Direct Lithium Extraction from brines could help lithium scale 30x in the Energy Transition; with costs and CO2 intensities 30-70% below mined lithium; while avoiding the 1-2 year time-lags of evaporative salars. This 15-page note reviews the top ten challenges that decision-makers need to de-risk, in order to get excited within the fast-evolving DLE landscape.
The need to ramp lithium 30x in the energy transition is re-capped on pages 2-3, including why this is one of the most explosive trajectories of any material we have tracked, and becoming a painful bottleneck in 2022-23.
Today’s production is dominated by mining (page 4) and evaporative salars (pages 5-6). Each of these has drawbacks, which are covered in the note.
Direct lithium extraction is a kind of holy grail for the lithium industry, a magic process that can separate all and only the lithium ions from the complex ionic soup, even at challenging geothermal brines (example charted above). However, there are ten challenges that need to be overcome before a DLE technology gets truly exciting. They are laid out on pages 8-12.
The extent of these challenges may benefit incumbents in the lithium industry (shown on page 13), as their era of excess returns persists for longer.
Promising DLE leaders are summarized on pages 14-15, along with each company’s recent progress, and the challenges we would focus upon.
For an outlook on mined lithium supply chain, please see our article here.
Global graphite volumes grow 6x in the energy transition, mostly driven by electric vehicles, while marginal pricing also doubles. We see the industry moving away from China’s near-exclusive control. The future favors a handful of Western producers, integrated from mine to anode, with CO2 intensity below 10kg/kg. This 10-page note on graphite opportunity in energy transition concisely outlines the opportunity.
What is graphite and why does it matter? We outline some history, some chemistry, some market-sizing and the main sources of industrial demand growth on pages 2-3.
The supply chain is explained on page 4-5. Specifically, how is battery-grade graphite made via mined graphite (natural route) and petcoke/coal (synthetic route), and what are the respective CO2 intensities?
Our base case economic model requires $10/kg for a greenfield production facility to earn a 10% IRR. We outline what drives these numbers on pages 6-7.
Surprise bottlenecks? We cannot help wondering whether there is a surprise bottleneck waiting in battery-grade graphite. The rationale is laid out on page 8.
Western companies are described on pages 9-10, including summary profiles of the four leading listed companies, ramping up Western graphite facilities in 2022-25.
To read more about our outlook on graphite opportunity in energy transition, please see our article here.
This 14-page note compares the economics of EV charging stations with conventional fuel retail stations. They are fundamentally different. Our main question is whether EV chargers will ultimately get over-built, as retailers look to improve their footfall and accelerate the energy transition. This means prospects may be best for charging equipment and component manufacturers.
To set a baseline, this note starts by reviewing the economics of conventional fuel retail stations, covering their typical costs, throughputs, fuel margins and convenience retail margins, on pages 2-4.
More electric vehicles are needed in the energy transition. Our estimates of volumes, oil market implications, and CO2 credentials are refreshed on page 5.
So how do the economics compare for EV chargers versus conventional fuel retail? We outline our numbers for an EV ‘fast charging station’ on pages 6-9, covering barriers to entry, throughput volumes, utilization factor aspirations, required margins, ultimate energy costs, and retail incentives.
This market structure is what makes us think EV chargers could ultimately get over-built, and this idea is fleshed out on page 10.
Could EV charging technology change in the future? We review the three technologies we would be watching on page 11.
Which companies are best-placed? We close with observations on better-placed companies, on pages 12-14, including specific examples from our patent reviews.
Motor innovations are an overlooked enabler for the electrification of transport. This 15-page note explores whether axial flux motors could come to dominate in the future. They promise 2-3x higher power densities, even versus Tesla’s world-leading PMSRMs; and 10-15x higher than clunky industrial AC induction units; while also surpassing c96% efficiencies. This extends the range of EVs and the promise of drones/aerial vehicles.
Traditional AC induction motors are described on pages 2-6, outlining how they work, their efficiency, middling reliability and typically low power density.
Electrification of transport already uses a step-change in motor design, to yield higher power density and controllability. Tesla’s PMSRM is world-leading. Details are laid out on page 7.
But a totally novel motor design is gaining ground. This is the axial flux motor, described on pages 8-11. Power density is 10x a traditional AC induction machine, efficiency is enhanced, and lower material usage may also yield important cost-savings.
Power electronics are overlooked in the revolution of electrifying transport. We note the importance of Moore’s Law on page 12, in the attempt to electrify passenger cars, two-wheelers and even aerial vehicles in the future.
Leading companies in axial flux motors are profiled on pages 13-15, based on reviewing 1,200 patents, and the technical specifications of their products. Auto-makers have started acquiring industry leaders, while earlier-stage companies are also raising capital.