Purely electric cars could remain expensive for some time, due to affordability of technology catching up with the price of raw materials, according to a report by banking and financial services specialist, HSBC.
In the report - first published by Bloomberg - HSBC analysts estimate that by 2025 global market share of EVs will still be under 10 per cent.
This is due to limited supply and demand of purely electric vehicles in the short term, followed by a surge in resource prices when the underlying technology becomes more affordable around 2020.
Lithium prices hit a high point in late 2017 due to strong demand and government subsidies for electric vehicles in China, the world’s biggest EV market. Since then, the price has taken a tumble due to oversupply and a pairing back of those government incentives.
But, analysts from both HSBC and BMI Research predict a surge in demand for lithium (and, therefore, prices) as emissions regulations tighten globally, and investment in lithium-based battery technology by many of the world’s biggest car manufacturers starts to kick in on next-generation vehicle platforms.
Manufacturers hedging their bets on plug-in hybrids alongside full-EVs (like Hyundai with the Ioniq) could be in a better place in the coming years.
Meanwhile, the price of cobalt, another resource essential in the construction of electric vehicle batteries, is set to become more expensive as the Democratic Republic of Congo – the world’s top exporter of cobalt by a long margin – seeks to capitalise on demand by introducing a new 10 per cent ‘strategic resource’ royalty.
This comes as good news for Australian industry, as investors could look to us as the world’s third largest producer of cobalt.
The report suggests that plug-in hybrids will bridge the gap in the mean time, doubling their predicted market share by 2025.
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