tesla\'s model 3 launch: where will the lithium come from?

When a new lithium was announced-
A few years ago Elon Musk said in Nevada that Tesla(TSLA)
By 2020, enough batteries will be produced there to power tens of millions of electric vehicles.
This forecast has since been significantly revised.
Last year, Tesla said it would produce 500,000 electric vehicles by 2018 and 1 million electric vehicles by 2020.
With regard to whether this means doubling the size and/or cost of the Gigabit plant, there are still some questions as to whether the Fremont plant in California must also be expanded to achieve this new goal, or according to the new plan, it is also necessary to copy the target set used for fixed energy storage.
However, regardless of these considerations, Tesla\'s CEO appears to be serious about launching the production of Model 3 in next July to speed up subsequent manufacturing and implement the \"lithium revolution\" in the world \".
In the chart below, Bloomberg describes the evolution of Tesla\'s sales between 2013 and 2016, including forecasts for the 2017-2018 period.
Figure 1 to know what this \"unfathomable launch\" means for lithium, we need the actual numbers that Bloomberg uses to make the chart.
Since this data is not available, we can visually estimate them based on two broad guidelines suggested in the Bloomberg chart: I)
Model 3 alone exceeded 350,000 in 2018, ii)
The three models have a total of 500,000 production units in the same year.
Table 1 shows the results of this work.
Please note that I used the official Tesla numbers from 3q2016 to 1q207 and predicted the number after that.
Table 1: actual and projected global production of Tesla and Bloomberg
For complete and comparative reasons, I copied the Bloomberg chart in figure 2.
Look at how similar these two charts are.
Figure 2 Source: Tesla and Bloomberg.
We are now ready to learn how much lithium Tesla used between 2012 and 2016 and how much lithium will need to be used between 2017 and 2018.
In addition, we can also see Tesla\'s LCE consumption as a percentage of the global lithium supply.
This is described in table 2.
It can be seen that Tesla\'s LCE consumption accounted for a percentage of the global lithium supply from 0.
12% in 2012 to 3.
43% in 2016 will jump to 5.
91% with the launch of Model 3 on 2017 and 13.
Once Tesla started producing 62% electric vehicles a year in 2018.
In addition, if Elon Musk fulfills his promise to produce 1 million electric vehicles by 2020, Tesla\'s LCE consumption is likely to exceed 20% of the global supply of lithium.
That being the case, it seems difficult to understand why it is not interested in ensuring the supply of critical battery materials.
Table 2 Tesla: actual and projected LCE consumption
2018 Source: Tables 1 and 3 in this contribution and USGS. Note. -
Assuming that in all cases, the battery capacity at 1 KW requires 1,000 LCE, the LCE consumption is obtained by multiplying the number of sales by the battery capacity of each model divided by 1 kg.
Lithium: global demand and supply table detailed breakdown of global lithium demand and supply during 3,2016
The 2018 goal is to find out where the extra lithium Tesla needs from July.
But before we get to that, let me first make the following note [
The same order and corresponding sources as in Table 3;
Links to these sources are found at the back of the form]
Then make some comments on the need for the lightest metal on Earth.
TABLE 3 Global Lithium demand and supply
2018 * there are comments and comments in the text. Sources: [1]: HybridCars, [2]
: Ask for Alpha (i), [3]: BYD, [4]: EV-Sales, [5]: LG Chem, [6]: EV-Sales, [7]: Tesla, [8]
: Ask for Alpha (ii), [9]: Bloomberg, [10]: USGS, [11]: BEA, [12]
: Ask for Alpha (iii), [13]
: Benchmark Minerals ,[14]
: Benchmark Minerals ,[15]: Nasdaq, [16]: SQM, [17]
: Ask for Alpha (iv), [18]: Orocobre (i), [19]
: Ask for Alpha (v), [20]: Galaxy (i), [21]: Galaxy (ii), [22]: Galaxy (iii), [23]: Neometals, [24]: Posco, [25]: Rincon, [26]: Roskill, [27]: Nemaska, [28]: Orocobre (ii), [29]: Tianqi, [30]
: Lithium America ,[31]
: Altura Mining, and [32]
Pilbara Minerals
Global demand for lithium :[1]-[2]: Li-
Ion batteries for electric vehicles: when the battery is 90 KW (Model X); 65 kWh (Model 3).
2016 of the sales figures come from Tesla.
Estimated figures of 2017-
2018 from Table 2 of this article. [8]: Li-
Ion batteries for consumer electronics: 2016 of sales figures are from Table 2 in my latest Seeking article.
