I couldn’t help but notice that Eramet and Glencore in their 2017 financials couldn’t say enough about metals in the electric vehicle (EV) market. All of a sudden, well not so sudden in Glencore’s case, the metals world has a new HOT concept to sell, metals to the EVs. Whether it is cobalt, tied with lithium, as the two sizzling commodities, or nickel or manganese or you name it.
If you add EV to your presentation, investors, the companies’ boards, and the financial analysts will fall all over you. It’s the fifty-year supercycle without China or even India. And, it makes the rare earth craze of a few years ago passé.
Being the contrarian that I am, let’s look at it with a more candid eye. GM sold about 3.1-million cars in the US last year, while Ford sold another 2.6-million units. And, SUV sales by all manufacturers were around 7-million units. Total US car sales were over 15-million units last year.
Tesla, the darling of Wall Street, sold about 101,000 cars. EVs around the world account for about 1.5% of sales. Of course the percentage growth of EVs is staggering, but consider you are starting for around zero.
Many developed countries, including China, are saying that the internal combustion engine is doomed and won’t be around much longer. They are issuing all sort of mandates and edicts about the future. It’s as if buyers don’t have a say in this—they don’t.
Also, despite what many people say, EVs depend on government subsidies and the more EVs, the higher the bill. Also, by putting the drop dead date far enough into the future, today’s leaders don’t have to worry since they won’t be around to blame.
Also, current EVs still have a limited range and take a long time to recharge. And, several million gas stations will have to be replaced with charging systems. My neighbor has a very expensive Tesla, which I always say is the safest car since it never leaves the driveway.
My problem, however, isn’t that EVs will eventually be a major propulsion source for cars, but that the technology is EVOLVING. The trouble with predicting the future is that it is based on today’s knowledge. Computers are getting quicker with more storage with less materials. The number of cars, whether they are EVs or gas powered, could substantially drop in a shared economy world.
The internal combustion engine has over 150 years of development. It keeps getting better with more power, uses less fuel and has less emissions. It’s going to be that way with EVs. The energy storage systems of today will be the Univac computers of the 1950s.
That means we shouldn’t invest in EVs, but the investment should be in technology, not metals that could be used in future EVs. It’s the build it and they will come mentality.
As my good friend told me (in Italian) a good lie is better than a bad truth.