As we look ahead to the next decade, the push for electric vehicles has become a global initiative as part of a broader drive toward renewable energy. The California government has said that it aims to put five million EVs on the road by 2030, while China wants seven million EVs on the road by 2025.
An ongoing trade spat between the United States and China has not abated despite some warmer rhetoric between the two governments. The U.S. has sought to degrade Chinese technological development by targeting its “theft” of intellectual property.
The U.S. is also moving to cut dependence on China for lithium by ramping up domestic production. Global demand for lithium is projected to quadruple by 2025. The U.S. produced 2% of the world’s lithium in 2017, but possesses around 13% of global identified resources according to the U.S. Geological Survey.
The electric vehicle boom has been a crucial driver for lithium-ion battery demand. Annual global electric vehicle sales are projected to hit 24.4 million by 2030, according to Bloomberg New Energy Finance. Compare that to the 440,000 EVs that were sold worldwide in 2015. Electric vehicles reached 50% of lithium-ion demand in 2016, and its share is expected to widen significantly going forward. The widespread growth of electronics use, including cell phones, laptops, and other devices, will also keep demand up in the coming decades.
How can Canadian investors take advantage of this soaring demand? Today we’ll look at one stock that’s worth your consideration.
Lithium Americas Corp. (TSX: LAC)(NYSE: LAC) is a Vancouver-based resources company that operates the Cauchari-Olaroz lithium project in Argentina and the Lithium Nevada project in Nevada, USA. The stock soared to an all-time high of $14.06 in late 2017, but has since suffered a precipitous drop in value. Shares are down 37.7% in 2018, but have still posted gains of 46% year over year.
The company released its first-quarter results on May 14. Developments were on track at the Cauchari-Olvaroz project, with engineering over 80% complete and plant design close to 70% complete. Stage 1 production is projected to commence by 2020.
Its Lithium Nevada project posted an update to its mineral resource to 6 million tons of lithium carbonate equivalent at 2,917 parts per million lithium. The company expects to release results of the NI 43-101 Feasibility Study by the end of the second quarter.
Lithium Americas posted sales of $1.1 million at RheoMinerals. As of March 31, 2018, Lithium Americas had $43.5 million in cash and cash equivalents.
Is it a buy today?
Statista has projected that the total global demand for lithium will exceed 420,000 metric tons by 2025. A report from Grand View Research expects the lithium-ion battery market to reach $93.1 billion by 2025, representing a compound annual growth rate (CAGR) of 17%. Lithium Americas is an enticing speculative buy with two promising projects on the table.
