Lithium as an Emerging Asset: Opportunities in the Battery Market

Why Lithium Dominates Current Investment Decisions

Lithium has established itself as one of the most coveted materials in financial markets. Its fundamental role in the electric vehicle supply chain makes it a central element for those seeking exposure to the growth of sustainable mobility.

Unlike other materials, lithium benefits from a formidable legislative catalyst: the European Union, China, and the United States have established regulatory frameworks that ban the sale of combustion vehicles starting in 2035. This political decision guarantees a captive market for electric vehicles and, by extension, for the lithium that powers their batteries.

Supply and Demand Dynamics: The Critical Factor

The equation is relatively simple: electric vehicles require lithium-ion batteries to operate autonomously. Over the next 10 years, demand for this precious metal is expected to significantly outpace the available supply in raw material markets.

Currently, there are no viable competitors in the short term. Although alternatives based on sodium, silica, and zinc are being researched, these technologies require an additional 8 to 15 years to reach commercial viability. This positions lithium as the only practical material for the energy transition during this critical period.

Price Evolution: Evidence of Growth

Over the past five years, lithium has experienced a remarkable revaluation. The price increased from approximately $24 per ton to nearly $70 per ton, primarily driven by the accelerated rise in demand for electric vehicles.

Analysts project this upward trend will continue, with estimates suggesting prices above $100 per ton in the medium term, conditioned by the rapid growth of electric vehicle fleets in key markets such as China, Europe, and North America.

Channels to Access Lithium Growth

Direct raw material

Some platforms allow investment in lithium as a commodity. However, this approach tends to generate lower returns compared to investments in sector-related companies.

Lithium producers

Specialized mining companies offer the most direct profit potential. Chile’s SQM, Albemarle ( with operations in Chile and Nevada ), and Tianqi Lithium (, dominant in Asia ), control approximately 60% of global production. Production growth directly translates into increased profits.

Battery manufacturers

Tesla has vertically integrated battery manufacturing in its gigafactories, reducing dependence on external suppliers. Additionally, it produces large-scale storage systems for solar and wind installations. Panasonic maintains significant supply contracts, while CATL dominates the Asian battery and home storage market.

Electric vehicle producers

Tesla continues to lead due to technological advantage and vertical integration. Toyota positioned itself early in the transition, consolidating its second-place market share in the West. BYD leads decisively in China, also controlling its own battery supply chain, which grants higher operating margins.

Specialized index funds

The Global X Lithium and Battery Tech ETF (LIT) is the most established option, with a track record since 2010 and a 9.41% return in 2023. The Amplify Lithium and Battery Technology ETF (BATT) offers similar exposure with less history. WisdomTree Battery Solutions (CHRG) represents an emerging alternative with less track record but growing relevance.

Structural Advantages of Investment

The proposal is solid: lithium is indispensable in the value chain of electric vehicles for at least a decade. It does not depend on volatile consumer preferences or speculative technology. The higher the battery production, the greater the profits for lithium producers.

Legal backing through bans on combustion vehicles removes regulatory uncertainty. Unlike technological investments that may become obsolete, lithium is tied to an industrial transformation already legislatively mandated.

Considerations and Risks

Not all companies in the sector offer the same profitability. Some mining companies are currently overvalued in the stock market. Investors in emerging battery companies like Solid Power face technological risk: if their solutions prove ineffective against competitors, they could suffer significant losses.

The long-term transition (more than 15 years) remains uncertain. Sodium and other alternative technologies will eventually displace lithium as the dominant material, but this shift will occur after 2035-2040.

Fundamental Questions About Lithium Investment

What is the difference between lithium-ion batteries and lithium polymer batteries?
The former use liquid electrolyte, are more durable and economical. The latter employ solid electrolyte, occupy less space but are currently more expensive.

When will other chemistries compete with lithium?
Alternative technologies require 8-15 years of development. Sodium is the main candidate, but it has not yet reached viable industrial scale.

Are lithium batteries safe?
Like fossil fuels, they are flammable under accident conditions, manufacturing defects, or improper maintenance. Automotive protection systems mitigate this risk.

Environmental impact of lithium mining?
Extraction presents environmental challenges similar to oil and gas. The advantage is that vehicles using lithium batteries do not emit CO2 during operation, which greatly offsets the impact of extraction.

Conclusion: Opportunities in the Next Decade

Lithium represents one of the safest defensive investments currently available in markets. Investing in lithium in 2024 is akin to investing in oil in 1880: it is the fundamental energy resource of an emerging industrial era.

Legislation banning combustion vehicles removes ambiguity about future demand. Mining companies, battery manufacturers, and electric vehicle producers will benefit from structural growth over the next decade. Those seeking exposure to lithium investment should evaluate their risk profile: from defensive investments in established producers to higher-return opportunities in emerging battery manufacturers.