There was an interesting article yesterday on Bloomberg about the changing demand for various metals as more cars shift to hybrids or fully electric vehicles (EV’s). Every major car maker is now starting to come out with their own EV’s and Volvo just announced last month that by 2019 all of their cars will be completely electric. The lithium-ion batteries for these electric cars typically use different metals than the standard lead based battery in cars with an internal combustion engine (ICE). Demand for everything from copper, lithium, cobalt and manganese are up the past 2 years and expected to increase through the next decade and beyond.
It’s easy to get excited about something like this since there is a clear trend occurring but this is a very long-term projection. The key takeaway is obviously that demand is on the rise and this will create certain winners (related to EV growth) and losers (the decline of the ICE and related parts) but EV’s are still a very small percentage of total cars on the road. As of last month, there were only 2 million EV’s on the road in the entire world.
The internal combustion engine will still be around for at least 30 years as used car prices for all the cars produced in the last couple of years will be pretty attractive and the majority of cars over the next decade are expected to be hybrids. The cost of EV’s continues to drop each year though and the efficiency and range should continue to improve. It’s estimated that year 2022 should be the tipping point where EV’s are an equivalent cost to cars with an ICE so there’s still a few years to get ahead of the curve with some long-term investments but this is definitely something to have on your radar.
Long-term winners: EV battery metal producers, electricity producers/suppliers/servicing companies, and the consumer
Long-term losers: Parts manufactures for the ICE and young aspiring mechanics since an EV contains substantially fewer parts than an ICE that will need repaired/replaced.
Thanks for following!
-Nick
Very interesting!