Could buying lithium stocks be the best way for me to ride the electric vehicle (EV) revolution?
Investing in electric vehicle stocks like Tesla and NIO is a popular choice for many share pickers. So is investing in established carmakers that make electric vehicle ranges like Volkswagen, Toyota and Ford.
The trouble with buying car manufacturers is that competition is intense. Bad reviews versus the competition can sink a model’s sales. Profits-hitting vehicle recalls can be common too.
This is why I think buying shares that supply products to the entire industry could be a better option for me. This is where lithium stocks come in.
EV sales set to soar
Make no mistake, the EV industry is set to explode over the decade. This gives me as an investor an opportunity to make a sack of cash.
In 2021 EV sales more than doubled year-on-year to 6.6m, according to the International Energy Agency. In fact, they accounted for 9% of all vehicle sales, more that triple the figure two years earlier.
Sales are set to accelerate too as environmental worries grow and petrol and diesel prices shoot higher. According to EV charging platform Virta there will be 40m of these cars on the road in Europe alone by 2030. The firm’s pre-pandemic forecast was 33m, so that’s up considerably.
How I’m investing today
As I say, buying shares that supply materials and parts to the EV industry could be a better option than buying electric vehicle stocks themselves.
It’s why I’m looking to buy some choice lithium stocks. Zinnwald Lithium is one company on my shopping list right now. This mining company is named after one of Europe’s most advanced lithium projects located in Saxony, Germany. First production is scheduled here for 2023.
Another lithium stock to buy
Zinnwald Lithium should benefit massively from its position on the doorstep of Central Europe’s carbuilding belt. And having a great location is a quality it shares with Bradda Head Lithium, another top lithium stock.
This particular lithium business owns a number of assets in Arizona and Nevada. That puts it close to Tesla and other major lithium battery builders. Its resources are also near to the West Coast, which makes it easier to ship the material off to China.
Investing in mining companies is risky. Problems at all stages of a mine’s life can be common, which can hurt profitability. But buying early-stage miners like Bradda Head and Zinnwald can be even riskier. Their lack of revenues and weaker balance sheets mean they could struggle if trouble occurs.
That said, I’m encouraged by the progress they’re making in the journey to first production. And the rate at which the EV market is growing suggests these lithium stocks are worth the risk. I’d happily buy both today.