The Frenzied Global Race For White Oil

Not since the early days of the oil boom, has the world witnessed such a feverish pace of energy exploration.  From Argentina to Chile to Bolivia the hunt for lithium, dubbed "white oil", is fueling a surge in mining. Global demand for the silvery-white metal is expected to more than double by 2024.

Lithium is a key component in batteries that power electric vehicles (EV) designed to replace gasoline burning cars.  Lithium is a lightweight, alkali metal that stores energy efficiently and can be repeatedly recharged. A 1,200-pound battery in a Tesla Model S requires about 138-pounds of lithium.

Burgeoning global sales of electric cars, which increased 80% in 2021, are at the heart of the frenzied search for lithium reserves. By 2050, up to one billion electric vehicles are forecast on the roads worldwide, about 72 times more than the  EV's operating in 2020. 

Another contributor to the spiraling lithium demand is batteries for tablets, laptop computers and smart phones. Increasingly, lithium is also being deployed in electric grids to store energy from renewable sources, such as wind and solar.  Demand sent lithium prices skyrocketing 240% in 2021. 

In the global race to replace fossil fuels with with clean energy, the environmental impact of extracting lithium is surfacing as a major ecological issue. Most lithium is derived from traditional mine drilling or brine extraction, processes which scar the land or pollute water sources.

In Argentina and Chile massive amounts of water are used to loosen underground brine deposits, leading to contentious squabbles over the water supply. About 500,000 gallons of water are used per ton of lithium.  For some desolate areas, that could represent more than half of the available water supply.

Regions with rich lithium deposits are in poor, remote places, far removed from the nearest EV. The largest reserves of lithium--8.6 billion tons--are located in Chile, Australia and Argentina.  Nearly half of the world's known reserves reside in Chile.  These countries are also the top producers of the metal.

The United States has an estimated 630,000 tons of lithium reserves, the majority located in Thacker Pass in Nevada.  Area residents, Native American tribes and ranchers are opposing the building of a mine in the area.  To date, the opponents have stalled exploration and development.

Silver Peak Lithium Mine in Nevada represents the lone lithium operation in America.  It produces about 5,000 tons of lithium carbonate a year with capacity for 6,000 tons. That is less than 2% of the world's supply.  The operator extracts brine from an old lake bed that contains shallow ponds of lithium.

Estimates are the U.S. will need 500,000 metric tons per year of raw or unrefined lithium by 2034 just to power electric vehicles, according to California-based battery supplier OneCharge.  For comparisons sake, the entire global production of lithium in 2020 was 440,000 metric tons. 

China is the dominate player in lithium batteries.  Over the past decade, the government has spent $60 bullion to shore up its lithium industry. Additionally, China has the world's most robust lithium supply chain.

It is the largest importer of lithium-ion battery cells in the world and has the most ambitious electric car manufacturing schedule, planning to reach 52% of sales by 2040. China's lithium imports in 2019 were worth $46.9 billion,  China also exported 48% of the world's supply of lithium-ion cells and packs.

In recent years, China has been snapping up stakes in mining operations in South America and Australia.  China has invested $4.2 billion in lithium deals in South America during the last two years. The regime has also been tightening its grip on the supply of cobalt, a lithium-ion battery component. 

The threat is China will dominate the global supply of lithium just as OPEC once controlled the world's petroleum production, setting production limits and the price.  If China cuts off the U.S., American automobile and electronic industries will be left to scramble for lithium and lithium-ion batteries. 

Currently, the U.S. imports 90% of its lithium metal from two countries: Argentina and Chile.  Europe imports nearly every ounce of battery-grade lithium it uses,.  More than half (55%) originates in Australia.  Other principal suppliers include Chile (23%), China (10%) and Argentina (8%).

China is plotting to monopolize the supply and production of lithium batteries. The country already account for more than 60% of global lithium-ion battery production. In recognition of the threat, the Biden Administration has signaled it intends to provide $2.91 billion to boost U.S. battery production.

But public-private-regulatory partnerships are also needed to support lithium mining and production at home, to boost battery cell and pack manufacturing facilities and for recycling plants for battery disposal. Unless the U.S. acts soon, the nation will fall further behind China in this strategic area. 

Electric Cars Failing To Energize Buyers

A decade ago, a spunky startup company named Tesla unveiled the first all electric automobile.  Despite the media hoopla, major car manufacturers sniffed in skepticism.  Now virtually every major auto maker has debuted its own electric car.  Despite the array of choices, consumers are energetically unimpressed. 

