By Francesco Mocellin (own work) via Wikimedia Commons.
In case you missed it, Jon Hykawy's Stormcrow Capital put out a comprehensive report on the lithium industry last Friday. In the report, Stormcrow looks at lithium demand from no less than nine different sources, including glass, ceramics, greases and air-treatment applications. While demand from several of those areas is rising steadily, the report confirms what many lithium investors already know: battery use will drive lithium demand going forward. Specifically, the firm believes that "overall lithium demand will more than double from present levels through 2025." It expects that increase in demand — alongside stable supply — to lead to a higher lithium price. Battery demand Taking a closer look at the battery side of things, Stormcrow drew attention to predictions made by Avicenne regarding battery demand growth. It noted that while there's plenty of excitement in the lithium space over Tesla's (NASDAQ: TSLA) gigafactory and other similar projects, Avicenne "appears to have remained grounded in the principle that lithium demand depends on end-user battery demand, not on the scale of the factory constructing the batteries." Importantly, Stormcrow also noted that battery costs are not dominated by the cost of raw lithium, and found that a rising lithium price won't translate to vastly higher battery costs - an important concern for those who might be worried that rising costs could hurt demand. " [A]ssuming reasonable margins in the production of lithium-based battery cathode chemicals, even a large increase in the cost of lithium should result in only a very small cost increase in the batteries themselves," the report stated. "Clearly, while not welcome, an increasing lithium price does not represent an insurmountable hurdle for the battery industry. "