An industry was born this year

You’d never know it from looking at cars on the road. But the car industry has turned upside down in the last year. The biggest carmakers have suddenly decided to go “all in” on electric vehicles (EVs).

You’d never know it from looking at cars on the road. But the car industry has turned upside down in the last year. The biggest carmakers have suddenly decided to go “all in” on electric vehicles (EVs).

At first EVs were “interesting, but not urgent” for carmakers. Then a few companies like Telsa and BMW pushed the envelope by making some big investments in vehicles and batteries.

Then governments and carmakers noticed what they were doing, and decided they didn’t want to get left behind. China announced a plan to phase out fossil fuel cars, as did Germany, India, the UK and Norway.

Once it became clear that “this is really happening”, and lots of companies were making big investments in Evs, the rush became a stampede.

It’s going to take two years for all this to filter down to drivers. But then, things will start to move very quickly. Charging stations will start popping up everywhere. Taxis, vans and buses will be electrified first. In fact, depending on how long you hold onto it, your current car could be the last petrol-powered car you ever buy.

So governments and carmakers are betting big on EVs. What’s next? Who profits? Who loses out?

Lots of established carmakers will make the jump. The likes of Volkswagen, Volvo, Nissan-Renault, Ford, GM, BMW and Daimler are investing big in EVs now to make sure they’re still relevant in ten years’ time.

A couple of carmakers will be slow to adapt, and they’ll get left behind. And then there are the oil companies. Oil is to a surprising extent an extension of the auto industry; 71% of crude oil consumption goes on transport.

And the biggest winners of all from this EV revolution will be tiny companies you’ve never heard of, supplying an obscure metal you may have never heard of, to giant battery factories you’ve never heard of in remote Chinese cities.

Two metals are going to be in very short supply if we’re really going to have tens of millions of electric vehicles on the road in a couple of years’ time. The first is lithium. The other is cobalt.

I’ve been researching these metals for months now, and I’ve been advising my subscribers on how to build their exposure in my investment advisory service. Click here to learn how to profit from battery technology.

And for now, here’s my colleague Callum Newman on a huge year for electric vehicles.

Best wishes,
Sean Keyes


The year electric vehicles took over: a timeline

By Callum Newman

Here’s a timeline of key things events around electric cars and lithium since the beginning of the year…

In January, major Chinese lithium player Gangfeng took a 19.9% stake in an Argentinian lithium project — with production not due until 2019.

In March, global giant lithium producers Albermarle and Tianqi announced an expansion of their big Australian spodumene mine. It’s called Greenbushes. They wanted to double its yearly production.

They also predicted demand for lithium-ion batteries would rise 8% a year until 2022, and said they would consider mergers and acquisitions in the lithium market.

In May, German company Daimler announced it was building a European ‘gigafactory’ and would spend at least 500 million euros. In India, the government announced that it wanted every car sold in India to be electric by 2030.

In June, the aforementioned Chinese firm Tianqi announced it was considering spending an additional $300 million on its new plant in Western Australia because global demand for lithium hydroxide was proving so strong.

In July, Volvo announced that all its cars from 2019 onwards would have an electric motor.

France also announced it would ban petrol and diesel cars by 2040. Britain followed the same path a few weeks later.

Also in July, major Chilean lithium player SQM did a deal with Aussie ASX junior Kidman Resources and agreed to pay $US110 million to help develop its Mt Holland lithium project.

In August, Australian lithium miners revealed at the Diggers and Dealers mining conference that major carmakers were becoming worried about supply. This meant they were considering investing in mines directly.

Rio Tinto upgraded the status of its lithium and boron deposit in Serbia to its next most likely growth project. There are only two more of these in Rio’s portfolio for the next five years.

September saw Chinese automaker Great Wall Motors take a 3.5% stake — around AU$28 million — in Aussie lithium player Pilbara Minerals Ltd [ASX:PLS]. It also agreed to an off-take arrangement to secure supply.

Major global mining investor BlackRock revealed it had become a major shareholder in several lithium companies.

A report also suggested the Chinese government is considering banning petrol cars completely at some point.

Porsche revealed its first electric car will be available in 2019.
BHP said 2017 will be considered a ‘tipping point’ for electric cars. And Inventor James Dyson said his group would spend two billion pounds to develop its own electric car.

Wow. You can see just how fast events are moving here.

And this list is by no means exhaustive. I haven’t even mentioned the most famous electric car company in the world: Tesla. Its stock is up 540% over the last four years.

This is real money being put down by the players closest to the action.

I give these events above greater credence that most demand and supply numbers around both electric cars and the commodities needed to make the batteries.

Those types of numbers are highly variable, depending on who you read, and are often subject to revision.

But what you see above is real capital being put on the line by real titans of industry. These guys don’t invest unless they are truly confident it’s a good investment.

Best wishes,

Callum Newman
For Risk and Reward

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