Quick Take: Plugging Into Lithium Demand

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The race is on to roll out the first commercial plug-in electric hybrid vehicle. Toyota Motor (NYSE: TM) is working on a plug-in version of its Prius hybrid, and General Motors (NYSE: GM) just announced similar plans for its Chevy Volt. The main barrier to getting these cars on the road is the limitation of existing battery technology.

I don't know who among the automakers will win the race. I also have no idea which of the various cleantech startups will develop a world-beating battery. Perhaps it won't be a start-up at all -- Johnson Controls (NYSE: JCI) has a formidable R&D effort in this arena, as do various Japanese and Korean industrial powerhouses.

But I do know that lithium-ion technology looks like the anointed successor to the nickel-metal hydride battery that powers present-day hybrids. That lithium has to come from somewhere, and more likely than not, that somewhere is Chile.

According to the U.S. Geological Survey, fully 75% of the world's lithium reserves are chillin' in Chile. The world's largest producer is Chemical & Mining Company of Chile (NYSE: SQM), or Soquimich for short. Like its large shareholder, Potash (NYSE: POT), Soquimich is a large fertilizer company. That angle alone is enough to make the company worth investigating. Shares of fertilizer companies like Potash and Mosaic (NYSE: MOS) have been absolutely ripping over the past year. The rosy demand picture for lithium just makes Soquimich that much more intriguing.

Related Foolishness:

• Go, Go, Google Hybrid!
• Hybrid Cars Looking More Attractive

Fool contributor Toby Shute doesn't own shares in any company mentioned. The Motley Fool has a state-of-the-art disclosure policy.