Exxon Stock (NYSE:XOM)
The oil industry is starting to invest in lithium. This is huge news, but there is a caveat: the market for lithium isn’t all that significant.
According to a report published by The Wall Street Journal on Sunday, Exxon Mobil (NYSE:XOM) purchased land in the Smackover formation of southern Arkansas from an exploration company known as Galvanic Energy for approximately one hundred million dollars. A request for comment from Exxon was not immediately met with a response.
The Rise of Electric Vehicles
Electric vehicles have gained significant traction in recent years as the world collectively acknowledges the need for sustainable transportation alternatives. With concerns over climate change, air pollution, and fossil fuel dependency, governments, automakers, and consumers are embracing EVs as a pivotal solution to combat these challenges. However, the success and widespread adoption of electric vehicles depends heavily on the advancements in battery technology, particularly lithium-ion batteries.
On some levels, it appears as though the move is an acknowledgment that the future of cars will be more likely to be powered by batteries than by gasoline. After all, the International Energy Agency predicts that there will be 350 million electric vehicles on the roads of the world by the end of the decade. This number is roughly ten times higher than the current population of EVs, so investigating lithium seems to be a prudent course of action. In addition to this, if the IEA is correct, electric vehicles will make up roughly 15% of all vehicles that are driven on roads in the future, which is a significant increase from the current figure of less than 2%.
It is necessary for Exxon to find a way to satisfy a portion of the demand for gasoline. It is possible that the land in Arkansas contains as much as 4 million tons of LCE, which is shorthand for lithium carbonate equivalent. One of the actual products that get used by battery makers in the production of lithium-ion batteries is a compound known as lithium carbonate.
It may sound like a lot, but at the prices that are currently available on the market that quantity of lithium carbonate is worth approximately 120 billion dollars. That brings us to the resource. Each year, a portion of that would be extracted from the ground and processed.
It is anticipated that Exxon will generate approximately $373 billion in revenue in 2023. To replace a significant portion of that revenue will require a significant amount of lithium, which will take some time.
It’s possible that “a lot” is an understatement. It is anticipated that Exxon, Chevron (NYSE:CVX), and Saudi Arabian Oil, which is more commonly referred to as Aramco, will collectively generate sales of more than one trillion dollars this year. Albemarle (NYSE:ALB), Livent (NYSE:LTHM), and SQM (NYSE:SQM), which are the three largest lithium producers on the planet, are anticipated to generate lithium-related sales of approximately $10 billion, which accounts for approximately 2% of the total sales generated by energy giants.
The production of lithium is anticipated to increase by a factor of five to seven between the years 2023 and 2030, according to estimates provided by the automotive industry. Even with the projection of higher lithium prices, it is expected that global sales of LCE will amount to approximately $150 billion by the year 2030. According to data provided by BP (NYSE:BP), the total value of global sales of crude oil surpassed $2 trillion in 2022.
Both lithium and oil have somewhat dissimilar modes of operation. The typical electric vehicle may have LCE worth close to one thousand dollars. The battery as a whole, including the lithium, can, of course, be recharged indefinitely. Lithium, however, is only a component of the battery. A typical electric vehicle will probably rack up 150,000 miles over the course of its lifetime. When traveling the same distance in a typical car, one could expect to spend somewhere between $15,000 and $20,000 on gasoline.
The Exxon report is not having any effect on the price of lithium stocks. The percentage of shares held by Albemarle, Livent, and SQM has increased by 1.1%, 0.2%, and 0.6%, respectively. Futures contracts for the S&P 500 (SPX –0.05%) and the Dow Jones Industrial Average (DJIA –0.44%) are both trading at their opening levels. The stock of Exxon isn’t doing much better either. In early trading, the share price has decreased by 0.1%.
Unleashing the Power of Lithium-Ion Batteries
Lithium-ion batteries have become the gold standard for electric vehicles due to their superior energy density, longer lifespan, and faster charging capabilities compared to traditional lead-acid or nickel-based batteries. The increased energy density of lithium-ion batteries allows for greater driving range, making EVs more practical and appealing to consumers.
Enhancing Energy Storage with Lithium
Lithium, a highly reactive and lightweight metal, is a crucial component in lithium-ion batteries. Its exceptional electrochemical properties make it an ideal choice for energy storage. As technology evolves, researchers are continuously striving to improve lithium battery performance by enhancing the composition and structure of the battery’s cathode, anode, and electrolyte materials.
Cutting-Edge Cathode Materials
Advancements in cathode materials have been instrumental in boosting lithium-ion battery performance. Traditional cathodes were primarily made of cobalt, but its high cost, limited availability, and ethical concerns surrounding mining practices have prompted the development of alternative materials. Newer cathode compositions, such as lithium iron phosphate (LiFePO4), lithium manganese oxide (LiMn2O4), and nickel manganese cobalt oxide (NMC), offer improved safety, stability, and energy efficiency.
Anode Innovations: Moving Beyond Graphite
Graphite has traditionally served as the anode material in lithium-ion batteries, but its limited energy storage capacity has paved the way for novel alternatives. Silicon anodes, for instance, have shown promising results, as they can store significantly more lithium ions, increasing the battery’s overall energy density. However, challenges related to silicon’s expansion during charge and discharge cycles need to be addressed for practical implementation.
Electrolyte Enhancements for Efficiency and Safety
Electrolytes play a vital role in lithium-ion batteries, facilitating the movement of lithium ions between the cathode and anode. The development of solid-state electrolytes, which offer improved safety, higher energy density, and wider temperature ranges, holds great promise for the future of lithium battery technology. These advancements could mitigate safety concerns associated with the liquid electrolytes commonly used in current battery designs.
As the world transitions towards a sustainable future, lithium-ion batteries continue to play a pivotal role in revolutionizing the electric vehicle industry. The relentless pursuit of advancements in battery technology, coupled with supportive government policies and collaborative efforts, will accelerate the adoption of EVs globally. By understanding the intricacies of lithium battery technology and its potential, we can contribute to a greener and more sustainable future.
Featured Image: Unsplash @ Sébastien Jermer