Use LCE = $17,500 for 1 metric ton as per the same procedure (2017-2018)
Comment: First of all, Tesla\'s consumption of lithium for batteries accounted for about 3% of global lithium demand in 2016.
With the emergence of Model 3, this figure will jump to 6% in 2017 and 13% in 2018 (
Please also note that Tesla\'s use of lithium next year may exceed all other electric vehicle manufacturers in the world).
Also, during the deliberations, when we looked at all Li-, these percentages almost doubled
When we consider EV Li, the ion battery is used separately, at least three times
Ion batteries only.
Overall, the results suggest that Tesla could become an influential actor in just two years.
13% market share)
Throughout the lithium market, as well as important players (
22% market share)in its Li-
Market and dominant market for ion batteries (
36% market share)in its EV Li-Ion batterysegment.
Second, in 2016, the use of lithium in electric bus batteries accounted for 10% of global lithium demand, and it is expected to reach the same proportion in 2017 --2018.
These percentages are more than double that of all Li-and are on the rise
Ion batteries, and it is possible to reduce from 47% in 2016 to 41% in 2017 and 30% in 2018
Ion batteries only.
This confirms two things: first, no. so-
In 2016, the role of electric buses in the global demand for lithium was negligible, mainly due to the large number of government incentives implemented in China.
Second, Li in Li-
Relative to other participants, such as consumer electronics that are expected to grow at a slower rate, the Ion battery portion on the market, and EV at EV Li-Ion battery
Part of the market, this is due to the recent elimination of these incentives, as well as the expected exponential growth of Tesla Model 3 and other electric vehicles.
One warning of these preliminary conclusions is, of course, that the analysis uses only Chinese data, and there is still a large degree of uncertainty in China at present.
Although this may be compensated in the near future, because some Chinese companies sell electric buses in foreign markets and other non-
Chinese electric bus companies in the US, Europe and other markets, such as Proterra and Volvo.
It seems that some analysts are starting to ask themselves whether electric buses are the new normal.
Third, LCE percentage for Li-
This year, the demand for lithium-ion batteries may exceed 50% of the global demand for lithium and continue to grow in 2018.
By contrast, LCE consumption for other uses as a percentage of global lithium demand is expected to fall from about 53% in 2016 to 47% in 2017 and 41% in 2018.
This will make it clear that the lithium battery revolution has begun.
However, as described in Table 3, almost all sources of information highly underestimate the use of lithium batteries, mainly because they do not include lithium consumption data for batteries powered by electric buses, whether in China or anywhere else.
As we have seen before, these numbers are indeed very different.
Four is in Li.
Lithium Ion battery part, LCE consumption of electric vehicle Li-
Ion batteries are likely to grow from around 22% of global lithium demand in 2016 to 28% in 2017 and 36% in 2018, surpassing the follow-up decline in consumer electronics, from 25% in 2016 to 23% in 2017 and 21% in 2018, energy storage will rise from nearly 0% in 2016 to 2.
15%, to 2 again this year. 5% next year.
Needless to say, the potential use of LCE in Tesla model 3 will be the most dynamic factor in this trend.
We are now analyzing the global supply of lithium.
The exam is divided into two parts.
One is related to the current global lithium supply and the other is related to the new global lithium supply.
For the purposes of this study, the current global lithium supply means the production of companies operating in 2016.
As before, let me put the following note first [
The same order and corresponding sources as in Table 3;
Links to these sources are found at the back of the form]
Then make some comments on the current global lithium supply situation. Annotations:[10]
: Yabao of production materials (ALB)
The United States was detained.
Since 2012, USGS have only reported 2013 figures.
Therefore, figures of 2012, 2014 and 2015 are estimated using the following formula: Production = apparent consumption export-Imports.
2016 is the average value of 2012-estimates
2015, multiplied by 5.
32282962 convert lithium metal into li2co2.
Assuming this production remains unchanged in 2017 --2018. [10]
: The production number of Australia\'s Albemarle was obtained from USGS on 2016 (Australia)
, Multiplied by 0. 49 [
Due to the lithium industry in Chengdu (SHE: 002466)]and 5.
32282962 convert lithium metal into li2co2.
It is also assumed that this output will remain unchanged during 2017 --2018. [15]
: The production number of Albemarle-Chile on 2016 was obtained from the Nasdaq telephone record held on February 28, 2017.
This figure is not expected to change between 2017 and 2018. [10]-[16]-[17]
: Production number of chemical and mining companyof Chile Inc. (SQM)
2016 minus Chile-
The production of Abbott comes from the U. S. Geological Survey (Chile)
Multiply by 5.
