Elon Musk Promises to Make His Own Lithium; This Analyst Is Unimpressed, , on September 29, 2020 at 8:57 pm

By
On September 29, 2020
Tags:

Put one “Battery Day” in the books, folks. On Tuesday, Sept. 22, CEO Elon Musk finally held his long-awaited presentation running down everything Tesla (TSLA) plans to do over the next decade to cut the cost of batteries, and extend the range (and lower the price) of Tesla’s electric cars.One of the key revelations: In an effort to accelerate the conversion of 300 million American cars from gasoline engines to electric, Tesla is pioneering a method of using “table salt (sodium chloride) to basically extract the lithium” … from 10,000 acres of Nevadan clay, ensuring plentiful supply of the metal for use in building more batteries. “Simply mix clay with salt, put it in water, the salt comes out with the lithium — done.””Nobody’s done this before,” avers Musk, but “it’s a very sustainable way of obtaining the lithium.”And it certainly sounds like a bright idea. There’s just one problem: According to GLJ Research analyst James Bardowski, it probably won’t work.In a firmly tongue-in-cheek report out Thursday titled “TSLA Claims to [Manufacture Lithium] ‘Simply’ w/ Salt … We See a Higher Chance of a $25K M3 Robo-Taxiing to Mars,” Bardowski calls Musk’s claim that Tesla can vertically integrate lithium production into its battery operations “eccentric,” and argues it’s liable to become just one in a long line of “broken promises” from the Tesla CEO.Why is Bardowski throwing shade on Elon Musk this week? First off, as Tesla itself would probably admit (indeed, has admitted), this method of extracting lithium from clay “would be a first for the industry.”That’s not to say there’s zero chance of success, of course, but Bardowski observes that “the details surrounding Tesla’s planned Li production were conspicuously light.” And viewed in light of past pie in the sky promises from Tesla (swappable batteries in 2012, for example, or fully-autonomous Teslas in 2014, or cars with 620 miles of driving range in 2015, or — most recently — 1 million robo-taxis driving folks around the U.S. “in 2019 or 2020”), Bardowski has his doubts that Tesla will deliver on this latest promise as well.Even in the most optimistic scenario, the analyst notes that obtaining a permit to mine lithium in Nevada could take “years” for Tesla to secure, while obtaining the water needed to facilitate (what little we know of) the process — in the middle of the Nevada desert — could also prove problematic.But what if Musk does end up delivering on this particular promise? Well, in that case, acknowledges Bardowski, Tesla’s move into lithium mining could pose serious competitive pressures on existing lithium producers such as Albemarle, Livent, Lithium Americas, and Sociedad Quimica y Minera de Chile.As the analyst has previously warned, the global supply of lithium is on track to outpace demand into at least 2023. Combined with lower production targets for battery cathodes from Tesla itself, which will further depress demand for lithium without doing anything to slow supply coming online, Bardowski hypothesizes that Tesla becoming a lithium miner in its own right could accelerate the growth of lithium, and “quickly drag” down both lithium prices, and lithium profits for the incumbent producers.That is to say, this could happen if Tesla’s promises bear fruit this time — it’s just that Bardowski thinks you’ll see robo-taxis on Mars before that happens.All in all, Street-wide caution circles the electric car giant, as TipRanks analytics model TSLA as a Hold. This boils down to 6 Buy ratings, 14 Holds and 10 Sells issued in the past 3 months. Meanwhile, the 12-month average price target, $310.15, implies a 26% downside from current levels. To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.,

