Price cuts affect economic security! Lithium carbonate $1 million/ton can be afforded

Killing the landlord does not equate to becoming wealthy, and Tesla's price reduction can even be considered a sin. This is the demand of the ecosystem!

On May 23rd, a new round of lithium carbonate auction was held by a salt lake enterprise in Qinghai, with a total of 32 tons of lithium carbonate up for bidding. The starting price was 295,000 yuan/ton, and only one person made a bid, ultimately concluding at the starting price.

The pricing of lithium carbonate is determined by auctions, and under the condition that prices need to be bid, it is generally unrealistic to expect a significant reduction.

Additionally, lithium carbonate can be stored, with increased demand leading to more mining and reduced demand leading to decreased production. The pricing power is firmly in the hands of the upstream industry.

In the medium to long term, lithium carbonate priced below 1 million yuan/ton is considered cheap. High prices for lithium carbonate can nurture the new energy ecosystem.

Sodium batteries, hydrogen fuel cells, power battery recycling, solid-state batteries, energy storage, intelligence, and more—all these require lithium carbonate to be maintained at a higher price to allow other related ancillary industries to survive.

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The development of the new energy industry is still in its infancy, with the future of global electricity relying on new energy sources. Coal-fired and nuclear power generation are unstable and easily affected by coal price fluctuations, as seen with the collapse of electricity prices in South Africa.

If lithium carbonate rises to 1 million yuan/ton, the lithium cost per new energy vehicle would be around 25,000-30,000 yuan/vehicle.

This would create space for sodium battery vehicles, hybrid vehicles, and the petroleum industry, ensuring that everyone has a way to survive.If lithium carbonate remains at 200,000 USD/ton or even lower, then pure electric new energy vehicles would cost 100,000 USD+ per unit. Adding some non-intelligent features and further deductions, pure electric vehicles priced at 50,000 USD+ per unit will emerge. At that time, charging might be more expensive than the car itself. The consequence would be that sodium batteries would not be viable, and in the global automotive industry, only China would survive.

Supply shortages are a long-term condition. The production process of lithium carbonate is more complex than that of oil, and the consumption is predictable. It is not an absolute necessity, unlike the era of oil, where global power depended on oil, and the production and demand could be calculated and were relatively urgent. In the new energy era, society's industrialization has reached a high level, entering a customized era where pre-sale becomes the main line. The supply and demand are more tightly calculated, leading to more cautious production and smaller price fluctuations.

Minmetals Securities predicts that by 2030, global lithium carbonate demand will approach 4 million tons. In 2022, global production was about 720,000 tons, equivalent to lithium carbonate. Among them, electric vehicles consumed about 420,000 tons, energy storage consumed 100,000 tons, consumer batteries consumed 100,000 tons, and others consumed 100,000 tons.

Purely in the automotive industry, the global demand for full electrification of vehicles exceeds 4 million tons/year. This does not yet include robots, energy storage, and the global power replacement demand for lithium carbonate.

Currently, the automotive industry in the populous country of India is in an explosive growth period. In the future, India's automotive demand is expected to surpass that of China. Due to India's population concentration, smaller land area compared to China, and transportation construction pressures, especially the lower anxiety over new energy.

If all global vehicles are fully electrified in the future, and global energy is fully electrified, the demand for lithium carbonate will be more than 30 times the current level.

The supply of lithium carbonate will remain tight in the long term, and I firmly believe that lithium is the super oil of the future.

Remember, the world's electricity demand continues to grow steadily. Before the construction of the Three Gorges Dam, it was boasted that once the Three Gorges were built, the national electricity prices could be halved... However, the electricity supply from the Three Gorges far from meets the national demand.

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