Good to see The Economist and the FT writing about lithium and energy innovation in the past couple of days.

The Economist says that demand for lithium and high-density energy storage is set to soar amidst a global scramble to secure supplies.   The world’s largest battery producers Samsung, LG, Panasonic, Sony, and ATL are hoovering up supplies, as are carmakers such as Toyota and Tesla, and other end users.

Gloomy news if you rely on lithium for your anti-depressant drugs.

In fact, The Economist calls lithium “the world’s hottest commodity”, explaining that the price of 99.5%-pure lithium carbonate imported to China more than doubled in the two months to the end of December, to $13,000 a tonne.  Some even suggest the Chinese spot market may even hit $20,000 in the next few months.

And the world can’t just turn on a magic lithium supply tap. The oligopoly who produce most of the world’s lithium, will take years to gear up to meet just a fraction of the demand surge.

One thing for sure is the world’s going to need new sources of lithium. The massive Sonora Lithium Project in northern Mexico, for example, is suddenly getting a lot of attention worldwide, having signed a supply agreement with one EV major.  As are some of the smaller Australian, US and Canadian discoveries.

EVs accounted for 3% of global car sales last year, and its rising.  Sales of EVs in China tripled in the first ten months of 2015 compared with the same period in 2014, to 171,000.  And the pressure on demand is rising fast – tougher emissions standards in Europe and America are likely to boost carmakers’ need for lithium.

Electricity storage is also going to ramp up demand for lithium in the years to come. The holy grail of renewable electricity is cost efficient batteries with enough storage to overcome intermittent solar and wind power. Expect the mother of all batteries coming to a neighbourhood near you to make your electricity grid more efficient. All the big battery makers are now making them.

But for all the hype and excitement (My pals at Goldman Sachs called lithium the new gasoline in November) hurdles remain. Storage capacity, and weight, which determine the range of EVs, and price are all hampering adoption.  As Andy Sharman explains in yesterday’s FT “consumer acceptance will depend on companies solving the problems linked to electric vehicles.”

Lithium accounts for only about 10% of the cost of a lithium battery, which thankfully has helped avoid skyrocketing battery costs, therefore defeating the whole purpose of making battery tech more affordable.  The commodity crash has brought down the cost of the main components like nickel and cobalt and other ingredients.

Batteries need to offer hundreds of miles of driving range, be rechargeable in minutes, and provide power at costs comparable with fossil fuels.  Sub-200 mile ranges are simply not good enough. The basic promise of the motor car is “the freedom to go where you want, when you want” and EVs makers must remember that.   And the price of cars needs to continue to come down (although good to see Chevrolet Bolt EV coming out next year for $30K).

So technological developments are what’s needed to push EVs into the mainstream.  But when it happens its going to happen fast.  Remember how quickly shale became mainstream?  Twenty years ago people thought it would be impossible to produce gas from shale at commercially viable rates.  Well the technology was developed and shale now accounts for 50% of US gas production.

I’m watching those battery and clean tech developments closely.  Last year during the Paris climate summit a commitment was made by the world’s top billionaires, including Jeff Bezos, and Bill Gates, to invest in bringing energy technologies to market.

We are on the brink of a clean energy revolution and when the tipping point happens, it’s going to shake things up.  Maybe the emergence of lithium as the new gasoline is nearer than we think.

mm
Written by David Lenigas