What Do Electric Vehicles, Energy Storage Systems And Electric Aircraft Have In Common? The Argument For Lithium's Long-Term Value

August 13, 2024 at 08:30 AM EDT

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By Mangeet Kaur Bouns, Benzinga

As the world increasingly shifts toward greener and more sustainable energy sources, the demand for lithium is expected to grow in the coming years. This commodity underpins key advancements across three pivotal sectors: electric vehicles (EVs), energy storage systems and electric aircraft.

While lithium has faced short-term weaknesses and price fluctuations due to broad market factors, it is believed to still hold long-term value, and companies like Atlas Lithium Corporation (NASDAQ: ATLX) are strategically positioning themselves to capitalize on this growing demand.

Lithium's Role In Electric Vehicles

Electric vehicles are part of the global transition to sustainable transportation. A key part of this shift is lithium-ion battery technology, renowned for its high energy density, long lifespan and relatively low cost. These attributes make lithium-ion batteries ideal for automotive applications, aligning well with global goals to achieve net-zero emissions by 2050.

According to Dimension Market Research, the lithium-ion battery market is projected to reach $470.50 billion by 2033, expanding at a CAGR of 21% from an estimated $84.3 billion in 2024. This surge is expected to be driven by the worldwide adoption of EVs.

The adoption of EVs is accelerating globally, spurred by some supportive government policies and incentives. Countries like Norway have set ambitious goals, such as banning the sale of new internal combustion engine vehicles by 2025. In the U.S., California wants all new passenger vehicles and light-duty trucks sold to be zero-emission by 2035. These regulations create a fertile ground for the lithium market to expand, with lithium-ion batteries being a cornerstone of EV technology.

Energy Storage Systems: A Renewable Energy Solution

Lithium-ion batteries are also critical for renewable energy storage, providing a potential solution to the intermittency of wind and solar energy. Utilities globally are investing heavily in lithium-ion battery systems to store vast amounts of energy, ranging from 100 to 800 megawatts (MW). For instance, the Moss Landing energy storage facility in California, one of the world's largest lithium-ion battery systems, has a capacity of 750 MW/3,000 MWh.

As countries transition to renewable energy sources, the ability to store and manage energy becomes crucial. Lithium-ion batteries provide the needed flexibility and reliability, allowing for the stabilization of power grids and the optimization of energy use. The falling cost of lithium-ion batteries, coupled with their ability to store increasing amounts of energy, makes them a cornerstone of many renewable energy strategies.

Governments worldwide are recognizing the need for robust energy storage solutions. The European Union, for example, has set ambitious targets for energy storage capacity to ensure energy security and grid stability. Similar initiatives are underway in the U.S. and Asia, where large-scale energy storage projects are being implemented. This global trend underscores the role of lithium-ion batteries in achieving sustainable energy goals.

Electric Aircraft: The Future Of Aviation

The aviation industry is exploring lithium-ion battery technology as a game-changer for electric aircraft. As this sector evolves, lithium-ion batteries seem poised to provide the power needed for longer flights and more efficient operations. Although still in the early stages, advancements in lithium battery technology are critical for overcoming the challenges of electric aviation, such as weight and energy density.

Companies like Joby Aviation and Lilium are pioneering electric vertical takeoff and landing (eVTOL) aircraft, which aim to transform urban air mobility. These eVTOL aircraft, powered by lithium-ion batteries, promise to reduce traffic congestion and lower carbon emissions associated with traditional air travel. While regulatory hurdles and technical challenges remain, the successful deployment of eVTOLs could significantly boost lithium demand.

Short-Term Weakness Vs. Long-Term Potential

In recent years, lithium prices have been highly volatile, peaking dramatically before falling sharply. Factors such as speculative trading, shifting demand projections and supply-demand imbalances have driven this fluctuation. For example, lithium prices soared from around $12,000 per metric ton in 2019 to $46,000 per metric ton in 2023.

China's dominance in lithium processing — accounting for about two-thirds of the global supply — impacts the supply chain. Geopolitical tensions and trade restrictions exacerbate these issues, as seen with U.S. legislation excluding companies that are Foreign Entities of Concern (FEOCs) from receiving tax credits for EV investments. Additionally, the environmental impact of lithium mining and the slow pace of regulatory approvals for new mines complicate the growth of domestic production.

Despite these challenges, lithium's long-term potential across EVs, energy storage systems and electric aircraft seems robust. Governments worldwide are setting ambitious targets for zero carbon emissions, and automakers are ramping up EV production.

How Atlas Lithium Is Positioning Itself For Long-Term Growth

Atlas Lithium is strategically positioning itself to meet the growing demand for lithium. With one of the largest exploration projects in Brazil, the company seems poised to capitalize on this need. Atlas Lithium has more than doubled its exploration portfolio in Brazil to approximately 539 km² (nearly 133,294 acres), including new claims in the Doce River and Mucuri Valleys, which are emerging as promising lithium jurisdictions.

In addition to expanding its exploration footprint, Atlas Lithium says it is investing in advanced technologies and sustainable mining practices to enhance its production capabilities. These efforts, it says, aim to increase output and to mitigate the environmental impact of lithium extraction.

Lithium's role in powering electric vehicles, enabling energy storage systems and supporting the development of electric aircraft underscores its critical importance in the transition to a more sustainable future, and the recent sell-off may have made the prices of stocks and commodities like lithium more attractive for interested investors. Leveraging substantial exploration activities and an established resource base, Atlas Lithium could be poised to benefit from rising global demand.

Featured photo by Priscilla Du Preez 🇨🇦 on Unsplash.

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