The surge in sales of Electric Vehicles: Can supply for minerals hold?

Often than not, electric vehicles or commonly known as EVs, are seen as the future of the automotive and transport industries. This future is slowly turning to present reality. Over the years, combustion engine vehicles have dominated the industry in terms of sales, but with time, the electric cars have been catching up slowly but steady. In the past few months, the sales of these EVs have shot sky high, with various companies registering significant sales in the first quarter of 2020. This has been an exemplary performance given that the COVID-19 pandemic has caused an economic slowdown and lockdown in various parts of the world, especially in the vibrant economies.

The surge in sales is in relation to government intervention measures of offering subsidies and tax cuts to electric vehicle manufacturers and buyers. This is because the EV industry falls in line with the government’s plans for reducing carbon footprints for a better environment. This increase can also be seen as a result of people being more conscious of environmental changes, and also the consideration of electric vehicles as being long term cost-effective than their gasoline counterparts. Companies such as Tesla have registered a tremendous increase in sales with its Model 3 alone selling 300,500 units by the end year 2019. Firmly behind Tesla was General Motors EV, Chevy Bolt. Tesla’s Model 3 sold 660 units in April alone, closely followed by Jaguars I-Pace with 367 units, and this is amid the coronavirus lockdown. In Western Europe, general sales of EVs did well with even instances of doubling and tripling.

The biggest uncertainty amid all this good news is that EVs makers may face a significant challenge in the supply of raw materials. Electric vehicles use large quantities of minerals such as Nickel, aluminum, lithium and cobalt, more than the traditional automobiles. The question of how the supply of these essential minerals and metals will address the ever-increasing demand and how it will be scaled up is still unanswered. Already, several base metals such as Nickel are falling short of supply, with projections indicating that demand will shoot by15.5 times higher by 2030. The projections for the market of copper and aluminum suggests an increase by 10 times.

To help tackle this future and inevitable challenge, electric car makers are receiving advice to invest in mines themselves or buy directly from producers. Tesla is already leading the way, having gone into an agreement with Glencore to ship cobalt to its shanghai EV factory. By doing this, the electric car industry will be building a supply chain that will stand the test of time.