Tesla boss: ASX lithium shares set to boom
According to an executive at Tesla Inc, ASX lithium shares like Pilbara Minerals Ltd (ASX: PLS) might be in for a fantastic few years
Sebastian Bowen
Sebastian Bowen has been a Motley Fool contributor since late 2018.
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Published May 5, 2021 3:28pm AEST
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The ASX lithium sector has long been an area of interest from ASX investors. Since the days of the 2017 lithium bubble, interest in the sector has been on the rise again. This can be seen in the share prices of some of the ASX's largest lithium plays. Take Pilbara Minerals Ltd (ASX: PLS), whose shares are up more than 500% over the past 12 months. Galaxy Resources Limited (ASX: GXY) has enjoyed gains of around 450% over the same period. Orocobre Limited (ASX: ORE) shares, 230%.
Much of this share price buying pressure has arguably come from the assumption that there is a coming surge in demand for lithium. A surge driven by the adoption of electric cars, vehicles and batteries. Including those from Tesla Inc (NASDAQ: TSLA).
Lithium is a key ingredient in the lithium-ion battery – the most popular design for rechargeable batteries across the board. As such, many investors are hoping that the mass adoption of electric vehicles across the globe will result in a supply squeeze for lithium.
An electric future for ASX lithium shares?
Well, those hopeful investors might be encouraged today. According to a report in the Australian Financial Review (AFR), the head of Tesla's energy business in the Asia-Pacific, Mark Twidell, says Australia is in a "prime position" to harvest much of the gains in the lithium sector that he sees coming.
Mr Twidell headed the team that was responsible for South Australia's 'big battery' development that was completed by Tesla in 2018. It now forms a core part of the state's electricity grid. He was speaking at a Southstart conference for entrepreneurs in Adelaide. Twidell reportedly told the conference that demand for lithium is indeed rising as electric vehicles and large-storage batteries usage ramps up. Predicting that the lithium-ion battery value chain is forecast to be $400 billion by 2030, Mr Twidell reckons Australia's substantial lithium deposits bode well for us.
"It's silly to fight to say the transition isn't happening. It's happening quickly… Let's actually increase the benefits to Australia" he was quoted as stating. "It's the economics at the end of the day which transitions us to where we are going… The environmental benefits make sense, but economics will see us through".
The report concludes by quoting broker UBS. UBS predicts electric vehicle sales will be around 20% of the total vehicle sales by 2025. That's up from 4% in 2020.
No doubt many ASX lithium investors will be in furious agreement with Mr Twiwell today.
Sebastian Bowen owns shares of Tesla. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.