Automakers are investing in new technology to create greener lithium for EVs.

Automakers, investors, and even the oilfield giant Schlumberger NV are beginning to embrace environmentally friendly lithium production technologies that could help meet 25% or more of global demand for the electric vehicle battery metal by the end of the decade.

In recent months, Stellantis, Bill Gates’ Breakthrough Energy Ventures, and others have invested millions of dollars or signed supply agreements with so-called direct lithium extraction (DLE) start-ups in an effort to propel the technology to commercial production, which is expected within the next year or two.

“This new technology promises more green lithium,” said Kasper Sage of BMW I Ventures, BMW’s venture capital fund, which this week invested in DLE tech start-up Lilac Solutions Inc.

DLE technologies are similar to common household water softeners in that they remove metals from drinking water.

Filtering the metal inside an average-sized warehouse can take as little as a few hours. Traditional evaporation ponds, on the other hand, can be hundreds of acres in size, permanently drain nearby aquifers, and take several years to produce lithium.

Most DLE technologies, however, are more expensive to operate than evaporation ponds that use sunlight, and some require large amounts of freshwater and electricity.

Albemarle Corp. and other traditional lithium producers say they have studied DLE technologies but believe they will not be widely adopted until later this decade due to concerns about high energy and water consumption.

The Wall Street

Wall Street’s interest in so-called green lithium has not been dampened by the potential stumbling blocks.

Standard Lithium Ltd. shares have more than doubled since they began trading in New York in July, despite the fact that the company’s DLE technology is still being tested in Arkansas.

Vulcan Energy Resources Ltd shares have risen 40% since August due to the company’s plans to supply Stellantis and Renault SA from its German DLE project.

Based on existing announcements, Chris Berry, an independent industry analyst with House Mountain Partners, believes DLE could produce a quarter of global lithium supply by the end of the decade, though he cautions that not all technologies should be treated equally. Other industry consultants place a higher value on that figure.

Last year, global demand for lithium was around 320,000 tonnes, and it is expected to reach 1 million tonnes by 2025, and 3 million tonnes by the end of the decade.

“Investors must weigh the benefits of DLE technology against a slew of challenges associated with tailoring the technology to each lithium deposit,” Berry said.

The Salton Sea in California, about 160 miles (258 kilometres) southeast of Los Angeles, has piqued the interest of DLE developers. Under the area, which sits atop the San Andreas Fault, superhot brines teeming with lithium swirl.

Berkshire Hathaway Inc and EnergySource LLC, both owned by Warren Buffett, are looking into ways to incorporate DLE technology into existing power plants in order to process lithium while also producing electricity.

Nearby, privately held Controlled Thermal Resources Ltd is developing a geothermal lithium brine project for General Motors, which has stated that CTR could supply “a sizable portion of our lithium needs” by 2024.

This project, as well as a similar one in Argentina, are backed by Lilac Solutions technology and are viewed as one of DLE’s first commercial tests by some analysts.

The DLE’s interest comes at a time when lithium prices are near all-time highs, according to Benchmark Mineral Intelligence data, fueling the race for new technologies.

“Lithium supply is the main bottleneck to electrification, and DLE can help boost that supply,” Teague Egan, CEO of Energy Exploration Technologies Inc, a privately held company that collaborates with Argentina lithium producer Orocobre Ltd, said.