Tesla Looms Large in Global Lithium Market | ETF Trends

The Global X Lithium & Battery Tech ETF (NYSEArca: LIT) is lower by 3.22% year-to-date, but the fund could be poised to rebound as Tesla Inc. (NASDAQ: TSLA) gobbles up more lithium, potentially boosting prices of the commodity along the way.

LIT, which is nearly nine years old, tracks the Solactive Global Lithium Index. One of the oldest thematic ETFs, LIT is designed to provide exposure to “the full lithium cycle, from mining and refining the metal, through battery production,” according to Global X.

“Adamas Intelligence tracks the battery capacity (and the metals used in them) of electric vehicles sold in more than 80 countries around the world, representing more than 90% of the global EV market,” reports Mining.com. “The latest report by Toronto-based Adamas on global EV battery deployment in passenger vehicles should give Tesla skeptics, the ranks of which are still growing, pause.”

Tesla’s dominance in the booming electric vehicle market is becoming apparent.

“Tesla is simply miles ahead of the competition. On a MWh-basis, the Muskmobile is not just shaming US and European competitors, but also the more than 400 EV manufacturers registered in China,” according to Mining.com.

Loving LIT ETF

Electric vehicles are in the early innings of development and there are signs that there is a lot of pent up demand among consumers whom want to embrace the technology. In 2017, electric vehicle sales represented 1.7% of all vehicle sales globally, exceeding 1 million for the first time and rising 51% year-over-year. The rate could continue to accelerate as a result of EVs becoming more economical than gas-powered cars and as a result of a pro-climate regulatory changes pushing to ban gas-powered cars.

Lithium-ion battery capacity is vital because one of the primary factors car buyers consider when evaluating electric vehicles is how long those vehicles can run on a single charge.

“In May this year, Tesla was responsible for 22% of all electric vehicle battery capacity deployed worldwide versus 18% a year ago according to Adamas data,” reports Mining.com.

Bolstering the long-term case for LIT is that global automotive industry observers believe electric vehicles will reach comparable price points to traditional internal combustion engine vehicles sometime in the next several years, making it more compelling for drivers to make the switch to electric vehicles.

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