If you think about Henry Ford and the making of the Model T, a vehicle for everyone as long as you wanted the car in black. At the Ford Rouge Complex, the Ford Motor Company owned all parts of the production. The company had interests in the steel making, the parts, and was one of the largest employers in Detroit. At some point, carmakers including Ford decided it was better to the assembler of vehicles and not own all the products and parts or to contract it out. It seems we are moving back in time again for EVs.

In an article by Clifford Krauss and Jack Ewing of the New York Times News Service, without the product of lithium, carmakers will not be able to build batteries, no batteries no EVs. This has led to carmakers to mines in Chile. Argentina. Quebec and Nevada to lock up lithium for their battery factories in Michigan, Tennessee and Saxony, Germany.

Established mining companies do not have enough lithium to supply the industry as electric vehicles become more popular.

In the past, automakers let battery suppliers buy lithium and other raw materials on their own. But lithium shortages have forced carmakers to directly acquire the have it sent to their factories, some own by suppliers and others owned partly or fully by the automakers.

Sham Kunjor of GM, noted we quickly realized their was not an established value chain that would support our ambitions for the next 10 years. GM has signed deals with Livent, a lithium company in Philadelphia for material from a South American mine. Then GM invested $650 million with Lithium Americas to develop the Thacker Pass mine in Nevada.

Ford has made deals with SQM, a Chilean supplier, Albemarle based in Charlotte, North Carolina and Nemaska Lithium of Quebec.

There are many companies trying to mine lithium for the mineral is abundant but not always easy to extract. Countries such as Bolivia, Chile and Argentina have large reserves. The risk with any commodity is prices go up, supply increases and prices drop too less than profitable. At the moment, the big winners are the miners who signed long term contracts with the automakers.

Linking to dividend paying stocks, in every industry there are supply chains and they develop to ensure the highest productivity and lowest cost are built into the system. Examining the supply chain allows the investor to pick where the best margins are and tend to remain.

There are more questions than answers, till the next time – to raising questions.