Elon Musk Promises to Make His Own Lithium; This Analyst Is UnimpressedPut one “Battery Day” in the books, folks. On Tuesday, Sept. 22, CEO Elon Musk finally held his long-awaited presentation running down everything Tesla (TSLA) plans to do over the next decade to cut the cost of batteries, and extend the range (and lower the price) of Tesla’s electric cars.One of the key revelations: In an effort to accelerate the conversion of 300 million American cars from gasoline engines to electric, Tesla is pioneering a method of using “table salt (sodium chloride) to basically extract the lithium” … from 10,000 acres of Nevadan clay, ensuring plentiful supply of the metal for use in building more batteries. “Simply mix clay with salt, put it in water, the salt comes out with the lithium — done.””Nobody’s done this before,” avers Musk, but “it’s a very sustainable way of obtaining the lithium.”And it certainly sounds like a bright idea. There’s just one problem: According to GLJ Research analyst James Bardowski, it probably won’t work.In a firmly tongue-in-cheek report out Thursday titled “TSLA Claims to [Manufacture Lithium] ‘Simply’ w/ Salt … We See a Higher Chance of a $25K M3 Robo-Taxiing to Mars,” Bardowski calls Musk’s claim that Tesla can vertically integrate lithium production into its battery operations “eccentric,” and argues it’s liable to become just one in a long line of “broken promises” from the Tesla CEO.Why is Bardowski throwing shade on Elon Musk this week? First off, as Tesla itself would probably admit (indeed, has admitted), this method of extracting lithium from clay “would be a first for the industry.”That’s not to say there’s zero chance of success, of course, but Bardowski observes that “the details surrounding Tesla’s planned Li production were conspicuously light.” And viewed in light of past pie in the sky promises from Tesla (swappable batteries in 2012, for example, or fully-autonomous Teslas in 2014, or cars with 620 miles of driving range in 2015, or — most recently — 1 million robo-taxis driving folks around the U.S. “in 2019 or 2020”), Bardowski has his doubts that Tesla will deliver on this latest promise as well.Even in the most optimistic scenario, the analyst notes that obtaining a permit to mine lithium in Nevada could take “years” for Tesla to secure, while obtaining the water needed to facilitate (what little we know of) the process — in the middle of the Nevada desert — could also prove problematic.But what if Musk does end up delivering on this particular promise? Well, in that case, acknowledges Bardowski, Tesla’s move into lithium mining could pose serious competitive pressures on existing lithium producers such as Albemarle, Livent, Lithium Americas, and Sociedad Quimica y Minera de Chile.As the analyst has previously warned, the global supply of lithium is on track to outpace demand into at least 2023. Combined with lower production targets for battery cathodes from Tesla itself, which will further depress demand for lithium without doing anything to slow supply coming online, Bardowski hypothesizes that Tesla becoming a lithium miner in its own right could accelerate the growth of lithium, and “quickly drag” down both lithium prices, and lithium profits for the incumbent producers.That is to say, this could happen if Tesla’s promises bear fruit this time — it’s just that Bardowski thinks you’ll see robo-taxis on Mars before that happens.All in all, Street-wide caution circles the electric car giant, as TipRanks analytics model TSLA as a Hold. This boils down to 6 Buy ratings, 14 Holds and 10 Sells issued in the past 3 months. Meanwhile, the 12-month average price target, $310.15, implies a 26% downside from current levels. To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

,

Instant Quote

Enter the Stock Symbol.

Select the Exchange.

Select the Type of Security.

Please enter your First Name.

Please enter your Last Name.

Please enter your phone number.

Please enter your Email Address.

Please enter or select the Total Number of Shares you own.

Please enter or select the Desired Loan Amount you are seeking.

Please select the Loan Purpose.

Please select if you are an Officer/Director.

High West Capital Partners, LLC may only offer certain information to persons who are “Accredited Investors” and/or “Qualified Clients” as those terms are defined under applicable Federal Securities Laws. In order to be an “Accredited Investor” and/or a “Qualified Client”, you must meet the criteria identified in ONE OR MORE of the following categories/paragraphs numbered 1-20 below.

