Last weekend, The New York Times reported an astonishing mineral discovery in Afghanistan that is believed to be valued at more than $1 trillion. While many in the investment community were quick to trumpet the impact this could have on miners and mineral producers, an underlooked investment opportunity has arisen in the automotive manufacturers.
More specifically, Afghanistan's vast deposits of lithium could play a key role in the push for greener car fleets, by making lithium-ion batteries cheaper to use in hybrid and electric vehicles.
Lithium-ion-based batteries have double the storage capacity of the nickel-metal hydride battery packs featured in the Prius. The Nissan Leaf is the first vehicle operated by lithium-ion-based batteries to market domestically, and Hyundai plans to release its 2011 Sonata with a lithium-ion battery option.
Perhaps the biggest detriment to the sales of lithium-ion-based hybrid vehicles is the high cost of manufacturing, which can be attributed in part to the finding and production costs of lithium. However, if these Afghanistan deposits are developed correctly, production of the element will increase, and when combined with technological advances, battery prices should drop.
What do you think? Will these lithium resources play a significant role in the transformation of the automotive industry, or are battery-based vehicles not practical on a large scale for carmakers? Let us know in the comments box below.
Andrew Bond does not own shares in the any of the companies mentioned. Ford is a Motley Fool Stock Advisor recommendation. Try any of our Foolish newsletters today, free for 30 days. The Fool has a disclosure policy.
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