The Electrifying Outlook for Metals Demand

A steady roll-out of wireless products, such as power tools, vacuums, phones and computers over the past decade has driven increased demand for the metals that go into lithium batteries. Franklin Equity Group’s Steve Land explains why the growing adoption of electric vehicles (EVs) is one particular development that is arousing investor interest in those resources.

A Bit of Background

For decades, lithium and its compounds have been used in a variety of ways, including in pharmaceuticals and chemical manufacturing. However, lithium’s popularity in recent years can be tied to the demand for lithium-ion batteries that power EVs, as well as smartphones, laptops and other products.

Although they are called lithium-ion batteries, they also contain significant amounts of cobalt, copper, nickel and sometimes manganese or aluminum. Battery technology continues to evolve, as companies look to reduce their reliance on harder to source materials. However, a need to produce a safe battery capable of delivering the high-performance characteristic needed for an EV makes this a slow process. Given the potentially rapid growth in EVs, battery suppliers are worried about shortages of critical elements in the years ahead.

The World Embraces Electric Vehicles

According to the International Energy Agency (IEA), by the end of 2017, there were more than three million EVs globally.1 As the chart below shows, China has the largest stock of these vehicles, with more than 1.2 million EVs.

China has the longest-running national program to build up its EV volumes, including financial incentives to manufacture and buy the vehicles, as well as build out the country’s EV-charging station infrastructure. However, major world economies, including France, India, the United Kingdom and Norway, have set strict target dates by which they want to have specific percentages of EVs on the road.

Based on these new policies, the IEA projects there could be as many as 125 million EVs on the world’s roads by 2030.2 Under its high-adoption scenario, where EVs comprise 30% of the global auto market by 2030, the agency projects up to 220 million electric cars could be on the road by then.3