The Massive Impact of EVs on Commodities
How demand would change in a 100% EV world
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What would happen if you flipped a switch, and suddenly every new car that came off assembly lines was electric?
It’s obviously a thought experiment, since right now EVs have close to just 1% market share worldwide. We’re still years away from EVs even hitting double-digit demand on a global basis, and the entire supply chain is built around the internal combustion engine, anyways.
At the same time, however, the scenario is interesting to consider. One recent projection, for example, put EVs at a 16% penetration by 2030 and then 51% by 2040. This could be conservative depending on the changing regulatory environment for manufacturers – after all, big markets like China, France, and the U.K. have recently announced that they plan on banning gas-powered vehicles in the near future.
The Thought Experiment
We discovered this “100% EV world” thought experiment in a UBS report that everyone should read. As a part of their UBS Evidence Lab initiative, they tore down a Chevy Bolt to see exactly what is inside, and then had 39 of the bank’s analysts weigh in on the results.
After breaking down the metals and other materials used in the vehicle, they noticed a considerable amount of variance from what gets used in a standard gas-powered car. It wasn’t just the battery pack that made a difference – it was also the body and the permanent-magnet synchronous motor that had big implications.
As a part of their analysis, they extrapolated the data for a potential scenario where 100% of the world’s auto demand came from Chevy Bolts, instead of the current auto mix.
If global demand suddenly flipped in this fashion, here’s what would happen:
|Lithium||2,898%||Needed in all lithium-ion batteries|
|Cobalt||1,928%||Used in the Bolt's NMC cathode|
|Rare Earths||655%||Bolt uses neodymium in permanent magnet motor|
|Graphite||524%||Used in the anode of lithium-ion batteries|
|Nickel||105%||Used in the Bolt's NMC cathode|
|Copper||22%||Used in permanent magnet motor and wiring|
|Manganese||14%||Used in the Bolt's NMC cathode|
|Aluminum||13%||Used to reduce weight of vehicle|
|Silicon||0%||Bolt uses 6-10x more semiconductors|
|Steel||-1%||Uses 7% less steel, but fairly minimal impact on market|
|PGMs||-53%||Catalytic converters not needed in EVs|
Some caveats we think are worth noting:
The Bolt is not a Tesla
The Bolt uses an NMC cathode formulation (nickel, manganese, and cobalt in a 1:1:1 ratio), versus Tesla vehicles which use NCA cathodes (nickel, cobalt, and aluminum, in an estimated 16:3:1 ratio). Further, the Bolt uses an permanent-magnet synchronous motor, which is different from Tesla’s AC induction motor – the key difference there being rare earth usage.
Big Markets, small markets:
Lithium, cobalt, and graphite have tiny markets, and they will explode in size with any notable increase in EV demand. The nickel market, which is more than $20 billion per year, will also more than double in this scenario. It’s also worth noting that the Bolt uses low amounts of nickel in comparison to Tesla cathodes, which are 80% nickel.
Meanwhile, the 100% EV scenario barely impacts the steel market, which is monstrous to begin with. The same can be said for silicon, even though the Bolt uses 6-10x more semiconductors than a regular car. The market for PGMs like platinum and palladium, however, gets decimated in this hypothetical scenario – that’s because their use as catalysts in combustion engines are a primary source of demand.
Visualizing 10 Years of Global EV Sales by Country
This infographic charts the exponential growth of EV sales by country over the last decade.
10 Years of EV Sales by Country
In 2011, around 55,000 electric vehicles (EVs) were sold around the world. 10 years later in 2021, that figure had grown close to 7 million vehicles.
With many countries getting plugged into electrification, the global EV market has seen exponential growth over the last decade. Using data from the International Energy Agency (IEA), this infographic shows the explosion in global EV sales since 2011, highlighting the countries that have grown into the biggest EV markets.
