Lithium Is Tesla's Biggest Winner. Citi Likes Two Lithium Stocks.

Whatever calculations Wall Street makes, the globe will require a lot more lithium to accomplish the energy shift. This is positive for the stock prices of companies that manufacture and refine metals.

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The March 1 event for Tesla TSLA -0.44% is already over. The event was a bust for Tesla's (ticker: TSLA) shares. Since the electric vehicle manufacturer welcomed analysts and investors in Austin, Texas, shares had decreased by approximately 10% heading into Thursday's trade.

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Thursday's premarket trade has seen a further 2.7% decline in Tesla shares. Futures for the Nasdaq CompositeCOMP +0.25% and S&P 500SPX +0.13% are down 0.3% and 0.6%, respectively.

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Investors wished for additional information on pressing matters, such as the upcoming, more affordable Tesla model that will increase the company's target market. In 2022, the average cost of a Tesla was around $54,000.

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Tesla, on the other hand, painstakingly detailed how it may expand its company and potentially produce 20 million vehicles annually. Elon Musk, the company's CEO, calls that objective ambitious.

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The 20 million amount is far larger than what the Street is currently estimating. If Tesla succeeds—or just expands more quickly than anticipated—it will increase the number of electric vehicles on the road, the production of lithium ion batteries, and the amount of money lithium miners make.

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According to our initial estimates, the statements on their face value might indicate as high as 23% yearly rise in the need for lithium by 2030, according to Citi chemical expert P.J. Juvekar in a report on Wednesday. This increase in lithium consumption exceeds Citi's prediction of an average yearly growth rate of around 17% until 2030.

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Either way, the rise of the lithium demand is picking up speed. For the past 20+ years, lithium output has increased at a rate of about 12% annually. The price for a commodity is astounding. At the same period, the output of copper worldwide increased by 2% to 3% year on average. The average annual increase in steel demand has been around 4%.

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In the long run, Citi anticipates benchmark lithium prices to stay at around $30,000 per metric ton. It will be necessary to motivate the sector to create the new mines and assets needed to fulfill the escalating demand.

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In 2021, the price of lithium was about $7,000 per metric ton.

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Juvekar has Buy recommendations on a few lithium-related companies. He ranks Albemarle ALB -3.63% (ALB) shares, a lithium miner, as a Buy. His share price objective is $310. On Wednesday, Albemarle shares reached a closing of $253.25. Li-Cycle, a company that recycles lithium, has also given a Buy rating by Juvekar. He has set a $7 per share price objective for the stock. On Wednesday, Li-Cycle shares reached a high of $5.75.