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In 1985 when Doc and Marty McFly powered up the Mr Fusion Home Energy Reactor in Back To The Future they travelled forward 30 years in time using household waste and nuclear fusion.

Little could they have imagined the reality – that by 2016 the world would be seriously contemplating the end of oil and the emergence of brand new energy technologies.

Global energy demand continues to plough ahead, driven by population growth and increased consumption as countries become richer.  To satisfy this demand new energy sources need to be found, not least as existing sources are depleted.

The renewable energy industry has found a partner in crime in the wonder element lithium.  It’s all very well producing gigawatts of power on a windy or sunny day.  But what about when it’s cloudy with no wind?  And what about mobile applications – cars, phones, planes, and trucks?

The answer lies in energy storage, something that lithium’s chemical properties are ideally suited for.

Last year Goldman Sachs issued an investor note: Lithium is the New Gasoline.’  Goldman predict that global demand for lithium is set to explode.  They forecast that current global demand for lithium could see a 50% uplift, of 70,000 metric tonnes of LCE/year, with a mere 1% increase in EV penetration of the global car market.

Electric vehicles (EVs) are poised for a sustained period of growth.  Leading the charge is Tesla and China’s BYD Co.

Elon Musk’s Tesla isn’t just producing ludicrously desirable cars (the affordable Model 3 is about to launch.)  Tesla is rapidly becoming a fully integrated energy company, with a full ecosystem of vehicles, batteries, solar hardware, and charging stations.

In a few month’s Tesla’s Gigafactory will control the largest production of lithium batteries in the world and they’re planning to build 500,000 cars a year by 2018.  There is a debate whether Tesla will achieve this ambitious target, but the finished Gigafactory will have the biggest footprint of any building in the world, employ about 6,500 people, and will produce more lithium batteries annually than were produced worldwide in 2013. The Gigafactory has changed the world forever and caused a scramble to keep up from the established car industry in the US, Europe, and Asia.

I was recently at Tesla’s inner sanctum at Palo Alto where they pull apart their competition’s battery tech.  Sitting outside their cafeteria discussing lithium supply one of their team remarked “The future development for EV range could be in lithium anode and lithium cathode development work.  This could double the range for EV’s.”

And behold – MIT News recently reported that the boffins there had won a $12m prize for a novel rechargeable lithium metal battery that offers double the energy capacity of the lithium ion batteries. New lithium metal batteries could make drones and electric cars last twice as long and travel twice as far.

In China, EV sales increased 223% in 2015, grabbing 1.4% of market share.  The country’s on track for even more dramatic growth by the end of 2016.  Shenzhen based BYD Co (BYD stands for ‘Build Your Dreams’) is China’s biggest selling EV maker and has been turning heads since it started up in 1995. Warren Buffett’s Berkshire Hathaway holds a 9.1% stake.

BYD also happens to be the largest rechargeable battery maker worldwide, for the time being, with 25% market share. And BYD makes its own batteries, the only EV manufacturer at the moment to do so.  This gives it a significant edge in controlling costs.  For now!

But it’s not just these two. VW, Nissan, and General Motors are putting EVs and battery tech at the core of their strategies.  Tech giants including Apple and Google are secretly developing technologies that may change everything.  And boffins in university labs around the world are racing for a breakthrough to earn their Nobel Prizes.

Just this week VW announced that it was launching its 300 mile range EV at next month’s Paris Motor Show.  It should be production in 2018 or 2019. I have spoken to a number of very senior corporate bankers in Germany who have said that they will not let Tesla or the USA take away Germany’s car market share and Germany will spend hundreds of billions of Euros to stay in front.

The world is switching to EVs and they will hit 1% penetration during the course of 2016.  Goldman Sachs expects EV penetration to reach 22% by 2025.  (Incidentally Norway is already at 22%).  Lithium demand for all EV applications could grow more than 11 times by 2025.

This means that providers of Lithium hold the key to the next stage of expansion.

Companies such as Rare Earth Minerals Plc are poised to take advantage of this, with interests in Sonora Lithium in Mexico, a JV with Bacanora Minerals, and European Metals Holdings Ltd, who operate Cinovec in the Czech Republic.  These interests combined now hold over 13 million tonnes of Lithium Carbonate Equivalent (LCE). And Rare Earth Minerals Plc has just signed up heavyweights Société Générale Corporate & Investment Banking (Société Générale) and Hannam & Partners as strategic advisors. The big banks can see enormous potential in the supply chain of the new up and coming miners.

The direction of travel is clear.  It’s not if but when EVs will take off.  At 1% global penetration lift off is not far away.  Popular demand, breakthroughs in battery tech, cost, and range, will drive uptake, as will investment.

Neil Passmore, Hannam & Partners chief executive, recently described lithium as “currently amongst the most exciting commodities being scrutinised by both investors and the mining industry at large.

He’s right.  Lithium sits at the very heart of this new energy revolution.

Written by David Lenigas