Sentiment in the lithium sector has improved markedly in the past few months. Improving sentiment and higher stock prices among lithium juniors, despite continued devastation in other natural resource sectors, is certainly noteworthy. Lithium is hot and attracting a lot of attention. That’s largely without even considering underlying lithium carbonate and hydroxide prices marching higher this year and expected to be higher again next year. Renewed M&A, most notably the Western Lithium / Lithium Americas merger, could be a sign of things to come. Projections of lithium demand continue to increase. Looking back 10 years, annual lithium consumption grew at roughly 6%-8%. Estimates of annual growth looking forward in the 8%-12% range, could prove woefully low. 
 
Tesla Motors launched the first globally accepted EV just 3 years ago. This year BMW announced that ALL of its cars will become electric, multiple giga-factories are under construction, Apple and Google are poaching talent from Tesla, Tesla’s success continues to spark car manufactures to improve product offerings or leap into the fray and battery costs are falling rapidly. Nothing short of a paradigm shift might be at hand in the EV space. Growth could clock in closer to 20% to 30% annually, (30% would be a doubling every 3 years), not so crazy with global EV adoption below 2%. Nearly half of the 258 million vehicle fleet in the U.S. alone is at least 11 years old, and global car sales are in the hundred(s) of millions. Just 5% EV penetration in coming years would blow away all lithium projections. The “green movement” not only supports EVs, but increasing is demanding it. 
 
On the supply side, lithium sources are already stretched. Even if one believes that supply can increase by 20% or more, there’s no question that it’s far from secure and is highly uncertain. Of the four non-Chinese producers of lithium, Chemical & Mining Co. of Chile Inc, “SQM,” FMC Corp, Albemarle and Orocobre Ltd. strong and steady growth is only expected from Orocobre and that’s off of a tiny base. Severe weather events, technical issues and political challenges in the “Lithium Triangle,” (Bolivia, Argentina & Chile) are plaguing the majors. Juniors will need to step up. Of the relatively few juniors of merit, the ability to raise capital is improving, M&A, farm-outs, joint ventures and off-take agreements with a larger universe of partners, (including battery makers) is on the horizon. 
 
The stocks of the majors and Tesla have failed miserably to keep up with the performance of many lithium juniors and there’s no reason to fear that out-performance will end. Tesla’s market cap of $32 billion is difficult to budge, even on good news. The majors also have multi-billion dollar market caps, and in most cases are not pure-plays for investors looking for exposure to the lithium space. Even after a doubling or tripling of some juniors, the vast majority have market caps well below $50 million, with most below $25 million. A mere drop in the bucket for potential suitors and partners to be concerned about.