The Early EV Days
From 2011 to 2015, global EV sales grew at an average annual rate of 89%, with roughly one-third of global sales occurring in the U.S. alone.
|Year||Total EV Sales||CAGR|
|Total sales / Avg growth||1,448,162||89.3%|
In 2014, the U.S. was the largest EV market followed by China, the Netherlands, Norway, and France. But things changed in 2015, when China’s EV sales grew by 238% relative to 2014, propelling it to the top spot.
China’s growth had been years in the making, with the government offering generous subsidies for electrified cars, in addition to incentives and policies that encouraged production. In 2016, Chinese consumers bought more EVs than the rest of the world combined—and the country hasn’t looked back, accounting for over half of global sales in 2021.
EV Sales by Country in 2021
After remaining fairly flat in 2019, global EV sales grew by 38% in 2020, and then more than doubled in 2021. China was the driver of the growth—the country sold more EVs in 2021 than the rest of the world combined in 2020.
|Country||2021 EV Sales||% of Total|
|South Korea 🇰🇷||119,402||1.8%|
|Rest of Europe 🇪🇺||469,930||6.9%|
|Rest of the World 🌍||313,129||4.6%|
China has nearly 300 EV models available for purchase, more than any other country, and it’s also home to four of the world’s 10 largest battery manufacturers. Moreover, the median price of electric cars in China is just 10% more than conventional cars, compared to 45-50% on average in other major markets.
Germany, Europe’s biggest auto market, sold nearly 700,000 EVs in 2021, up 72% from 2020. The country hosts some of the biggest EV factories in Europe, with Tesla, Volkswagen, and Chinese battery giant CATL either planning or operating ‘gigafactories’ there. Overall, sales in Europe increased by 65% in 2021, as evidenced by the seven European countries in the above list.
The U.S. also made a comeback after a two-year drop, with EV sales more than doubling in 2021. The growth was supported by a 24% increase in EV model availability, and also by an increase in production of Tesla models, which accounted for half of U.S. EV sales.
Tesla’s Dominance in the U.S.
Tesla is the world’s most renowned electric car company and its dominance in the U.S. is unmatched.
Between 2011 and 2019, Tesla accounted for 40% of all EVs sold in the United States. Furthermore, Tesla cars have been the top-selling EV models in the U.S. in every year since 2015.
|EV Model||2021 Sales||% of 2021 U.S. EV Sales|
|Tesla Model Y*||185,994||29.5%|
|Tesla Model 3*||147,460||23.4%|
|Ford Mustang Mach-E||27,140||4.3%|
|Chevy Bolt EV/EUV||24,828||3.9%|
|Tesla Model S*||15,545||2.5%|
|Tesla Model X*||7,985||1.3%|
Share of total sales calculated using total U.S. EV sales of 631,152 units, based on data from the IEA.
Tesla accounted for over 50% of EV sales in the U.S. in 2021 with the Model Y—launched in 2019—taking the top spot. Furthermore, the Model Y remained the bestselling EV in the first quarter of 2022, with Tesla taking up a massive 75% of the EV market share.
Despite Tesla’s popularity, it could face a challenge as other automakers roll out new models and expand EV production. For example, General Motors aims to make 20 EV models available by 2025, and Ford expects to produce at least 2 million EVs annually by 2026. This increase in competition from incumbents and new entrants could eat away at Tesla’s market share in the coming years.
Visualized: Battery Vs. Hydrogen Fuel Cell
Understand the science behind hydrogen fuel cell vehicles, and how they differ from traditional EVs.
Battery Electric Vs. Hydrogen Fuel Cell
Since the introduction of the Nissan Leaf (2010) and Tesla Model S (2012), battery-powered electric vehicles (BEVs) have become the primary focus of the automotive industry.
This structural shift is moving at an incredible rate—in China, 3 million BEVs were sold in 2021, up from 1 million the previous year. In the U.S., the number of models available for sale is expected to double by 2024.
In order to meet global climate targets, however, the International Energy Agency claims that the auto industry will require 30 times more minerals per year. Many fear that this could put a strain on supply.
