Steve McDonald: Hi, everybody. I'm Steve McDonald. This might be the single most stunning Market Wake-Up Call we've ever done. Our guest is David Fessler, The Oxford Club's Energy and Infrastructure Strategist, and he's here to talk about a small group of companies that have gone absolutely bonkers that are up as much as 80% in December alone and haven't even made it onto most people's radars yet. And the best part is... Dave told us this was going to happen the last two times he was on. This one is amazing. Welcome, David. How are you? David Fessler: Hi, Steve. Happy New Year! Steve McDonald: Thank you, sir, and the same to you. Batteries... What the heck is going on with batteries? This whole industry is going crazy. Anything related to batteries is through the roof. Tell us what's going on. David Fessler: That's right, Steve. And it's all about the electrification of the transportation sector. You know, I've been writing about electric vehicles, or EVs, for 10 years, and now they're finally going mainstream. And the battery and material stocks are going through the roof. You see, Steve, every EV has a huge battery pack that stores the energy to drive the electric motors that power the car. Just imagine 7,000 or 8,000 AA-sized batteries connected together - that gives you an idea of an average Tesla battery pack. Multiply that by 10,000 cars per week, which is Tesla's production goal, and you start to get some idea of how many batteries we're talking about. It's in the billions. Steve McDonald: Lithium is one of the elements in these EV batteries, and it's one of the things that's just gone insane. It's on fire, literally. Can you talk about why it's so hot? And how much room is left on the upside here? David Fessler: Sure, Steve. Let's take these one at a time. There are various battery chemistries out there, but most EV manufacturers have settled on some variation of lithium-ion. And regardless of which variation they're using, it contains lithium carbonate or lithium hydroxide. For instance, it's estimated that a 100 kilowatt-hour Tesla battery pack contains more than 21 pounds of lithium. And in terms of upside, Steve, take that 21 pounds, multiply it by Tesla's future Model 3 production volume of 10,000 cars a week, and you get more than 5,460 tons of lithium needed annually just for Tesla's Model 3. Now add in Tesla's Model S and X production and all the other EV manufacturers starting to ramp up production this year, and that number just goes through the roof. Steve McDonald: I mean, you're only talking about Tesla. Volvo said they're going to be all electric, and China said they're going to be all electric by 2030. That's just 12 years away. If the U.S. follows suit even in a partial way, how big is this thing going to be? I mean, it sounds like it's computers in 1978. David Fessler: Yeah. Well, Steve, the U.S. probably won't set any kind of goal to phase out cars with internal combustion engines in favor of EVs anytime soon, at least not under this administration. But as you mentioned, the car manufacturers themselves are moving toward EVs, so it's eventually going to happen anyway. Volvo's going to totally electrify its automobile model line by 2019. Ford is spending upward of $4 billion to develop its EV line. And Volkswagen, after it got burned in the “dieselgate” scandal, said it's going to convert all of its models worldwide. That's over 300 different car models converting into EVs. But as you alluded to, the big elephant in the EV room is China, and here's an interesting statistic for you that gives you some idea of how big vehicle electrification is in China. In 2017, China produced more than 180,000 electric buses. That number's expected to grow to 250,000 by 2020. That's just a few years away. Its total EV sales last year hit 800,000. So it's not unreasonable to think that we could eventually see sales of 100 million EVs per year by 2030 or 2040, and half of that volume's going to come from China. And it's a lot of lithium. I hope I'm still around to witness it. Steve McDonald: Well, we've had multiple triple-digit winners this year - 60% and 80% in one month in just this past December. This is an amazing growth story that you have to pay attention to. It's like watching the computer, wireless and internet stock sensations in the mid- to late-'90s. It's totally crazy. Dave, thank you so much, and thank you for telling us about this ahead of time. I hope people listen to you. David Fessler: My pleasure, Steve, as always. Steve McDonald: And for everybody here at the Market Wake-Up Call, thanks so much for being a part of us. We'll see you all next week. [End of Audio]