Exxon Mobil on Monday announced plans to begin producing lithium, the key component for EV batteries, by 2027. The U.S. super major's decision to make public its lithium strategy comes after it agreed to purchase Pioneer Natural Resources for $60 billion, strengthening its fossil fuel production in the Permian Basin. XOM advanced Monday.
Exxon Mobil aims to become the leading lithium supplier for electric vehicles by 2030. The goal entails production of enough lithium to supply the manufacture of more than 1 million EVs per year.
Exxon set its first lithium production for 2027. Discussions with possible customers, including electric vehicle and battery manufacturers, are ongoing, the company said.
"Lithium is essential to the energy transition, and Exxon Mobil has a leading role to play in paving the way for electrification," Dan Ammann, president of ExxonMobil Low Carbon Solutions, said in the statement.
"This landmark project applies decades of Exxon Mobil expertise to unlock vast supplies of North American lithium with far fewer environmental impacts than traditional mining operations." Ammann added.
Exxon Mobil stock edged up 1% to 104.84 Monday during market action. XOM is down around 5% in 2023.
Exxon Mobil's Lithium Play
In May, Exxon Mobil paid Galvanic Energy $100 million for rights to 120,000 gross acres in the Smackover formation in southern Arkansas. Galvanic reported in 2022 the area could have 4 million tons of lithium carbonate equivalent. That would be enough to produce 50 million electric vehicles. EVs sold in the U.S. are eligible for U.S. tax credits if enough of their basic materials come from North America. The company said it plans to brand the product Mobil Lithium.
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Exxon Mobil Chief Executive Darren Woods told analysts on the company's Oct. 27 earnings call that the "aperture's wide-open" on the company's lithium business prospects.
"Obviously, lithium is an important part of the transition going forward, and the electrification and the need for batteries and storage of power and energy," Woods said. "It looks fairly promising at this stage."
XOM: Lithium Stocks
XOM is not the only U.S. energy giant eying EV diversification. In July, Chevron Chief Executive Mike Wirth told Bloomberg the company was also looking into lithium. And in early October, Chevron Technology Ventures, the oil company's venture capital arm, invested in Electric Era, a high-speed EV charging startup.
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Meanwhile, lithium stocks Sociedad Quimica Y Minra, Albemarle and Livent have retreated in 2023.
SQM stock is down more than 40% this year while ALB and LTHM have dropped 46% and 30%, respectively. This comes as lithium carbonate prices in China, after hitting highs in November 2022, have cratered around 70% in 2023.
The Global X Lithium & Battery Tech ETF has lost 19%. The Amplify Lithium & Battery Technology ETF has also dumped about 19%.
Please follow Kit Norton on X, formerly known as Twitter, @KitNorton for more coverage.
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