For all the media electricity surrounding the industry, gasoline powered light trucks remain the top selling model in the U.S. with sales of 12.2  million units in 2019.  By comparison, consumers purchased 2.1 million electric powered cars the same year.  Forecasts are for a modest uptick to 2.3 million this year.

Pioneering Tesla is far and away the consumer choice for electric cars. The California-based firm racked up sales of 381,190 vehicles in 2019. Nissan's electric car, Leaf, was a distant second with 130,000 units. Tesla's sales last year eclipsed the entire U.S. electric auto market of 361,000 cars in 2018.

Electric boosters point out that today's market is quadruple the 2015 U.S. sales. Since 2012, the average growth rate of electrics is 25% per annum.  There are an estimated 1.1 million electric cars purring along on streets and highways in America.  

Worldwide, Global EV Outlook estimates that sales in the first seven months of this year topped 2.1 million plug-in electric units.  There are about 7.2 million electric cars operating around the globe. However, it represents about 1% of the total fleet of an estimated 1.4 billion vehicles on the planet.

China has the largest number of electric vehicles in operation: 2.3 million. However, Norway lays claim to the title of Electric Champion. Nearly eight-out-of-every-ten (79%) of vehicles sold in October in this European country was electric.  In total, about 60% of autos driven in Norway are electric.   

The Norwegian government offers generous sale incentives, including eliminating taxes and road fees along with discounts for parking and tolls. Incentives are driving the American market too.  California, home to 46% of the nation's electric vehicles, shells out sales rebates, subsidies and other perks.

Electric supporters bemoan the obstacles to charging up sales: restricted supply, limited geographic availability, lack of consumer knowledge as well as perennial issues of cost, range and charging times.  They insist without these barriers, gasoline-powered cars would become extinct.  

Tesla, the global electric market leader with a 17% share, has a unfortunate history of missing production goals, which limits availability.  The issue of cost, however, is still a factor as new gasoline car prices average $38,000, while the average cost of an electric vehicle is $55,000, according to Car and Driver.  

But averages can be misleading.  A long-range Tesla Model S retails for $81,190, while its top brand scales upward of $100,000.  Tesla has introduced a smaller car, the Model 3, but the price tag is $50,190 for the long-range battery. Interested in an SUV? The Audi E-Tron carries a $75,000 sticker price.   

That is a tough sell when the median household income income in the U.S. is $64,000. 

One positive, despite the price tag, is the range of electric cars is expanding.  Tesla's newest long range battery powers its car for 322 miles, Nissan's long-range Leaf has a range of 226 miles, while the plug-in electric Hyundai can travel 258 miles on a single charge.  

A more pressing issue is the lack of charging stations in the country. Unlike gasoline stations, it can be difficult to find an electric charger unit.  Statista estimates there are about 13,093 charging outlets at grocery and retail stores, and 20,000 stand alone stations. China has 400,000 charging stations.  

Home charging equipment is not inexpensive.  The average cost nationwide to install an electric vehicle charger at home is $1,200, but it may be as much as $4,500, depending on your auto's battery range.  An electrician is normally required to install a 240-outlet, charger and wall-mounted system.  

For most electric models, fully recharging an average  lithium-ion battery will cost $9 in electricity.  Even with today's low gasoline prices, electrics are still cheaper to operate. Industry figures estimate a plug-in electric will cost about $421 annually, compared to $l,500 for a standard gasoline automobile.  

Electric cars are up to three times as efficient as their gasoline-powered cousins. The difference in performance can be attributed by the fact that electric motors are 90% more efficient at converting energy into motion.  And, of course, electric cars run without creating CO2 carbon dioxide emissions.

Achieving the world mantra of "net zero carbon emission by 2050" argues for embracing electric vehicles to save the planet.  But there are some "dirty" secrets about producing clean running electric cars. Hardly any attention has been paid to critical mineral commodities relied on to manufacture lithium-ion batteries.

Cobalt, graphite, lithium and manganese are the raw materials that are used to build the batteries.  These elements are concentrated in a small number of Third World countries where environmental and labor regulations are lax or nonexistent, according to a U.N. report.  Many of the mines employ child labor.

Mining for these minerals creates a trail of pollution from the source as well as the processing upstream.  A United Kingdom study estimated that acquiring the raw materials to fuel the next generation batteries would require doubling the annual production in 2018.