“The data shows a looming mismatch between the world’s strengthened climate ambitions and the availability of critical minerals.”
– Fatih Birol, IEA
Thankfully, BEVs are not the only solution for decarbonizing transportation. In this infographic, we explain how the fuel cell electric vehicle (FCEV) works.
How Does Hydrogen Fuel Cell Work?
FCEVs are a type of electric vehicle that produces no emissions (aside from the environmental cost of production). The main difference is that BEVs contain a large battery to store electricity, while FCEVs create their own electricity by using a hydrogen fuel cell.
|Major BEV Components||Major FCEV Components|
|Onboard charger||Hydrogen fuel tank|
|Electric motor||Fuel cell stack|
Let’s go over the functions of the major FCEV components.
First is the lithium-ion battery, which stores electricity to power the electric motor. In an FCEV, the battery is smaller because it’s not the primary power source. For general context, the Model S Plaid contains 7,920 lithium-ion cells, while the Toyota Mirai FCEV contains 330.
Hydrogen Fuel Tank
FCEVs have a fuel tank that stores hydrogen in its gas form. Liquid hydrogen can’t be used because it requires cryogenic temperatures (−150°C or −238°F). Hydrogen gas, along with oxygen, are the two inputs for the hydrogen fuel cell.
Fuel Cell Stack and Motor
The fuel cell uses hydrogen gas to generate electricity. To explain the process in layman’s terms, hydrogen gas passes through the cell and is split into protons (H+) and electrons (e-).
Protons pass through the electrolyte, which is a liquid or gel material. Electrons are unable to pass through the electrolyte, so they take an external path instead. This creates an electrical current to power the motor.
At the end of the fuel cell’s process, the electrons and protons meet together and combine with oxygen. This causes a chemical reaction that produces water (H2O), which is then emitted out of the exhaust pipe.
Which Technology is Winning?
As you can see from the table below, most automakers have shifted their focus towards BEVs. Notably missing from the BEV group is Toyota, the world’s largest automaker.
Hydrogen fuel cells have drawn criticism from notable figures in the industry, including Tesla CEO Elon Musk and Volkswagen CEO Herbert Diess.
Green hydrogen is needed for steel, chemical, aero… and should not end up in cars. Far too expensive, inefficient, slow and difficult to rollout and transport.
– Herbert Diess, CEO, Volkswagen Group
Toyota and Hyundai are on the opposing side, as both companies continue to invest in fuel cell development. The difference between them, however, is that Hyundai (and sister brand Kia) has still released several BEVs.
This is a surprising blunder for Toyota, which pioneered hybrid vehicles like the Prius. It’s reasonable to think that after this success, BEVs would be a natural next step. As Wired reports, Toyota placed all of its chips on hydrogen development, ignoring the fact that most of the industry was moving a different way. Realizing its mistake, and needing to buy time, the company has resorted to lobbying against the adoption of EVs.
Confronted with a losing hand, Toyota is doing what most large corporations do when they find themselves playing the wrong game—it’s fighting to change the game.
Toyota is expected to release its first BEV, the bZ4X crossover, for the 2023 model year—over a decade since Tesla launched the Model S.
Challenges to Fuel Cell Adoption
Several challenges are standing in the way of widespread FCEV adoption.
One is performance, though the difference is minor. In terms of maximum range, the best FCEV (Toyota Mirai) was EPA-rated for 402 miles, while the best BEV (Lucid Air) received 505 miles.
Two greater issues are 1) hydrogen’s efficiency problem, and 2) a very limited number of refueling stations. According to the U.S. Department of Energy, there are just 48 hydrogen stations across the entire country. 47 are located in California, and 1 is located in Hawaii.
On the contrary, BEVs have 49,210 charging stations nationwide, and can also be charged at home. This number is sure to grow, as the Biden administration has allocated $5 billion for states to expand their charging networks.
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