By David Forest, editor, Strategic Investor

David Forest

The world’s richest man, Elon Musk, shocked the world last week.

Musk bid $46.5 billion for Twitter. It became one of the biggest items in global business news.

But back-page filings with the Securities and Exchange Commission (SEC) confirm Musk is doing something even more surprising.

He’s betting on a new hard tech. And it’s a mineral no one’s talking about right now…

Why a Battery Design Switch Is Major News

Last week, Tesla filed its usual quarterly report. Analysts keyed into the electric vehicle (EV) maker’s $19 billion in profits.

But Tesla revealed more important information in the quarterly. Company officials buried this key news in the back pages. But it’s something every investor should be paying attention to.

Tesla changed the way it does batteries.

Back in October, Tesla said it was looking at a completely new battery design. Elon Musk personally said he wanted less cobalt and less nickel in batteries. He was concerned about these hard tech metals getting scarce and expensive.

Fast-forward six months and Musk’s call is spot-on. Nickel prices exploded 200% in a single day following the Russian invasion of Ukraine.

Cobalt also looks dicey. Last week, the world’s largest cobalt-mining nation, the Democratic Republic of Congo, said it’s “reviewing contracts” for several large mines. That often means officials will ask for higher tax payments – or potentially seize mines.

Tesla’s solution to all this? Go old school.

When Tesla made its battery shift last October, it bet on an old tech. That’s a battery design called lithium-iron-phosphate. Industry insiders call this “LFP” for short.

The LFP battery design is older than the NMC (nickel, manganese, cobalt) battery used by most EVs today. LFP battery technology dates all the way back to the mid-1990s.

LFPs hold advantages over newer batteries. LFP tech costs less to make, runs safer, and lasts longer than NMC batteries.

But LFPs have several downsides. LFP batteries weigh more and don’t deliver as much power.

Tesla set out to solve these issues. They adapted LFP batteries to work with their energy-efficient motors.

The result: Tesla now says an LFP battery delivers nearly as much range (267 miles) as an NMC battery.

That’s a massive win for Tesla. Switching to LFPs saves the company money and makes vehicles safer. It also means they don’t have to rely on nickel and cobalt imported from overseas.

This Metal Could Become a New Tech Darling

Tesla’s recent filings reveal the company is going all in on LFPs. In the first quarter of 2022, nearly half of the vehicles Tesla produced used LFP battery technology.

There’s still a lot of room for LFPs to grow. Right now, only 3% of EVs on the road in North America run on LFP batteries. In Europe, it’s slightly higher at 6%.

China, on the other hand, runs about 44% of its EV fleet on LFPs. Chinese battery maker CATL bet big on LFP technology years ago.

CATL is the go-to supplier for Tesla. In fact, recent reports suggest CATL will build a dedicated LFP factory in America – or close by, in Canada or Mexico. So it’s safe to say Tesla and other EV makers will be ordering more LFPs in the future.

This is obviously good for hard tech plays like lithium. That battery metal continues to enjoy buoyant prices on strong EV demand.

But the switch to LFPs could lift a surprising new hard tech.

Phosphate.

Right now, phosphate is mostly used to make fertilizer. Florida and Louisiana produce large amounts of the mineral for crop feed.

But LFPs could make phosphate a tech darling. Remember, nickel and cobalt surged in price due to NMC batteries rolling out. LFPs are setting up phosphate for a similar spike.

Officials from some of the world’s largest fertilizer companies say they’re already seeing the effects. One firm said large amounts of phosphate will be diverted away from fertilizer in the coming months. All this phosphate supply will be going into EV tech.

How to Play It

Here’s the best part. We can invest in phosphate hard tech right now. Before it hits the radar screens of most investors.

Readers of my Strategic Investor advisory had the chance to buy into one of the biggest phosphate companies on the planet. It’s a firm most investors currently see as a “boring,” old world business.

They’re dead wrong. With the rise of LFPs – demonstrated by Tesla’s new filings – this company stands to become one of the hottest names in tech, nearly overnight.

You can get all the details by signing up for my Strategic Investor advisory.

This is a space I’ll be watching closely, along with all the other emerging hard tech stories from the EV revolution.

Keep walking the path,

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David Forest
Editor, Strategic Investor