Electric Vehicles might be close to becoming a victim of their own success.
in 2017, sales of these vehicles rose 57% over the previous year. This is a trend that continued into 2018. China alone counnts for more than half the 3M EVs being sold a year.
The United States, ranked number 2 behind China, with 280,000 electric vehicles sold in 2017, up from 160,000 the prior year.
We also see a similar situation with Nordic countries, who remain the global leaders in terms of the EV penetration rate.
All this success is not without dangers.
The automobile industry is in peril of becoming a casualty of success that it created. As battery technology gets less expensive and performs better, the expectation is a wider adoption of electric vehicles. Estimated are that, by 2030, demand will increase 10-25 times for batteries over what it is today.
Rising commodity costs are already starting to affect manufacturers. If the industry has any hope of fulfilling the demand, it is going to need innovative chemical processes for new batteries. Presently, many of the global batteries depend upon cobalt.
Renewable energy is of great benefit. The advantages over fossil fuels are well documented. It does create a problem, however, if the entire industry, at least as it pertains to transportation, is dependent upon a finite resouce i.e. raw material from the Earth.
Another challenge for manufacturers is geo-political. The cobalt industry has 60% of the production located in the Congo while the refining is 90% controlled by the Chinese. These factors mean that political headwinds could serverely affect the earning potential of various automakers.
General Motors and Ford are facing lower than expected earnings due to increase in prices of steel while Tesla missed the most recent quarter's profit, in part due to the rising price of colbalt.
In addition to cobalt, lithium and nickel are core components of batteries.
Battery chemistry is going to have to keep innovating if the demand is going to be met over the next 10-15 years.
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