32282962 convert lithium metal into li2co2.
However, this number may be greatly underestimated (
View The SQM presentation in April 2017 and the CEO intervention of SQM on company results
Revenue call March 2017.
So for 2017-
2018, assume full load operation. [10]
: Obtain the production number from USGS on 2016 (Australia)
, Multiplied by 0. 51 (
Due to the joint venture)and 5.
32282962 convert lithium metal into li2co2.
In addition, production is expected to remain unchanged for the period from 2017. 2018. [18]-[19]
: Orocobre (OTCPK:OROCF)in 2016-
2018 is obtained from different documents on the Orocobre web page.
As previously expected when seeking the Alpha contribution, it seems that Orocobre continues to face many problems, which explains why it will not reach full-year capacity until 2018. [10]
: Company Number of FMC (FMC)
In 2016, the output of orocobree was subtracted from USGS (Argentina)
, Multiplied by 5.
32282962 convert lithium metal into li2co2.
It is further speculated that this production will be fixed in 2017 --2018. [10]
: Number of other Chinese producers obtained from USGS in 2016 (China)
Multiply by 5.
32282962 convert lithium metal into li2co2.
It is further assumed that this output will remain at 2017-2018. [10]
: The number of other producers obtained from USGS in 2016 (
Brazil, Zimbabwe, Portugal)
Multiply by 5.
32282962 convert lithium metal into li2co2.
It is further assumed that this production will remain unchanged during 2017 --2018.
Comment: First of all, there is evidence that Albemarle and SQM in Chile are all produced in 2016.
However, the corresponding USGS figures do not reflect this, which does not match the actual figures published by the two companies.
So I think the numbers provided by Albemarle are valid and estimate the number of square meters from there.
Please note that we can also take another route and the results are similar: nearly 10,000 tons of LCE are missing from USGS data in Chile.
To solve this problem, we assume that lithium operators can produce at full capacity in 2017 and 2018.
Second, the figure for Orocobre only reflects the difficulties faced by the company in increasing its production since it first came into production in 2015.
They also raised some doubts about the reasonableness of the traditional techniques applied in this operation, not to mention their decision not to explore the possibility of using alternative technologies in the second phase of the project.
Third, production in 2016 was concentrated in three countries, Australia, Chile and Argentina, which accounted for 88% of global supply.
With a market share of nearly 40%, Australia seems to dominate the market, followed by Chile, accounting for 33%, Argentina, accounting for about 16%, which is unlikely to change significantly in 2017 and 2018.
Fourth, throughout the review period, we can see that only six companies control the market of 88 to 89%, alble le (32-34%)
Leading the market, followed by SQM (20-24%), Tianqi (19-20%), FMC (9-10%)And Orocobre (6-8%).
Fifth, given the negligible additional output expected by \"existing suppliers\" in 2017 and 2018, it can be said that they are not a good candidate to provide any lithium for the upcoming Tesla Model 3.
The new global lithium supply in this section, our analysis focuses only on the four operations currently increasing production and starting production in 2018.
In Table 3, other operations that have the potential to bring production online from 2019 are also listed, as well as other projects that are planned to be further operated in the future.
In the following, only comments and notes related to the operation in the pipeline are included. Annotations:[20]-[21]-[22]
: At the beginning of this year, after the first and second shipments were shipped from Catlin Mountain to China, it all showed that Galaxy (OTCPK:GALXF)
By the end of this year, LCE is expected to reach 17,000 tons to complete the production ramp-
Another 3,000 tons of LCE will be added next year. [23]
: With the second batch shipped from Marion Mountain to China this year, a joint venture formed by Mineral Resources Co. , Ltd. (MALRF)New Metal Co. , Ltd. (RRSSF)
Jiangxi Ganfeng Lithium Industry Co. , Ltd. , Ltd. (SHE:002460)
It seems to be able to reach the target of 25,000 LCE 2017 tons and the target of 27,000 LCE 2018 tons. [24]
: On February, POSCO made iron (PKX)
By using the recycling company\'s lithium phosphate as a raw material with an annual production capacity of 2, the plant for extracting lithium from used secondary batteries has been completed. 500 tons.
The test of li2co2 produced from recycled materials confirms that, in terms of quality standards, it is equivalent to existing products (i. e.
Particle size, purity, charge and discharge efficiency and capacity).
