Throwing Out The Rules For Epic Commodity Play

This is one of the greatest setups for a commodity play you’ll ever see.

On the stock side an overheated bubble is bursting.

On the fundamental side an industry is about to enter an eight year Amazon-like growth trajectory.

It’s going to be a good one once we find the right entry point that’s coming soon.

Here’s the breakdown.

A Falling Knife Worth Catching

We’re talking about lithium.

If you bought into the lithium bubble, you probably know it’s been a major bust.

Lithium shortages have disappeared and prices collapsed.

The chart below shows the market price of lithium carbonate per tonne:

Normally, this would be a catastrophic setback for any commodity industry.

The kind of 1000% price spike would drive insane amounts of capital into exploration and production expansion projects.

Supplies would soar.

Prices would collapse.

And it would take years for demand to catch up to supplies leaving the industry dead for years.

Again, that’s in a normal commodity market.

Lithium is not going to be normal this time around.

The reason?

The government.

Consumers Hate EVs

Lithium demand is about to explode.

Now, I know what you’re thinking.

EV's largely serve a niche market.

The data bears that out too.

The average time on the lot for a Honda HR-V, a small SUV with an internal combustion engine, is 33 days.

Dealers turn them around fast because of the high demand.

The average time on the lot for a Tesla Model S is 88 days. 

There just isn’t much demand for EV beyond the current U.S. capacity.

But that’s where a little-noticed announcement from the EPA is going to change all this.

Boom-Bust-Boom

The EPA announced it was going to increase the mileage requirements of all new cars.

Although the final number isn’t official, we know it’s going to be a big jump.

After all, it’s why all the big U.S. automakers are pushing forward with many EVs even though consumers aren’t buying them.

The EPA said the result of the update mileage requirements will be:

“Requirements will ensure that between 54% and 60% of all vehicles sold in the US will be electric vehicles (EV) by 2030 and between 64% and 67% by 2032.”

That’s a huge change.

The industry has to go from less than 6% in 2022 to 64%+ in 2032.

The numbers from there are just nuts.

About 750,000 new EVs were registered in the U.S. last year.

That was 5.66% of the total market of just under 14 million new vehicles sold into the U.S. market last year too.

That 5.6% has to go to 67% in 10 years.

That alone is monster growth.

But there’s another layer to it.

The last year has been a particularly awful one for new U.S. vehicles with 14 million.

The U.S. is going to require at least 18 million new vehicles per year just based on the current average vehicle age in the United States.

And 67% of that being EV’s is about 12 million.

The growth from 750,000 this year to 12 million in will require about 32% annual growth in EVs for a decade.

Conclusion: How To Play It

We’re looking at a growth opportunity the size of the major tech growth stories of the last decade.

More importantly we don’t think too many see it right now.

That’s because everything is going against EVs right now.

Lithium prices are collapsing.

Consumers are not nearly as interested in them as automakers were expecting.

And there’s a price war for market share on top of it all.

That all will change if for no other reason than the EPA requirements.

Next week we’ll look at some stocks set to benefit from this.

We’ll go beyond just basic lithium miners and development plays and look at some true potential gems.

All the best,

Shareholder Intel Action

Current Research Reports:

Major Hedge Fund Takes Massive Stake In Fast-Growing Gold Company