High West Capital Partners, LLC cannot provide you with any information regarding its Loan Programs or Investment Products unless you meet one or more of the following criteria. Furthermore, Foreign nationals who may be exempt from qualifying as a U.S. Accredited Investor are still required to meet the established criteria, in accordance with High West Capital Partners, LLC’s internal lending policies. High West Capital Partners, LLC will not provide information or lend to any individual and/or entity that does not meet one or more of the following criteria:

1) Individual with Net Worth in excess of $1.0 million. A natural person (not an entity) whose net worth, or joint net worth with his or her spouse, at the time of purchase exceeds $1,000,000 USD. (In calculating net worth, you may include your equity in personal property and real estate, including your principal residence, cash, short-term investments, stock and securities. Your inclusion of equity in personal property and real estate should be based on the fair market value of such property less debt secured by such property.)

2) Individual with $200,000 individual Annual Income. A natural person (not an entity) who had individual income of more than $200,000 in each of the preceding two calendar years, and has a reasonable expectation of reaching the same income level in the current year.

3) Individual with $300,000 Joint Annual Income. A natural person (not an entity) who had joint income with his or her spouse in excess of $300,000 in each of the preceding two calendar years, and has a reasonable expectation of reaching the same income level in the current year.

4) Corporations or Partnerships. A corporation, partnership, or similar entity that has in excess of $5 million of assets and was not formed for the specific purpose of acquiring an interest in the Corporation or Partnership.

5) Revocable Trust. A trust that is revocable by its grantors and each of whose grantors is an Accredited Investor as defined in one or more of the other categories/paragraphs numbered herein.

6) Irrevocable Trust. A trust (other than an ERISA plan) that (a)is not revocable by its grantors, (b) has in excess of $5 million of assets, (c) was not formed for the specific purpose of acquiring an interest, and (d) is directed by a person who has such knowledge and experience in financial and business matters that such person is capable of evaluating the merits and risks of an investment in the Trust.

7) IRA or Similar Benefit Plan. An IRA, Keogh or similar benefit plan that covers only a single natural person who is an Accredited Investor, as defined in one or more of the other categories/paragraphs numbered herein.

8) Participant-Directed Employee Benefit Plan Account. A participant-directed employee benefit plan investing at the direction of, and for the account of, a participant who is an Accredited Investor, as that term is defined in one or more of the other categories/paragraphs numbered herein.

9) Other ERISA Plan. An employee benefit plan within the meaning of Title I of the ERISA Act other than a participant-directed plan with total assets in excess of $5 million or for which investment decisions (including the decision to purchase an interest) are made by a bank, registered investment adviser, savings and loan association, or insurance company.

10) Government Benefit Plan. A plan established and maintained by a state, municipality, or any agency of a state or municipality, for the benefit of its employees, with total assets in excess of $5 million.

11) Non-Profit Entity. An organization described in Section 501(c)(3) of the Internal Revenue Code, as amended, with total assets in excess of $5 million (including endowment, annuity and life income funds), as shown by the organization’s most recent audited financial statements.

12) A bank, as defined in Section 3(a)(2) of the Securities Act (whether acting for its own account or in a fiduciary capacity).

13) A savings and loan association or similar institution, as defined in Section 3(a)(5)(A) of the Securities Act (whether acting for its own account or in a fiduciary capacity).

14) A broker-dealer registered under the Exchange Act.

15) An insurance company, as defined in Section 2(13) of the Securities Act.

16) A “business development company,” as defined in Section 2(a)(48) of the Investment Company Act.

17) A small business investment company licensed under Section 301 (c) or (d) of the Small Business Investment Act of 1958.

18) A “private business development company” as defined in Section 202(a)(22) of the Advisers Act.

19) Executive Officer or Director. A natural person who is an executive officer, director or general partner of the Partnership or the General Partner, and is an Accredited Investor as that term is defined in one or more of the categories/paragraphs numbered herein.

20) Entity Owned Entirely By Accredited Investors. A corporation, partnership, private investment company or similar entity each of whose equity owners is a natural person who is an Accredited Investor, as that term is defined in one or more of the categories/paragraphs numbered herein.

Please read the notice above and check the box below to continue.

Singapore

+65 3105 1295

Taiwan

Coming Soon!

Hong Kong

R91, 3rd Floor,
Eton Tower, 8 Hysan Ave.
Causeway Bay, Hong Kong
+852 3002 4462