It is speculated that only 1,000 tons of li2co2 will be produced in 2017 and will reach full capacity next year. [25]-[26]
: On July 2016, Enirgi Group, a privately held multinational Group based in Toronto, Canada, announced the completion of the feasibility study.
Following Roskill, it also appears to have just completed the main construction works and successful commissioning of its commercial separation plant
Scale demonstration lithium carbonate processing direct mining plant.
Although we still have reason to be skeptical about the company\'s ability to add any meaningful products to the market by 2019, which is basicallyyet-completely-
They intend to apply mature direct mining technology in this operation from the beginning, suggesting that it may be wise for investors to focus on it in the coming months. [27]
: Despite the Nemaska Lithium Battery, Inc. (OTCQX:NMKEF)
It seems that it is ready to deliver the first ton of LiOH from the first phase plant, and it is likely to add new meaningful commercial production (
From their own ore)
It only started 2019 in the market. [28]
: Given the difficulties Orocobre has been facing in improving their initial production levels, it seems doubtful whether they can start a new production phase by 2019.
Despite the different reasons, a recent analysis came to the same conclusion. [29]
: According to the latest update, Tianqi is expected to complete the project in fourth quarter of 2018, which means that the production of lithium carbonate will begin in 2019. [30]
: After announcing the positive feasibility study for Phase 1 of the project, Lithium Americas(OTCQX:LACDF)
Recently, the company said that construction will begin immediately after completing this month\'s strategic investment with Ganfeng Lithium mine and Bangladesh Petroleum Corporation.
Assuming everything goes as planned, commissioning and first production will likely take place in 2019. [22]
: As Galaxy has pointed out, it is expected that the target first production time is no earlier than 2 hours and 2019. [31]
Althura Mining Co. , Ltd. (OTCPK:ALTAF)-
Pilgangoora announced in its 2016 report that it will start production in the fourth quarter of 2017, and there is still doubt about whether it can increase any meaningful production to the market by 2019. [32]
: Although the Pilbara Minerals (PILBF)
In its latest report, the company announced that in December 2016, the company started the implementation phase of the project, and people still doubt whether it will increase any meaningful production to the market by 2019.
Comment: from this part of table 3, the lithium needed for Tesla Model 3 can be very obvious and must come from Australia, to a lesser extent from Chile.
Needless to say, the new products of POSCO are likely to flow all to Korean consumers.
However, it may not be clear --
As we can imagine, since the signing of two new businesses in Australia,
Entering into agreements with different customers, none of whom seem to be part of Tesla\'s lithium supply chain, makes it difficult for Chile\'s choice to bridge that gap.
In fact, Cattlin-Galaxy Mountain has signed a final contract with another Chinese
Purchase of 45,000 tons of lithium concentrate from Japan for $600/mt for $2016 and delivery for the first four months of 2017.
As stated in Table 3, to date, two shipments have been made on compliance with these contracts, one being the provision of approximately 10,000 tons of lithium concentrate to an unnamed Chinese customer, the other is to provide 14,000 tons of lithium concentrate to Mitsubishi Corporation.
In the next few days, there will be a third shipment of about 18,000 tons of lithium concentrate.
Also, Galaxy signed after the latest demo
Signed an agreement with other China converters to deliver 120,000 tons of lithium concentrate 2017 between 2017 and 2018.
Similarly, the marienshan joint venture between new metals, mineral resources and Ganfeng has signed an off-site agreement
Reached an agreement with Ganfeng on 100% of the output.
This will allow us to have albchile le Chile as the only option for Tesla Model 3 to offer lithium.
However, even if we assume that Chilean operators can fully produce in La Negra 2 in 2018, this is unlikely to happen, and this output is not enough to meet all the requirements of Tesla\'s new models for lithium in the current year, not to mention 2017, because Albemarle Chile is not able to bring any new products online.
Therefore, Panasonic is not only a supplier of Tesla
Ion batteries, as well as Sumitomo, a Panasonic cathode material supplier, also seem to have a lot of reason to worry about lithium this year and next.
Finally, as shown in Table 3, the balance of supply and demand was negative in 2016, which means that supply exceeded demand, although it was found to be positive in 2017 and negative again in 2018, but similar to 2016.
These results explain why LCE prices were so high in 2016, and also help us predict that prices will drop in 2017 and prices will rise again at 2018.
Disclosure: I/we have no positions in any of the stocks mentioned and no plans to start any positions in the next 72 hours.
This article was written by myself and expressed my views.
I received no compensation (
In addition to Seeking Alpha).
I have no business relationship with any stock company mentioned in this article.
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