Yahoo Finance Play the Emergence of Lithium With These ETFs
Elon Musk's tagged lithium as "the new oil" last summer. The very phrase emphasized its importance of lithium in the global supply chain and the burgeoning electric vehicle market. As an essential component of rechargeable batteries found in everyday devices, lithium's demand continues to soar, making it a promising investment opportunity.
Due to high-density energy storage, the metal is used in rechargeable batteries for electric cars, smartphones, laptops, and other electronic devices.EVs and battery storage have already displaced consumer electronics to become the largest consumer of lithium and are set to take over from stainless steel as the largest end user of nickel by 2040, per IEA.
Overview of the Lithium Market
China, Australia and Chile are the primary lithium producers, with China holding an 80% market share in lithium-ion batteries. Recognizing the need for battery-grade lithium, Elon Musk stressed the importance of increased production to sustain the growth of electric vehicles.
Tesla's Ventures
Elon Musk's belief in lithium extends beyond words, as evidenced by Tesla's strategic investments. Tesla's ambitious plan to construct a $375 million lithium refinery in Texas underscores their commitment to securing a robust supply chain and establishing dominance in North America's lithium refining sector by 2025.
Inflation Reduction Act
Climate provisions in the Inflation Reduction Act put the United States back on track toward significant emissions reductions, potentially lowering greenhouse gas emission by 40% of 2005 levels. The Biden administration, for instance, looks to cut the sale of gas-powered vehicles to 50% of all new purchases by 2030.
ETFs in Focus
While Tesla's ventures may be out of reach for most individual investors, there are alternative avenues to tap into the expanding lithium market. Analysts on Wall Street have identified promising investment opportunities in companies engaged in lithium-ion battery production. There are pure-play ETFs as well to invest in this burgeoning market.
Global X Lithium & Battery Tech ETF (LIT)
The underlying Solactive Global Lithium Index tracks the performance of the largest and most-liquid listed companies that are active in the exploration and mining of Lithium, or the production of Lithium batteries. LIT charges 75 bps in fees.
Amplify Lithium & Battery Technology ETF BATT
The EQM Lithium & Battery Technology Index seeks to provide exposure to global companies deriving material revenues associated with the development, production and use of lithium battery technology. BATT charges 59 bps in fees and yields 3.83% annually.
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Global X Lithium & Battery Tech ETF (LIT): ETF Research Reports
Amplify Lithium & Battery Technology ETF (BATT): ETF Research Reports
