Surprising demand for Tesla Model 3 Electric Vehicle underlines need for new lithium supply

April 6, 2016

Pre-orders for the highly anticipated, relatively affordable Tesla Model 3 electric car caught even the perennially optimistic Tesla Motors CEO Elon Musk by surprise when it went on sale on March 31st. Worldwide pre-orders for the new lower-priced electric car hit 276,000 during the first weekend, prompting Mr. Musk to tweet that Tesla will “definitely need to rethink production planning,” including building a European factory to keep up with regional demand.

Pricing for the Model 3 starts at $35,000 and the car has a range of almost 350 kilometres per charge. Customers must put down $1,000 to order the cars, which won’t be released until late 2017. To put these deposits into perspective, the total vehicles pre-ordered is more than twice the total sales of all previous Tesla vehicles combined and represents approximately $11 billion in sales.

So what does this all mean for lithium demand?

Simon Moores of Benchmark Mineral Intelligence noted that at 180,000 pre-orders this “could do a lot for lithium demand… [as] pre-orders will increase demand for lithium hydroxide by 20 to 30 percent.” Furthermore, Mr. Moores expects this will lead to rapid progress on critical materials supply agreements, as the market is already seeing supply shortages and higher prices with the Tesla Gigafactory yet to come on line. He believes that the success of the Model 3 launch “shows that full electric vehicles are here to stay.”

The global automotive industry is reacting quickly to this new reality. Sales of plug-in electric vehicles hit over 565,000 in 2015, up from 315,000 in 2014 and the month of March in the U.S. set a fifth straight monthly sales record with 13,725 electric vehicles sold, up 32.7% from year ago. This type of sales growth will continue to drive an increased demand for the lithium needed in rechargeable batteries, creating opportunities for new lithium suppliers, like Avalon, to serve this rapidly growing market.

For the latest news release on Avalon’s Separation Rapids Lithium Project, visit: http://www.avalonadvancedmaterials.com/news_media/display/index.php?id=19962.

For a recent video interview with President and CEO Don Bubar, produced by BTV, visit: http://www.b-tv.com/avalon-advance-materials-ceo-clip/.

For questions or feedback, please email Avalon at [email protected].

About Avalon Advanced Materials Inc.
Avalon Advanced Materials Inc (TSX: AVL & OTCQX: AVLNF), formerly Avalon Rare Metals Inc., is a Canadian mineral development company specializing in niche market metals and minerals which are in growing demand in new technology. The Company has three advanced stage projects, all 100%-owned, providing investors with exposure to lithium, tin and indium, as well as rare earth elements, tantalum, niobium, and zirconium. Avalon is currently focusing on its Separation Rapids Lithium Project, Kenora, ON and its East Kemptville Tin-Indium Project, Yarmouth, NS. Social responsibility and environmental stewardship are corporate cornerstones.