Lithium 2024: The investment that defines the 21st century

At this point, no one disputes that lithium is the material that will drive the global energy transition. From manufacturers like Tesla, Toyota, Honda, and BYD to entire governments, everyone has bet on this reality: electric vehicles will dominate the roads, and with them, lithium demand will skyrocket.

Why lithium is now or never

The European Union, China, and the United States have already set an expiration date for gasoline engines: 2035. This is not a suggestion; it’s law. It means that, mandatorily, only electric vehicles will circulate in the main global markets. Without lithium, this is impossible.

Lithium-ion batteries are the only viable technology at scale today. Yes, there is research on sodium and other materials, but they are at least a decade behind. This leaves the way completely clear for lithium to consolidate its dominance until 2035 and beyond.

The math is simple: demand > supply

Over the past 5 years, lithium prices have multiplied. They went from around $24 per ton to nearly $70 per ton. But the best is yet to come.

The key phenomenon: lithium production grows slowly, but electric vehicle demand grows rapidly. This gap almost guarantees prices will rise, possibly exceeding $100 per ton in the coming years.

Lithium producers don’t need to be innovative or obsess over consumption trends. Simply: extract more lithium, make more money. Guaranteed profitability.

Options for investing in lithium

Lithium as a commodity

You can buy lithium directly on some platforms. Your gains would scale with the mineral’s price. It works, but returns are limited compared to other alternatives.

Mining companies: the core

Here’s the meat of the matter. Companies that extract lithium have years of success practically assured.

SQM (Sociedad Química y Minera, Chile): The world’s leading producer. Operates in Atacama and Antofagasta. Since 2020, its shares have experienced sustained growth. The downside: all its operations are centralized in Chile, which limits its geographic flexibility.

Albemarle (U.S.): Second largest in extraction. Controls mines in the Salar de Atacama and Nevada. Has multiplied its value fivefold since 2020. Its geographic diversification gives it more stability than SQM.

Tianqi Lithium (China): Dominates the Eastern Hemisphere, particularly China. While SQM and Albemarle lead the West, Tianqi fuels the Asian electric vehicle boom. Excellent performance since 2021.

Battery manufacturers: the gray zone

Companies that buy lithium to manufacture batteries are attractive, but here’s a warning: many are not solely specialized in batteries, so their stocks do not accurately reflect the success of this segment.

Tesla: Surprisingly, it also falls here. Although known as an electric vehicle manufacturer, it integrates battery manufacturing in its gigafactories. Additionally, it produces Powerwalls (home batteries) and installs large-scale storage systems for solar and wind plants. Shares may rebound after recent corrections.

Panasonic (Japan): Main supplier of batteries for Tesla. Produces huge volumes, but as a diversified multinational, its performance in batteries is not clearly reflected in its stock price.

CATL (China): One of the largest Asian battery manufacturers. Covers both electric vehicles and residential storage systems. Trades above $400 after recovering from corrections, with significant upside potential.

Solid Power: Specializes exclusively in EV batteries, but very recently. It’s a high risk/high return bet. If its technology fails, it loses value quickly. If it succeeds, it could be the next unicorn.

Vehicle manufacturers: the long-term bet

They are probably the safest investment, but competition is fierce and preferences can change.

Tesla: Led the EV revolution and continues to dominate. Although shares suffered corrections, it maintains leadership in the U.S. and Europe, ranking third in China. Its vertical integration positions it well for the future.

Toyota (Japan): One of the first traditional manufacturers to adapt. Second market share of EVs in the West. Shares show a pronounced upward trend.

BYD (China): Absolute leader in China, with a considerable gap over competitors. Follows Tesla’s model: integrates manufacturing of key components, including lithium-ion batteries. This reduces dependence on third parties and allows for more competitive prices.

Important note: BYD is traded as BYDDY in some markets. Do not confuse it with Boyd Gaming Corporation (ticker BYD), which is a casino company with no relation.

Lithium ETFs: the convenient option

If you prefer to delegate management, specialized ETFs offer automatic diversification.

Global X Lithium & Battery Tech ETF (LIT): The most well-known and with the most history. 0.98% return in 2022, but 9.41% so far in 2023. Clear correlation with companies like SQM, Tianqi, and BYD. An excellent option to start.

Amplify Lithium & Battery Technology ETF (BATT): Less history than LIT, but solid selection of miners and EV manufacturers. Nearly doubled capital between 2020 and 2023. Similar performance to LIT.

WisdomTree Battery Solutions UCITS ETF (CHRG): Very recent, only a few months of history. Too much long-term uncertainty. Use only if you want to diversify with higher risk.

Is now the time to invest in lithium?

The verdict: Yes, probably the best time is before others wake up.

Regulations are already in place. Companies are already buying. Demand is already growing. Prices are already rising. What has not yet happened is the mass adoption of these investments in retail portfolios.

In the short and medium term (next decade), lithium demand will surpass supply. Extraction companies will multiply profits. Battery manufacturers will consolidate. EV producers will gain market share.

In the long term (more than 15 years), new materials like sodium will eventually compete with lithium, but that’s years in the future.

Risks you cannot ignore

• Some lithium companies are overvalued today
• Not all generate similar returns; selection matters
• Alternative technologies are advancing (even slowly)
• Geographic concentration: Chile dominates production, creating political and supply risks

The reality of the 21st century

Investing in lithium now is equivalent to investing in oil in 1880. Fossil fuels dominated for a century. Lithium will dominate the next. Roads will not disappear. Vehicles will not disappear. But they will change engines. And that change starts today.

Those who delay shifting their capital from oil and gas to EV and lithium companies have a practically guaranteed runway of a decade. It’s not speculation; it’s anticipation of a transition already legislated.

The questions you should ask yourself now: Do you want to wait until everyone invests and then regret not doing it earlier? Or do you recognize that lithium is central to the economy of the next century and act accordingly?