Tesla Inc. (Nasdaq: TSLA) is at it again…

Last week the company announced plans to launch a fully autonomous car by 2023.

The car, unofficially dubbed the “Model 2,” is expected to resemble a hatchback.

And it will lack two components that come standard to most cars…

A steering wheel and pedals.

With Tesla giving Model 2 owners no choice but to sit back and enjoy the ride, it’s safe to say the company is confident in the state of its self-driving technology.

And that’s not all…

CEO Elon Musk expects the Model 2 to cost under $25,000.

That is HUGE news, especially considering the cost of new cars right now.

Lower Prices Will Spark a Chain Reaction

According to Edmunds, the average price of a light vehicle sold in 2021 stands at $40,000.

Industry analysts had previously expected electric vehicles (EVs) to be cheaper than gas-powered cars by 2022 or 2023.

But autonomous vehicles? No one imagined that.

If Tesla’s plans for the Model 2 come to fruition, the mass-market EV would cost 38% less than a new vehicle today.

I expect this development to spark a chain reaction in which other automakers are forced to lower prices for their EVs.

The low EV prices will increase demand as cost-conscious consumers flock to purchase cheaper vehicles.

This adoption scenario will be great for EV companies. But it will be even better for EV metal producers.

The Lithium Shortage Isn’t Over

The supply of EV metals can’t keep up with demand.

The expansion of the EV fleet has led to a massive supply-demand imbalance.

Benchmark Intelligence estimates a 25,000-ton lithium shortage this year and expects the shortage to continue through 2022.

Unless there’s major investment in production capacity, Benchmark believes the shortage could last till the end of the decade.

Since lithium is used heavily in EV batteries, a low supply will encourage higher prices. We’ve already seen this play out, with lithium prices up 168% over the past year.

And it’s not just lithium that’s in high demand…

EV Metal Prices Are Surging

The EV industry’s shift to higher-capacity batteries is leading to demand for other battery metals like graphite.

New EVs registered in June 2021 boasted battery capacities that were 160% higher than those registered in the previous year.

These vehicles were built using 30% more lithium and 36% more graphite than a year ago.

As you can see below, the increase in battery metal deployment and higher prices has led to a surge in the value of EV metals in recent months.

Value of battery metals in electric vehicles chart

(Source: Mining.com.) 

The value of battery metals contained in the EVs registered in June 2021 was $649 million, up 237% from last year.

1 Metal Critical for EV Production

Since EVs are heavily reliant on battery metals for production, it’s not surprising that battery metals stocks have become popular over the past year.

But the market seems to have overlooked one metal that’s critical for EV production.

In fact, this metal is used in 9 out of 10 clean energy vehicles.

Ian King and I pinpointed a company that’s in sole control of the metal’s mining in North America.

Check out Ian’s presentation to learn more.


Steve Fernandez

Research Analyst, Strategic Fortunes