Energy giant Exxon Mobil (NYSE:XOM) is eyeing the electric vehicle (EV) market by considering becoming a supplier of lithium, a crucial mineral needed for EV batteries. As per a Bloomberg report, Exxon is in early talks to supply lithium to EV makers including Tesla (NASDAQ:TSLA), Ford (NYSE:F), and Volkswagen (OTC:VWAGY). Exxon aims to leverage its existing oil extraction technology for lithium extraction. Following the news, XOM stock jumped about 3% on July 31.
Exxon’s Lithium Push
Last month, there was news that Exxon was setting up a massive lithium processing facility in Arkansas. The plant is expected to have an annual capacity of between 75,000 and 100,000 MT of lithium. The company has also begun drilling for lithium at the site, although it is unclear whether it will produce the metal by itself or with a partner.
Exxon’s lithium push comes at a time when worldwide economies are pushing for cleaner and greener fuel alternatives. The boost threatens Exxon’s legacy oil-producing business. Hence, the oil giant is eyeing the cleaner alternative of producing lithium. The EV market is a fast-growing multi-billion-dollar industry, and Exxon surely aims to be a vital player in it.
In its Q2FY23 results reported last week, Exxon Mobile missed earnings expectations. During the conference call that followed, CEO Darren Woods commented on the lithium aspiration, stating, “Brine and extracting the lithium is very consistent with a lot of the things that we do in our refineries and chemical plants and, in fact, in some of our upstream operations.”
Is Exxon a Buy, Sell, or Hold?
Yesterday, Wells Fargo analyst Roger Reed cut the price target on XOM to $129 (20.3% upside) from $130 but maintained a Buy rating.
On TipRanks, Exxon stock has a Moderate Buy consensus rating based on nine Buys and seven Hold ratings. The average Exxon Mobil price target of $124.93 implies 16.5% upside potential from current levels. Meanwhile, XOM stock has gained 17.4% so far this year.
