The Global Opportunity Elon Musk Just Touted As “A License To Print Money”

The Global Opportunity Elon Musk Just Touted As “A License To Print Money”
Reda Farran, CFA

over 1 year ago1 min

Mentioned in story

During Tesla’s second-quarter earnings call, Elon Musk promised riches to any company that invests in lithium refining, saying: “You can’t lose. It’s a license to print money”.

Musk’s argument is that lithium mining – extracting raw lithium deposits from hard rocks or brine reservoirs – is relatively easy. But lithium refining – converting the raw lithium into compounds that are essential to EV batteries – is much harder, requiring a massive amount of machinery and know-how. That might be why there’s a shortage of global refining capacity today, which has sent prices soaring: you can see above that Chinese lithium carbonate prices – to take one key material – have jumped almost 450% in the past year.

Musk added that there are software-like profit margins to be made in lithium refining – that is, the companies that do it will make a lot of profit from every dollar of revenue. He’s not wrong: the five firms that dominate lithium refining – Albemarle, SQM, Ganfeng Lithium, Tianqi, and Livent – have all forecasted 2022 net income margins of between 25% and 45%, compared to software giant Oracle’s forecasted net income margin of 29%. And in the corporate world, that might be as close to printing money as you’ll get…



All the daily investing news and insights you need in one subscription.

Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

/3 Your free quarterly content is about to expire. Uncover the biggest trends and opportunities. Subscribe now for 50%. Cancel anytime.

© Finimize Ltd. 2023. 10328011. 280 Bishopsgate, London, EC2M 4AG