What happened
Shares of automotive giant Ford Motor (F -0.38%) stock bounced back on Monday, gaining 2% as of 12:15 p.m. ET.
You can thank French banker Exane BNP Paribas for part of today's gains -- but not all of them.
Image source: Ford Motor Co.
So what
In a brief note this morning, StreetInsider.com highlighted Paribas as the source of a new "outperform" rating for Ford stock. Positive news to be sure, but I couldn't find any detail on the upgrade other than the simple fact that it happened.
But there was more substantive news today as well. Specifically, as my colleagues down under at Fool Australia reported, local lithium company Lake Resources has signed a nonbinding memorandum of understanding to supply Ford with 25,000 tons of lithium annually from its Kachi Project in Argentina.
Now what
A memorandum of understanding is not a binding contract, but it's a step toward one. And as Lake Resources Managing Director Steve Promnitz noted, according to the Fool Australia post, "both Lake and Ford see this as an opportunity for a potential long-term agreement" that will help to secure Ford's access to the lithium it will need to build batteries as it grows its electric car business.
How big of a deal will this be for Ford? It depends. On the one hand, according to Barron's magazine, you can build batteries for "about 90 electric cars" with 1 ton of lithium metal. So 25,000 tons of lithium, therefore, should be enough lithium for 2.25 million Ford electric cars, which is quite a lot, however, most likely, Lake isn't promising to supply Ford with lithium metal, per se, but rather lithium carbonate from which lithium metal can be extracted. And because there's only about 1 ton of lithium metal in every 5.3 tons of lithium carbonate, that means you need to divide the total number of cars that 25,000 tons of lithium carbonate can conceivably power -- by 5.3.
Now, Lake's supply deal is only good for about 425,000 electric cars or so per year.
That's still pretty good news for Ford and a pretty good reason for investors to be bidding up Ford stock today.
