As sales of electric vehicles explode, demand for lithium carbonate as a raw material for batteries will continue to be strong. Goldman Sachs in a report released at the end of 2015, lithium could become the "new era of gasoline". Goldman Sachs expects that the demand for lithium carbonate is currently 160,000 tons per year, and electric vehicle penetration rate of every 1 percentage point, will bring 70,000 tons of new lithium carbonate demand. By 2025, only the growth of the electric vehicle market is expected to drive the entire lithium market demand reached 470,000 tons.

On July 29, the opening ceremony of Giga factory, the world's largest lithium battery factory, will be held soon. The factory is located in the eastern suburb of Reno, Nevada, USA, covers an area of about 540,000 square meters, and was built by Tesla with an investment of 5 billion U.S. dollars.
Just earlier this month, construction of the Superfactory was completed at only 141 TP3 T. In order to supply batteries for the Model 3 electric car under development, Tesla doubled the number of construction workers to ensure that the factory would be up and running in time.
Once in production, the cost of the batteries used in Tesla's electric cars will drop by at least about 331 TP3T, Bloomberg reported.Tesla battery supplier Panasonic, on the other hand, expects the factory to begin large-scale production in November of this year. It is expected to operate at full capacity by 2020, producing 500,000 lithium batteries per year, more than all other factories in the world produce lithium batteries combined.

Related U.S. stocks surged in response

The Giga factory was built by Tesla in conjunction with Panasonic. In order to be able to sell Model 3 at a lower price and make a profit, the factory is crucial for Tesla to break through the capacity bottleneck. Earlier this year, Tesla Model 3 started accepting pre-orders. Because of the overwhelming demand, Tesla plans to increase its production capacity from the current 80,000-90,000 units to 500,000 units in two years, a nearly five-fold increase, and further increase to 1 million units by 2020, a full two years ahead of the previous plan.

Tesla CEO Elon Musk released Chapter 2 of the Tesla Blueprint on July 21st. According to this plan, Tesla's future business will involve integrated solar products, electric public transportation, driverless cars and derived rental and sharing markets, thus becoming a vertically integrated clean energy company.
Japan's Panasonic Corp. recently projected that strong demand for lithium batteries from Tesla Motors will drive its annual automotive battery revenue to more than double in three years, Huaan Securities recently revealed in a research report. Kenji Tamura, Panasonic's executive in charge of the automotive and industrial systems business, said he expects the company's annual revenue from automotive batteries to increase to 400 billion yen (about $3.98 billion) in the fiscal year ending March 2019. By comparison, the company's annual automotive battery revenue for the fiscal year ending March 2016 was 180 billion yen.

Kenji Tamura said the company expects consolidated annual revenue from automotive batteries and energy storage products to grow 1.5 times over the same period to 500 billion yen. "Panasonic intends to move forward with its $1.6 billion investment program targeting the latter's Nevada-based gigafactory at the request of Tesla to meet the demand for orders for Tesla's soon-to-be-released Model 3 sedan."

As sales of electric vehicles explode, demand for lithium carbonate as a raw material for batteries will continue to be strong. Goldman Sachs in a report released at the end of 2015, lithium could become the "new era of gasoline". Goldman Sachs expects that the demand for lithium carbonate is currently 160,000 tons per year, and electric vehicle penetration rate of every 1 percentage point, will bring 70,000 tons of new lithium carbonate demand. By 2025, only the growth of the electric vehicle market is expected to drive the entire lithium market demand reached 470,000 tons.
The market's interest in the lithium battery sector continues to rise due to the opening of the Superfactory. On Friday in the U.S. market, shares of Bacanora Minerals, which supplies lithium feedstock for Tesla's Super Battery factory, jumped 4.41 TP3T.
Among other lithium suppliers, Oroplata Resources gained 4.61 TP3T, SQM gained 0.81 TP3T, Nemaska Lithium gained 13.241 TP3T, Yabo gained 0.91 TP3T and FMC gained 0.31 TP3T.

Competition concentrated in Asia

Tesla is just a representative of the whole industry, Germany's Volkswagen is also in full development of new energy battery car, its plan in 2025 to let the annual sales of pure electric vehicles reached 2 million -3 million. In the view of He Xinjie, a researcher at Weishi Capital, the new energy battery car industry is a sunrise industry that has just started. "From the government to enterprises to capital, it's a relatively frenzied period now."

Ping An Securities pointed out in a previous analysis report, as an important foundation of new energy and the implementation of industry 4.0, lithium equipment companies continue to benefit from demand growth and policy support. At present, China's lithium equipment industry enterprise revenue scale is generally below 300 million yuan (RMB), huge growth space, large-scale investment after the climax, is expected to have industry reshuffle in the future, the industry leader's market share will continue to improve.

He Xinjie told the 21st Century Business Herald reporter, according to his personal rough statistics, from the second half of 2015 to March 2016, the new energy gradually became a wind mouth, a part of the listed companies were not doing the relevant industries, but also want to get a piece of the wave of the idea of acquiring the existing battery producers, the amount of money involved in such cases has been more than 20 billion (RMB), and this includes companies that are not listed. And this does not include companies that are not listed.

"Although the demand is in, but the quality of the product if it can not meet the requirements, the market will not buy in the end, and finally will be concentrated in the better quality of a few producers." He Xinjie said that in 2015 the actual shortage of power batteries is 3.5 MWh, to 2016, according to the plan of the projected overcapacity, by the end of next year overcapacity will be more serious.

He expects that in such a situation, the power battery industry from next year to start shuffling.

It is understood that the current production of lithium batteries is concentrated in Asia, and competitive battery producers are mainly concentrated in South Korea and Japan. Musk said his battery factory will compete with Asian counterparts for more market share.

"Tesla this high-profile claim to fight for market share, may be Japanese and Korean companies as well as Chinese related enterprises in the future technology route selection has a great impact." He Xinjie analyzed, because ternary lithium batteries and lithium iron phosphate batteries have their own advantages and disadvantages, the former in the range as well as the number of times of charging and discharging is more advantageous, and the latter security is better. If Tesla can solve the safety problem, its competitiveness is very strong.