Further to this March post,
here’s some nasty news for the EV dreams of PM Trudeau and Ontario Premier Ford–and of President Biden. From an opinion piece by the Globe and Mail’s excellent man in Rome:
Eric Reguly European bureau chief Rome
Any successful politician is adept at finding the one bit of good news floating in the ocean of despair, then gushing about it to try to drown our worries.
So it is with U.S. President Joe Biden. A few weeks ago, when the war in Ukraine was propelling gasoline and diesel prices ever higher – regular gas hit a record average of US$4.43 a gallon on Friday – he suggested that painful pump prices will speed the transition to electric vehicles (EVs), fear not.
Voila – no more hard decisions about filling your SUV or feeding your kids. “Transforming our economy to run on electric vehicles, powered by clean energy, will mean that no one will have to worry about gas prices,” he said on Twitter. “It will mean tyrants like Putin won’t be able to use fossil fuels as a weapon.”
Nice idea, except for one minor inconvenience: Gas and diesel aren’t the only commodities turning into luxury goods.
Most of the metals that go into EVs and their massive batteries – copper, nickel, cobalt [see this post: “Congo’s Cobalt Key to PRC’s Grasp for EV Dominance“], lithium [see this post: Lithium and Batteries for EVs look like just another Canadian Hi-Tech Pipedream”], plus a variety of rare earth metals – have climbed even faster than pump prices because they are in exceedingly short supply and high demand. Cobalt two years ago went for US$15 a pound; today it’s US$40. Lithium carbonate prices have climbed about 600 per cent in the same period.
The metals’ scarcity means that the endlessly touted EV revolution will almost certainly be delayed, perhaps long delayed, barring the invention of batteries that use far less of these crucial metals, or none at all [emphasis added]. Ditto then green revolution in general, for many of these same metals go into wind turbines and solar panels…
Already, Tesla boss and co-founder Elon Musk is screaming about excruciating metals prices while quietly jacking up the prices of Tesla cars to make them even less affordable for the average family. According to the Wall Street Journal, the average price of a Tesla is US$52,200, up almost 3 per cent since late 2021 [emphasis added]…
Mr. Musk has been a lot smarter than most auto executives in protecting supply chains. As far back as 2020, just before the price charts went vertical, he realized that shortages could translate into production and profit-margin squeezes. He negotiated a cobalt supply deal with Glencore, the world’s biggest producer of the metal that is essential for battery production. No more middleman.
General Motors and BMW recently did similar deals with Glencore, through presumably at a much higher price. Tesla is now trying to replicate the process with nickel producers.
In March, Volkswagen announced a joint venture with two Chinese companies to secure nickel and cobalt supplies from Indonesia. The deal thrusts VW into the mining industry, taking a page from the supply chain strategy created by Henry Ford a century ago [emphasis added]. Mr. Ford was so obsessed with security of supply that he bought coal mines, timberlands, sawmills, a railroad and a fleet of freighters to make sure iron ore and other materials would reach his factories.
…While the in-ground reserves of some metals are genuinely in short supply, such as copper, others, notably lithium, are blessed with generous reserves on several continents. But that’s not the point. The point is that building mines to extract the lithium, and plants to process it, can take five to 10 years. Cobalt mines can taken longer [emphasis added]…
Every big automaker in the world is ramping up EV production. Forecasts say that tens of millions of these cars will be produced each year by the middle part of this decade. Maybe not. In the United States alone, about 13 lithium-ion plants are in the construction or planning stages – but what is not known is where the lithium will come from. There is only one operating lithium mine in the U.S. European and Japanese carmakers face similar supply constraints.
The EV revolution is beginning to look like an evolution. EVs are coming, but not at pedal-to-the-metal speeds.
Follow Eric Reguly on Twitter: @ereguly
And a very relevant recent post (note that Ontario is finally getting, with big federal and provincial subsidies, a battery production plant)–but consumers too still will have to pay to play with Ontario-assembled EVs: