The economy is on the mend, and global oil prices are trending toward pre-recession levels. Consumers once again are staring at the prospects of $4 per gallon of gasoline.
Electric vehicles are the future, analysts believe, and that presents an intriguing investment opportunity for investors.
Economic factors have contributed to the advent of electric vehicles and a renewed focus on green technology. Late last year, the marketplace saw the unveiling of two of the first plug-in hybrid and electric vehicles—the Chevrolet Volt and the Nissan Leaf. Both models were released in the United States last year and will be sold globally in 2011.
It’s a safe bet that in the not too distant future as plug-in electric vehicle (PEV) prices drop, consumers will swap their gas-guzzlers for electric hybrids at a much faster pace. According to market research firm IDC Energy Insights, there will be 2.7 million electric vehicles on the road by 2015.
This presents a risky but rewarding investment opportunity for investors willing to ride on the coattails of a possible explosion in the PEV sector by making a long play for lithium, a major commodity component for current electric battery technology.
Currently, the lithium ion battery market is 90 percent consumer but demand for PEV as well as solar energy and portable electronics will change the market landscape dramatically.
One company, Vancouver-based Western Lithium, intends to capitalize on the demand by mining for the metal in Nevada. The company estimates that production will quadruple over the next 10 years due to demand from PEVs and other technology products needing energy storage.
Unlike other commodities such as copper and gold, lithium futures aren’t traded on the commodities exchanges. It is also highly reactive and no physical settlement is possible. But that doesn’t prevent it from being a good investment.
A quick and simple way to go long on lithium is via the Global X Lithium ETF (NYSE: LIT) exchange-traded fund. The fund seeks to gain exposure of lithium-producing companies rather than the metal itself, and is one of the best-diversified lithium plays on the market.
According to its prospectus, roughly half of its holdings are devoted to companies engaged in lithium mining and refining, such as Rockwood Holdings, Sociedad Quimica y Minera, and FMC. All three companies are diversified, meaning that they sell their lithium to a variety of industries. The rest of the fund’s holdings are reserved for battery manufacturers, including A123 Systems, which supplies PEV batteries to Daimler and BMW.
In the trailing twelve months, LIT is up more than 42 percent.
For a lithium pure-play investment, investors can turn to Talison Lithium Inc., the world’s largest single producer of lithium. The company’s mines in Australia supply roughly one-third of the world’s demand and 75 percent of China’s demand in lithium.
The company raised funds via an initial public offering (IPO) on the Toronto Stock Exchange late last year.
Disclosure: Author is long LIT.
The above view is the author’s and does not represent the opinion of The Epoch Times.
Electric vehicles are the future, analysts believe, and that presents an intriguing investment opportunity for investors.
Economic factors have contributed to the advent of electric vehicles and a renewed focus on green technology. Late last year, the marketplace saw the unveiling of two of the first plug-in hybrid and electric vehicles—the Chevrolet Volt and the Nissan Leaf. Both models were released in the United States last year and will be sold globally in 2011.
It’s a safe bet that in the not too distant future as plug-in electric vehicle (PEV) prices drop, consumers will swap their gas-guzzlers for electric hybrids at a much faster pace. According to market research firm IDC Energy Insights, there will be 2.7 million electric vehicles on the road by 2015.
This presents a risky but rewarding investment opportunity for investors willing to ride on the coattails of a possible explosion in the PEV sector by making a long play for lithium, a major commodity component for current electric battery technology.
Currently, the lithium ion battery market is 90 percent consumer but demand for PEV as well as solar energy and portable electronics will change the market landscape dramatically.
One company, Vancouver-based Western Lithium, intends to capitalize on the demand by mining for the metal in Nevada. The company estimates that production will quadruple over the next 10 years due to demand from PEVs and other technology products needing energy storage.
Unlike other commodities such as copper and gold, lithium futures aren’t traded on the commodities exchanges. It is also highly reactive and no physical settlement is possible. But that doesn’t prevent it from being a good investment.
A quick and simple way to go long on lithium is via the Global X Lithium ETF (NYSE: LIT) exchange-traded fund. The fund seeks to gain exposure of lithium-producing companies rather than the metal itself, and is one of the best-diversified lithium plays on the market.
According to its prospectus, roughly half of its holdings are devoted to companies engaged in lithium mining and refining, such as Rockwood Holdings, Sociedad Quimica y Minera, and FMC. All three companies are diversified, meaning that they sell their lithium to a variety of industries. The rest of the fund’s holdings are reserved for battery manufacturers, including A123 Systems, which supplies PEV batteries to Daimler and BMW.
In the trailing twelve months, LIT is up more than 42 percent.
For a lithium pure-play investment, investors can turn to Talison Lithium Inc., the world’s largest single producer of lithium. The company’s mines in Australia supply roughly one-third of the world’s demand and 75 percent of China’s demand in lithium.
The company raised funds via an initial public offering (IPO) on the Toronto Stock Exchange late last year.
Disclosure: Author is long LIT.
The above view is the author’s and does not represent the opinion of The Epoch Times.
