Electric car revolution brightens outlook for a medley of metals
LONDONOct 06, 2016 - 12:00 am GMT+3
Oct 06, 2016 12:00 am
Electric cars such as the Nissan Leaf may look no different from the standard family runaround.
But the new materials that go into them could revolutionise the market for metals used in the industry, opening up a new field for commodities investors.
"We identified electric vehicles as an area where we are at an inflection point for demand," said Duncan Goodwin, portfolio manager of the Baring Global Resources Fund. Around 12 percent of the fund's $378.2 million in assets is exposed to materials that are used in electric vehicles. It has investments in New York-listed Albemarle and Australia's Orocobre, two companies producing lithium, a key element in electric car batteries. Shares in both companies have
risen sharply this year. Governments, keen to push growth in electric cars in a bid to meet their carbon emissions targets, are tempting consumers with perks like subsidies, free parking and tax breaks. Growth in the market is in turn creating an opportunity for commodities investments currently estimated at $235 billion. But it is not a simple one-way bet.
Predicting how much of any metal will be needed to meet demand for electric vehicles in the longer term is tough and advances in battery technology could alter the mixture. Getting drivers to adopt electric cars remains a challenge - the need to charge them up frequently and time taken to do so have put off many potential buyers. The number of electric and hybrid vehicles on the road worldwide surpassed 1 million last year, according to the International Energy Agency. While estimates vary, IHS Automotive expects electric vehicles to represent nearly 4 percent of all light vehicles worldwide by 2020, equivalent to 3.9 million cars, up from just
over 14,000 in 2010. So what sits below the bonnet in these vehicles?
Most electric car batteries use lithium nickel manganese cobalt oxide (NMC) cathodes and graphite anodes. "Rare earth" metals dysprosium, neodymium and terbium, chiefly mined in China by companies including Xiamen Tungsten and China Minmetals Rare Earth Co, are used in some electronic components of the motor.
"It's clear that electric cars from today's point of view will have lithium ion-based batteries," said Horst Friedrich, director of Germany's Institute of Vehicle Concepts.
"We're talking about lithium, and... metals like cobalt, iron phosphate, rare earth elements."
About the author
Research Associate at Center for Islam and Global Affairs (CIGA) at Istanbul Sabahattin Zaim University