In 2008, the U.S. faced an energy crisis

Lithium Investors Should Look to Natural Gas’ History to See the Future

Natural gas prices sat near all time highs. In July, they spiked to $14 per thousand cubic feet (MCF) (in context, it’s about $3 per MCF today). Natural gas prices spiked in 2002 and remained high.

The high price spurred investment in natural gas imports. The investment thesis at the time was that the U.S. was running out of natural gas. Billions of dollars went into constructing the Freeport LNG and Sabine Pass LNG terminals. These giant facilities would import natural gas into the U.S.

However, in the background, companies experimented with an old rock cracking technology called “dry gas fracking”. Mitchell Energy pioneered the successful production of gas from the Barnett Shale.

Suddenly, the U.S. had more gas than it could use.

The giant LNG plants were redesigned to export natural gas.

The price of natural gas plummeted:

People kept wondering, “How far can it fall?”

Turns out, gas prices could fall far. And investors took a beating.

Natural gas became known as ‘the widow maker’.

Today, these dry gas shales like the Barnett see almost no new wells. We produce a lot of our natural gas from oil wells. The economics of natural gas made those wells unprofitable. Companies had to move on and retool.

Some giants, like Chesapeake Energy, Ultra Petroleum, Unit Corporation, and others never recovered from the collapse. They invested too heavily in shale gas. When the price collapsed, it hurt the economics of the shale wells. The wells were expensive, and the declining price made capital recovery difficult.

We see parallels in the latest energy industry revolution – batteries.

This Battery Technology is Electricity’s Dry Gas Shale Moment

For years now, we have told you that lithium batteries were not the answer.

They are expensive, dangerous, and do not scale well. They were “good enough” for garden tools but left a lot to be desired as vehicle batteries. And they were downright scary as grid-scale.

Engineers turned to sodium over lithium. In the early 2020’s, this technology showed promise but wasn’t as good as lithium.

However, earlier this year Chinese battery giant CATL, the world’s largest lithium battery maker, announced a major switch from lithium to sodium.

Here’s why…

Sodium-ion battery technology performance, cost, and commercial readiness. It is now seen as a credible alternative to lithium-ion batteries, especially for grid storage and entry-level electric vehicles.

Sodium-ion batteries have energy density that compares to lithium iron phosphate (LFP) batteries. These new batteries increase EV range to more than 310 miles per charge.

Batteries retain 90% capacity at -40°C. That’s far better than traditional lithium batteries.

Sodium batteries last longer. They can get 10,000–20,000 charge cycles with without losing capacity. That makes them superior to lithium for grid scale energy storage.

There is more room for improvement. Innovations in cathode materials and hard carbon/tin-carbon anodes continue to improve conductivity, cycle life, and capacity.

CATL began producing the world’s first commercial sodium-ion battery (Naxtra) in April 2025. It will be used in EVs, electric bikes, and grid storage.

BYD and others are building megafactories. We expect industrial-scale deployment by the late 2020s.

Utility-scale energy storage and budget/entry-level electric vehicles are the fastest-growing early-adoption segments, given sodium-ion’s safety and cost advantages.

Economics will Drive Adoption

Sodium is abundant and inexpensive.

Globally, we mine about 270 million metric tons of sodium salt (sodium chloride) per year. Batteries need a purified version, but it’s still far cheaper than lithium. A kilogram of sodium costs about $0.05, while lithium is currently around $10–15.

It doesn’t take an economist to see the benefit. A sodium ion battery costs between $10 to $80 per kilowatt hour. A lithium-ion battery costs $100 to $200 per kilowatt hour. That’s literally an order of magnitude higher than sodium. This is technology that makes everything with a battery cheaper.

There are some important reasons for that price. Sodium batteries don’t need scarce elements like cobalt and nickel. They don’t require graphite, which suffers from supply bottlenecks.

Commercial production is still early. However, we believe mass adoption in EVs, and grid-scale will come soon. As will continued improvements in costs and efficiency.

The technology should be better than the state-of-the-art lithium batteries within several years. That will dramatically cut back lithium’s market share.

Summary Table: Sodium-Ion vs. Lithium-Ion

Source: Perplexity.ai

Sodium-ion batteries are now a viable low-cost solution for large-scale energy storage and affordable EVs, with rapid improvements and large-scale commercialization underway, especially in China and Asia.

Companies Involved in Sodium Battery Construction

This technology is already moving into production. Peak Energy, an Asian clean energy company, installed a grid-scale sodium ion battery this summer. A private French company, Tiamat, builds 6-gigawatt hour sodium-ion grid storage batteries in France.

Today, there are only a handful of companies building these batteries. We expect that to change rapidly, as the economics push out the more expensive batteries. Unfortunately, the players we’d like to own are still private.

Companies like Altris AB in Sweden, Tiamat, and Natron Energy in the U.S. are not investible. And the real leaders, like China’s BYD and CATL are difficult to buy in the U.S. Reliance Industries, which bought Faradion, a UK sodium battery maker, is a giant Indian conglomerate. Investors won’t get much benefit from their new battery division.

That means we need to be patient.

There are two plays here, that are good initial investments.

The first is simply a basket of stocks that include CATL.

The KraneShares MSCI China Clean Technology Index ETF (NYSE: KGRN) is a small $62.2 million fund that holds a basket of clean energy stocks. About 7% of the fund is held in CATL stock and another 7% in BYD stock.

The fund is on a tear right now, so the trend is our friend. For an easy way to get early exposure to sodium batteries, this makes a lot of sense.

Action to Take: Buy KraneShares MSCI China Clean Technology Index ETF (NYSE: KGRN) to get exposure to two of the leaders in sodium batteries – CATL and BYD

The second opportunity is giant EV car maker BYD (OTC: BYDDY).

This giant $131 billion car company is the world leader in electric vehicles. Its cars are excellent, and it plans to dominate European EV sales.

The company plans to build all its European vehicles in Hungary and Turkey, to avoid tariffs. The ramp up is fast. It could hit full production within two to three years.

The company invested $1.4 billion into a new sodium ion battery plant in Xuzhou, China. It broke ground in 2024. These batteries won’t go into cars…yet. The plant builds batteries for scooters, bikes, and grid use.

But we like the fact that BYD is pioneering sodium battery technology, while being a leader in electric vehicles.

Action to Take: Buy BYD (OTC: BYYDY) on the over-the-counter market. Use a 25% trailing stop.

Sodium batteries don’t make up the bulk of this company’s revenue. However, we believe that this company will lead the way in the development and application of sodium batteries.

We see it as a direct play into the space, as more investible companies emerge.

We see this development as a watershed moment in battery technology. Lithium batteries became expensive for several reasons. They had no competition and the demand curve looked steep.

Sodium batteries offer many advantages over lithium in cost, safety, and availability. Lithium demand is about to suffer. And lithium prices could face their dry-gas moment.

For the Good

Mangrove Investor Team