When a new EV appears in a Tesla dealership, it already has produced 30,000 pounds of carbon-dioxide emission during manufacturing.  The equivalent amounts for manufacturing a conventional gasoline powered automobile is 14,000 pounds, Forbes magazine reported this year.

There is also the issue of generating electricity to recharge the EV batteries.  Assuming a fleet of 261 million electric vehicles in the U.S., it would trigger a 29% increase in power generation by the nation's grid and spark a 44% hike in installed electricity capacity at a price tag estimated at $1.4 trillion. 

Most consumers are blind to these consequences and environmentalists are loathe to come clean.  Wider adoption of electric cars biggest hurdle, however, may be convincing consumers to part with their money for a car that does not fit their needs.

In case anyone hasn't noticed, Americans are taller, larger and their appetite for SUV's and trucks is nearly insatiable.  Buyers are looking for extra room, more horsepower, fuel efficiency and lots of gadgets that make their driving experience safer.  Even with hefty subsidies, consumers prefer space and power.

Small electric vehicles are a mismatch for today's auto consumer. Tesla and the other auto manufacturers need to reassess, redesign and reengineer a new generation of electric vehicles that hit the sweet spot with buyers at a price they can afford.  Until then, electrics will be stuck in sales purgatory.

Auto Revolution: Shocking Electric Car Forecast

The electric car industry may be poised for a shocking sales jolt.  By 2050, research indicates there may be as many as one billion electric vehicles gliding silently on roads worldwide. That's the prediction of Morgan Stanley, one of the world's leading global financial services firms.

In a report dated September 28, 2017, the Morgan team forecasts advances in battery technology and growing consumer acceptance will fuel rapid sales growth during the next three decades.  Under their scenario, electrics would comprise as much as 90 percent of all sales by mid-century.

Thirty-years is a long horizon, but there are headwinds that make the prediction a stretch.  For one thing, at the end of last year there were only 1,039,988 electric powered vehicles on roads. In the U.S., the number was 199,826.  Today electrics account for less than 1 percent of vehicle sales.

Promoters of electrics autos tout the fact U.S. sales are increasing at prodigious rates.  The number of battery electric vehicles (BEV) in use have nearly quadrupled in five years from 2012 to 2017.  But there were a scant 52,607 produced in 2012.  Consumer adoption has been nothing to brag about.

Electrics enjoy one major advantage over gasoline powered cars.  The federal government doles out a tax credit of $7,500 to incentivize BEV purchases.  Some sates, such as California, tack on a rebate  of up to $7,000. Car manufacturers worry what will happen to sales if the subsidies evaporate.

Despite the government incentive, cost remains a barrier  to many consumers. Electrics are more expensive than their combustion engine siblings with similar features.  Market leader Tesla carries a price tag of more than $50,000 with some models costing north of $100,000.

Then there is the issue of battery distance.  Tesla leads the pack with 335 miles on a single charge for its Model 585D. A Chevy Bolt EV has a range of 238 miles. Ford's Focus Electric taps out at 115 miles.  The KIA Soul EV can travel 120 miles between charges.

When an electric car runs out of juice, there are few places to recharge.  Currently, there are 16,541 charging stations in the country.  Most are located in four states: California, Texas, Florida and New York.  Good luck finding one in Montana.  There are more than 121,000 gas stations nationwide.

The top four selling electrics in the U.S. last year were Tesla, Chevy Bolt EV, Toyota Prius, Chevy Volt and Nissan Leaf in that order.  The vehicle that led all sales in the country was the gas-gulping Ford F Series pickup with 896,764, more than all electrics combined.  Let that sink in.

Electric enthusiasts point to China as the shining example for the future.  Eleven percent of all vehicle sales in that country were BEV's, according to the most recent report.  China registered 352,000 new electric cars in 2016 alone.  The government is building 150,000 charging stations.

China’s Communist regime has gone one step further..  It  has announced plans to the phase out of new combustion engine vehicles entirely. No date has been set, but the United Kingdom and France both have approved bans on the sale of new gasoline powered vehicles beginning  in 2040.

But the threat of a ban has not disrupted China's auto market.  BEV's still account for a sliver of the 28 million automobiles and trucks purchased by Chinese in 2016.  Yet electric boosters are forecasting more than 5,000,000 electric cars will be traveling China's roadways by 2020.

China alone has tackled the cost hurdle, producing an ultra-affordable gasoline alternative.  The country manufacturers low-speed electric mini-cars that sell for $5,000 and max out at 40 miles per hour. The golf-cart looking cars are powered by a lead-acid battery. But it's decidedly low tech.

