Everything’s the new something else these days. Tacos are the new burgers, hydrogen is the new ethanol, and the EVANNEX blog is the new New York Times.
For years now, anti-EV campaigners have been claiming that lithium is “the new oil,” implying that, as lithium becomes a valuable commodity, the global economy will become hooked on it just as it currently is on oil, with similarly baleful effects—supply shortages, wars, environmental degradation.
Of course, this is a flawed analogy. Unlike oil, lithium is not a fuel, and doesn’t (normally) get burned. It’s a raw material, like iron, which is used to build a product, and can be recycled at the end of that product’s life. Also unlike oil, it is not in itself poisonous or hazardous to the environment (although current methods of lithium extraction do have negative environmental impacts). The kicker is that lithium-ion batteries don’t actually use that much lithium (about 2% of a battery cell by volume, according to Elon Musk).
However, the same headline can have two opposite meanings, which is why it’s always a good idea to at least skim an article before sharing it with the world. When a group of Morgan Stanley analysts wrote recently that batteries represent “the new oil,” they didn’t mean that batteries are going to cause environmental disaster—quite the reverse.
Above: Morgan Stanley highlights companies that make up the electric vehicle battery economy that's surfacing now (YouTube: CNBC Television)
Just as petroleum did in the 20th century, battery technology is poised to remake the global economy. The changes will unfold over several decades, will transform almost every aspect of human society, and will present endless investment opportunities. Just as oil did in its day, batteries are making, and will make, a lot of people rich, Rich, RICH! (Maybe you—read on.)
Morgan Stanley calls the emerging battery ecosystem a “cross-asset” space, with the potential to transform many areas of the business world. “The emerging battery economy is a story of battery-electric vehicles becoming vastly superior in cost and capability to internal combustion engine cars. Beyond its direct application to electric vehicles and [energy storage systems], the global battery industry sits at the nexus of equity sectors, commodities and public policy.”
Morgan Stanley cites a number of stocks that it expects to benefit from the coming battery boom, in several different industries. The list includes (of course) trend-setting automaker Tesla (TSLA), as well as battery firms Panasonic (PCRFY) and QuantumScape (QS). Potential winners also include raw material suppliers Albemarle (ALB) and Glencore (GLCNF) as well as heavy equipment-maker Komatsu (KMTUF), electric utility Norsk Hydro (NHYDY) and semiconductor supplier Analog Devices (ADI).