A Gold Rush is Coming – Are You Ready?

by Andrew Zatlin March 03, 2023 12:00 pm ET

Sometimes, it's good practice to stick to the basics...

Such as following a simple strategy: Follow the money.

Because wherever the big dollars are flowing, that's where the big opportunities are going to be.

Let me show you...

For a transcript of this video, see below. This transcript has been lightly edited for length and clarity.

A Gold Rush is Coming – Are You Ready?

There's a gold rush underway inside one of the world's biggest industries.

Right now, a specific sector is generating tens of billions of dollars in sales every year. Sounds impressive, right?

It does – until you realize that soon it'll be generating hundreds of billions of dollars each year...

And this growth is essentially guaranteed.

What industry and sector am I referring to?

The Rise of EVs

The auto industry! And within this industry, I'm referring to the push toward the electric vehicle ("EV").

Make no mistake: This shift is happening rapidly, though it may not be obvious at first blush. That's merely because we're in the early stages of this gold rush. Let me show you what I mean:

Last year, 800,000 EVs were sold in the U.S. That's a solid figure – double what it was just a couple of years ago. Except 800,000 EVs sold at a time when total car sales reached 14 million suggests this was merely a drop in the bucket...

In other words, a huge opportunity awaits. You see, EVs will soon reach this 14 million mark. In fact, I believe it'll happen within just a few years.

How do I know?

The Government Says So

Because the government is mandating it!

You see, states like California, New Jersey, and Washington have implemented EV-only mandates. Within the next decade, these states will produce no more internal combustion engine vehicles (aka gas-powered cars). It'll be EVs all the way, baby.

This will be a massive shift. And companies – both public and private – are leaning into this shift in a big way.

General Motors (GM), for example, is committed to EV production. It's dropping $35 billion to make these cars a reality. Ford (F) is investing $50 billion into EV projects, while Toyota (TM) is investing $70 billion.

Altogether, roughly $200 billion is being invested into EVs. So let's follow the money...

Follow the Money

That $200 billion is going a lot of places, but a main area of focus is battery technology.

You see, when we talk about an EV, the main difference involves replacing a traditional engine with a lithium battery pack. These batteries are massive and will lead to a lot more lithium consumption, as well as the need for various components and commodities.

Right now, the world's supply of lithium is geared toward laptops and smartphones. But the amount of lithium required for just one EV is the same as 8,000 smartphones. Last year's U.S. sales of EVs had more lithium than seven years of smartphone sales.

Simply put, lithium production is a major opportunity. But there's another angle to look at here...

Reduce, Reuse, Recycle

Another massive opportunity is in battery recycling. In fact, this is where I see some exciting developments.

Lithium batteries aren't like traditional batteries – the ones in your TV clicker or a kid's toy. Lithium batteries are dangerous. They can explode, meaning you can't simply toss them aside when you're done with them.

Lithium batteries require recycling. And we'll soon have millions of EV batteries that need recycling, presenting a huge environmental problem.

I'll give credit where it's due, though. The U.S. Department of Energy ("DoE") has said it needs to have the necessary infrastructure ready to go. That's why it recently put its money where its mouth is. Let me explain...

Here Comes the Money

The DoE just handed out $2.8 billion in grants. Let's see where all this money went:

To start, some of it went to American Battery Technology, a company that owns lithium deposits in Nevada and focuses on lithium extraction.

Li-Cycle (LICY), a lithium battery recycling company, received $375 million. (This company also has major backers like Swiss commodities company Glencore.)

Finally, Redwood Materials, a private company that recycles lithium batteries, took the lion's share of this funding. It received $2 billion from the DoE. Notably, Redwood's CEO was the CTO of Tesla (TSLA) – the original producer and consumer of EVs and batteries.

Get Ready

As investors, it often pays to simply follow the money. And right now, the money is flowing to the auto industry.

I've given you three companies to keep an eye on as this gold rush gets underway. And if you're a "Pro" subscriber, I'll share an opportunity I project could deliver gains as high as 160%.

In the meantime, we're in it to win it. Zatlin out.