Despite the skepticism of consumers, automobile manufacturers are going all in for electric.  Global automobile firms have earmarked $90 billion to develop plug-in electric vehicles.  Some researchers are convinced that investments will equal consumer adoption.  The assumption may be flawed.

Bill Ford Jr., the executive chairman of Ford Motor Company, marveled at the the many electric car prototypes that were being introduced at the recent North American International Auto Show in Detroit. He was impressed with the volume but admitted he had a nagging concern.

Mr. Ford mused, "The only question is will the customer be there with us?" His point was Ford and its competitors are rushing headlong into electric vehicles and spending the equivalent of the GDP of a small country to bring more BEV's to market even as customer response has been tepid.

Will  that change once there are millions of shiny electric vehicles sitting on auto dealers showroom floors? Consumers hold the answer to the multi-billion dollar question and many appear reluctant to part with their combustion powered vehicles, especially in a era of falling gasoline prices.

In light of that reality, how long will it be before politicians in Washington decide they know better than consumers and force Americans to give up their gasoline powered cars in favor of electric vehicles?

Electric Car Sales Run Out Of Gas

Sales of electric cars have flat lined, despite intrusive federal government efforts to fuel consumer demand. Disappointing results are particularly a blow to the president, who has championed the alternative fuel vehicles by providing billions of taxpayer dollars in research funding and tax credits.

For the first quarter of this year, the much ballyhooed Chevy Volt recorded 1,210 sales. The automaker couldn't even sell the paltry 1,800 Volts it manufactured in the first three months. The sales numbers look puny when compared with the total Chevy sales of 416,505 during the quarter. Since its introduction last year, Volt sales stand at 1,536 units. No wonder General Motors has lowered its annual production estimate to 10,000 of the electric-gas hybrid Volt, down from its original 60,000.

Chevy's competition in the category, Nissan's all-electric Leaf, has not fared any better. The Leaf turned in sales of 471 vehicles, despite heavy promotion. In all of last year, 19 Leafs limped off the showroom floor. By comparison, sales of Toyota's Pirus hybrid topped 100,000 in just a single month during the first quarter.

Sales figures for electric cars must be particularly worrisome for the administration in light of soaring gas prices, which are creeping toward $5 a gallon in some parts of the country. Afterall, sticker shock at the gas pump was supposed to send consumers scurrying to car showrooms to snap up the electric vehicles, the "green" alternative hyped by Obama.

In fact, the president took advantage of the government's bailout of General Motors to compell an early roll out for the Volt. The media did its part, breathlessly reporting that the electric cars would revolutionize the auto industry. All that was needed for a perfect storm was careening gas prices. But even that hasn't helped sales.

The problem is that consumers saw through all the hyperbole. Electric cars are no bargain because consumers quickly learned the range on a single charge was less than advertised. Popular Mechanics measured the range at 33 miles for the Volt, despite GM's claims of 40 miles. After the lithium-ion battery charge is exhausted, the gas engine supplies electricity to power the vehicle. This means the Volt is neither all-electric nor all-gas powered, putting it in a quandary with demanding drivers.

But that wasn't the only issue for consumers. The electric cars required 10 to 12 hours of charging on household current to rev up the vehicle. Not only is that costly, but the cars were consuming electricity generated by plants pumping carbons into the air. Weren't electric cars supposed to reduce carbon emissions?

Consumers also have turned up their noses at a $7,500 tax credit offered by the Obama Administration. The credit was designed to provide the incentive consumers needed to swap their gas guzzlers for the not-so-sleek electric cars. Consumers weren't duped, opting for stylish, powerful, gasoline vehicles. As proof, GM sold 19,000 gas gulping Camero sports cars in the first quarter, dwarfing sales of electric cars produced in the U.S.

Tepid consumer reception is a rebuke for the president's scheme to use the power of the government to force electric cars down the throats of a skeptical public. Besides tax credits, the administration has committed $2.4 billion to research electric car batteries. Another $115 million has been spent on solving the problem of limited battery range with research aimed at building charging stations in metro areas.

What this illustrates is that government intervention in private industry is bad policy. The government has no business promoting one type of car over another. Consumers will vote with their pocketbooks to decide the winners and losers in the automobile industry. The public doesn't need its government spending taxpayers' dollars to influence consumer decisions.

Unfortunately, this lesson will likely be lost on the Obama Administration, which views government as the solution not the problem.