Tesla Motors (NASDAQ:TSLA) is about to revolutionize the lithium industry, and this little-known stock is riding right alongside the rebound…
There’s no doudting that Tesla Motors is a media darling.
The company is a refreshing departure from all other automotive stocks out there, and its vehicles are not only environmentally-friendly… they are cool.
Since releasing their first electric roadster to huge fanfare in 2008, Tesla’s customer base has grown considerably.
But they want to grow bigger.
One of their goals since launching their initial model was to make increasingly affordable electric cars available to the mass market.
Last summer, they announced that they would soon be producing what they dubbed the “Gen III” mass-market car with a 200-mile range, which they intend to sell for around $35,000.
Details have been sparse on the vehicle specs, but Tesla CEO Elon Musk made a major announcement last week that sprung investors out of their seats.
In order for it to compete with a car like the Nissan Leaf, the Gen III will need to be produced efficiently and affordably.
The biggest cost component for the Gen III is its battery system.
That is why Musk unveiled his company’s plans for a state-of-the-art Gigafactory.
This new plant will be developed with the goal of producing lithium ion batteries in mass quantities — to the point where the cost per kWh of each battery pack will be down by more than 30% within the first full year of production.
By 2020, Musk believes his Gigafactory could churn out more batteries annually than were produced worldwide in all of 2013.
The estimated cost to build such a cutting edge facility is expected to be in the range of $4-$5 billion.
The company says they’ll contribute around $2 billion of their own cash and has offered an additional $1.6 billion worth of convertible notes along with an option for the underwriters to purchase a further $240 million in convertible notes to fund Gen III development and its Gigafactory.
Once fully operational (by 2020), the factory will employ 6,500 people, including production partner employees.
At the present time, Tesla is working with Panasonic (OTCMKTS:PCRFY) to develop the latest in battery technology and has a contract to purchase around 2 billion lithium-ion cells until 2017.
While this is great news for Panasonic, it’s even more bullish for the lithium industry.
As you know, investors thrive on industry buzz, and quite frankly, there hadn’t been a whole lot to cheer about for lithium… until Tesla dropped its Gigafactory bombshell.
But since then, investors are taking notice of lithium again. And it’s been all smiles for one low-flying developer, who has absolutely no problems with riding on the publicity coattail of the super carmaker.
Top Lithium Stock To Buy Today:
Investors should be aware that the current performance of this stock has mainly relied on the hype that Tesla has created around lithium in recent weeks.
Therefore, this microcap is as volatile as any that are out there, especially if Tesla runs into any issues during their Gigafactory’s development phase.
Bottom line: practice good judgment and do your homework before jumping in.
Having said that, Western Lithium Corp. (TSX:WLC, OTCMKT:WLCDF) has gone absolutely ballistic since the news came out of Tesla, and is likely to keep rising so long as Wall Street stays bullish on the industry.
We first alerted our readers to WLC back in 2011 when it spun off from Western Uranium Corp. Our recommended entry price at the time was about $0.30.
Within a week of Tesla’s announcement, Vancouver-based WLC soared nearly 150% and touched as high as $0.94 for a 213% gain for our readers.
But just prior to that, the stock saw some upward movement when it announced on February 13th that it had received a royalty of $1.5 million in a purchase agreement with majority shareholder Orion Mine Finance.
The timing with Tesla’s Gigafactory plans couldn’t be more appropriate, as the funds are to be put towards the construction of a planned lithium demonstration plant in Germany.
According to the company, “Western Lithium intends to use the plant to collect design data for a definitive feasibility study and to demonstrate the viability of producing low cost lithium carbonate from its Kings Valley lithium-rich hectorite clay deposit in Nevada.”
As of last May, WLC has received a US patent for its proprietary process of separating lithium and potassium byproduct compounds from lithium-rich clays.
The company plans to have their demonstration plant fully permitted and operational by Q4 2014.
In addition to their lithium business, WLC is also developing their clay assets for use in the shale fracturing and offshore drilling markets.
Last month, the company announced that it is building an organoclay plant in Nevada which will produce its line of Hectatone™ clay products that are designed to clean out drill cuttings, provide lubrication and maintain well pressure in challenging oil-based drilling environments such as high pressure, high temperature systems.
The company also received environmental assessment approval from Nevada’s Bureau of Land Management a couple weeks ago thus marking a major milestone for WLC.
It intends to start supplying Hectatone products to customers in the second half of 2014.
Overall, things are looking up for WLC already…but having the Tesla wave behind it is going to make it even better.