targeting 3TWhr by 2030 (vs ~100MWhr today). This capacity, for Tesla alone, implies over ~13x the volume of lithium consumed by the battery industry globally and ~ 8x total worldwide production in 2019. Additionally, all other major global automakers remain committed to electrifying their fleets to meet forecast EV demand and reduce carbon emissions.
Tesla’s battery technology advancements on both the anode and cathode side remain positive for lithium demand. Irrespective of the changes in chemistry and mix at the cell level, lithium continues to be the core element of rechargeable batteries.
Further, sedimentary deposits, including lithium extraction from clay, present significant technological challenges in becoming economically viable to produce at a meaningful commercial scale. It is expected that conventional brine and hard rock lithium production will continue to dominate market share of supply in the coming decade.
Global lithium demand growth remains attractive in the long term, however the level of global production supply required to meet forecast growth from both Tesla and the rest of the world is challenged in the near to medium term. This is due to the lack of current capital investment in raw materials, presenting a looming structural supply deficit.
Galaxy is well positioned to advance its portfolio of world-class lithium deposits to take advantage of the forecast lithium demand surge and fuel an electrical revolution in transportation led by Tesla.