Is This The Start Of A New Era?

Apple could be in talks with Hyundai to produce an electric car. The day early negotiations between the two companies were reported, Hyundai’s shares soared 20%. The company’s market capitalization instantly added $9 billion.

If true, though, investors will make multiples of this amount, and it won’t be by buying shares of either Apple or Hyundai…

Or Tesla, which, by the way, grew by over 740% in 2020.

These Eye-Watering Gains Will Look Like Pennies Compared to This…

The real winner will be the battery industry. Here’s why…

Apple was reported to explore a new battery technology based on lithium-iron-phosphate (LFP) cathode material. Why is it big news?

These batteries will have an energy density of about 50% higher than that of the current generation. This means that the battery packs more power per pound of weight.

It’s also better than other battery types by safety and cost.

Here’s what it means…

New Battery Gen Will Make iCar Possible

First, the battery cost is about one-third of an EV’s price. Add more costs, like upfront production expenses, and you don’t have much of a margin to earn. Most of the EV’s price goes into covering costs. This is why EVs aren’t as profitable as their internal-combustion counterparts.

Second, size matters. Smaller cars are even more challenging than larger ones to make money on. The reason is straightforward: automakers can charge more for SUVs.

Apple will address these challenges and dominate the car market. 

Apple Will Produce the iPhone of Cars.

It will be premium-priced. But the technology inside (like the cheaper battery, for example) will make sure that it’s affordable to millions of people.

iCars will flood city streets by the end of this decade.

And the best part is…

Even if Tesla keeps up, and even if legacy automakers adopt the EV tech successfully…

…everybody will need lithium for their batteries.

And Here’s the Best Part…

Apple could be forced to use US-produced lithium for its cars.

And this is where the real upside for lithium stocks lies.

The US is on a path toward producing more of its basic materials domestically. This trend started a while ago when the country realized that relying on China for strategically important commodities might not be the best decision.

…so it started moving some production back to the US or encouraging local mining companies to develop projects in areas like uranium.

If you ask me, lithium is the next oil. It will power the next energy revolution. It will be as important for the EV transition as oil was for the transition from a horse to an internal combustion engine.

And Apple could decide to produce its iCar in the US… which doesn’t mine nearly enough lithium to supply the domestic car market.

How to Play It

We are so bullish on US-based lithium producers. Apple will need lithium, Tesla could, too, and other car companies that decide to produce cars for the US market domestically.

To get exposure to a portfolio of lithium stocks, use The Global X Lithium & Battery Tech ETF (LIT). We’ll be back with more lithium coverage soon. Watch this space.

Thank You For Your Loyal Readership.
The Financial Star Team.