The tide is starting to turn for producers of battery metals. New government commitments to green transport in China and Europe, as well as supply constraints for the metals that power these vehicles, have led to a growing consensus that the markets are bottoming out. Meanwhile, battery costs are falling, which will only make EVs more affordable, so they can achieve faster penetration of the mass market.
Related ETF: Amplify Advanced Battery Metals and Materials ETF (BATT)
While the Covid-19 pandemic and low oil prices have dented global electric vehicle (EV) sales this year, penetration rates are improving in some large auto markets like Western Europe and China, helped along by regulation.
The European Commission, for instance, has carved out funds from its €750 billion green recovery plan to help boost EV sales. This trend is reinforced at the national level, with Germany, France and other members of the block handing out cash for electric cars and their infrastructure as part of a huge stimulus splurge. Over in China, EV sales are expected to be significantly higher in the second half of 2020 than the corresponding period in 2019. China is also still sticking to its goal of attaining 25% market share for electric and fuel cell vehicles by 2025.
BloombergNEF (BNEF) estimates that global EV sales will fall by 19% in 2020 — to 1.7 million from last year’s 2.1M — before rising again in 2021 as battery prices fall, energy density improves, more charging infrastructure is built, and sales spread to new markets. The research group anticipates worldwide electric car sales will reach 8.5M by 2025, then go on to surpass 26 million by 2030. By 2040, over half of all passenger vehicles sold are expected to be electric.
Bright Outlook for Battery Demand
Lower battery prices are key to getting more consumers to shift from autos with internal combustion engines to EVs. That’s because batteries account for 25% to 40% of total manufacturing costs for a standard electric vehicle. That is set to…