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19 September 2023

Market Round-Up

A potentially significant discovery of lithium has recently been made on the Nevada-Oregon border in the United States, sparking considerable interest from the automotive industry. It is reported that 20-40 million metric tons of lithium has been found within the McDermitt Caldera, which has the potential to significantly reshape global lithium dynamics. Lithium is a crucial component in the manufacture of batteries, used to power electric vehicles and various other environmentally friendly technologies.

There are concerns around the future supply of lithium, and with the growing demand for the batteries, this has meant that prices are expected to rise in the long term. Though, if the discovery is confirmed, it could have profound economic implications, easing concerns about longer-term supply constraints and increasing the likelihood of price stability. As well as this, the development could enable companies to increase their electric vehicle (EV) sales.

However, this discovery has also heightened political tensions, notably with China, a prominent force in the EV battery market. Currently, China has a stronghold on the industry, as it is the major global producer of batteries, allowing it to control prices and demand. This find is likely to further intensify competition and geopolitical dynamics in the lithium sector as China will no longer have the same amount of control.

BMW has announced a substantial investment of £600m to support the production of two new electric models at its Cowley manufacturing plant from 2026. These models include the 3-door Mini Cooper and the Mini Aceman. This strategic decision marks a significant development for the Cowley plant, which had previously faced uncertainty. The manufacturer has previously indicated it planned to stop producing electric vehicles at the plant and focus on petrol vehicles until 2030.

 This latest development carries profound implications for the UK's automotive industry, signifying a pivotal shift towards more sustainable manufacturing practices, and moving away from conventional petrol car production. This strategic shift is indicative of a broader commitment towards environmental responsibility and aligns with evolving industry trends to be carbon neutral by 2030.

In 2022, the government announced a UK electric vehicle infrastructure strategy, with £1bn being allocated to ventures in battery technology. Moreover, this commitment to sustaining production at the Cowley facility is poised to protect the jobs of 4,500 employees at the plant. Since it was established, the Cowley plant has played a pivotal role in offering job opportunities, supporting the local economy and ‘being the heart of the brand,’ Stefanie Wurst, Head of Mini said.

Please note that this communication is for information only and does not constitute a recommendation to buy or sell the shares of the investments mentioned. Investments and income arising from them can fall as well as rise in value. Past performance and forecasts are not reliable indicators of future results and performance.
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