The Lithium Mine Buildup Is Outpacing the Electric-Car Boom
The electric car industry hasn&#x27;t <i>remotely</i> boomed. Electric cars are still deeply strangled by two key factors: industry inertia and the cost&#x2F;supply of lithium batteries. Once those two factors are solved (and a build-up of lithium mines is key to that) electric cars will go from being a niche within a niche to utterly dominating the market very, very quickly.<p>Within the next decade we might see companies like Hyundai&#x2F;Kia, Toyota and Honda selling more EVs than ICE. Take the Kia Niro EV as an example: if the cost of batteries halved and the supply was unconstrained, there is little stopping that kind of product from dominating the market—starting with two-car households with off-street parking.<p>With their lithium cell investments, Telsa are well positioned to benefit from this boom, but they need to think carefully about their positioning. Right now they&#x27;re a luxury brand with no serious competitors; when Telsa&#x27;s drivetrain advantage is substantially neutralised, their mind share is likely to stagnate.<p>In my opinion Tesla needs to prepare to be in the budget space. They need to partner with an external manufacturer to sell a product with normal door handles that competes with Hyundai and Toyota. Because once the cost of batteries falls, I predict a substantial slice of their market will simply disappear to the economy manufacturers. I suspect that many people who love Telsa really just love the idea of electric vehicles and they&#x27;ll be buying something more like the Kia Niro EV.