January 28, 2023

Will 2023 be a breaking point for the EV revolution?

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In 2023 well funded, or at least funded, development of deposits of critical minerals into mines will continue providing that the target production of the minerals is projected to be profitable, and the first product is projected to be delivered on time.

Savvy readers know that my above statement is just boilerplate for an OEM automotive annual report. It’s tautological, its conclusion is contained in its premises. It is not at all certain that high-tech, critical minerals producers and processors, will be ready or even existent by the time the minerals can be delivered to their end-user manufacturers.

Even the car makers who have been so generous (or profligate) in their “investments” in critical mineral production and projects have finally begun to realize that their future demand projects, when measured against contemporary real world supply, have caused critical minerals prices to go too high to support their inclusion in the consumer products manufactured from them. Lithium is a prime example.

Worse than that the bankers who once viewed car makers as AAA investments are now very concerned at the profligate use of the enormous lines of credit by the car makers being used to fund critical minerals wannabes that the banks themselves would never consider. “Use retained earnings” has been the response of credit line providers asked to cover such “investments.”

It’s time that car makers performed a due diligence on the critical minerals’ supply space.

They need to ascertain whether or not the supply of finished components necessary for the assembly of motor vehicles, such as batteries, traction electric motors, miniature accessory electric motors, and, yes, even catalytic converters can meet current and all future demand.

Simultaneously, they need to predict and mandate price maximums for critical minerals that they can afford if their products are to be saleable.

For the first time, they need to address the lifetimes, as well as the costs, of critical mineral enabled components, since consumers will have to keep the vehicles for much longer than in the past in order to be able to afford them at all.

They need to assess these factors for minerals, metals, and manufactured components dependent upon lithium, cobalt, nickel and the rare earths.

If car makers are to change over from ICE powertrains to BEVs then they need to do this right now, and they need to recruit managers and analysts who can do the job.

2023 is a breaking point if there is to be an EV revolution/transformation.

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4 responses

  1. David R. Hammond, PhD Avatar
    David R. Hammond, PhD

    Absolutely spot on the money as usual Jack! Looking to me like a big slowdown in EV demand may be coming; the early adopter demand is getting satisfied and breaks are going on in getting the next cohort to buy in. The realities of EVs beginning to be understood–limited driving range for road trips, battery charge life degrading in cold weather, lack of usable (i.e., actually operating) charging stations, high purchase cost of vehicle, battery life and replacement cost, shortages of economical critical mineral inputs, load on the deteriorating electrical grid, rising cost of electricity, etc., etc. EVs have a place in big cities for low daily mileage demands and in warm weather climates but won’t cut it mass fleet conversion across driving conditions and distance demands for much of North America.

    1. Tracy Weslosky Avatar
      Tracy Weslosky

      Dr Hammond – what a pleasure to hear from you. Will follow up with you about the CMI as you are one of the sharpest minds in the business. HNY

  2. Phil Lodge Avatar
    Phil Lodge

    Again Jack details most accurate assessment, EV are great for town short ,regular journeys. Municipal vehicles that regulary visit the depot or stop for prolonged periods at certain points , Buses, ambulance, police and works vehicles. Trams in Seville recharge at every stop pantograph goes up gets a battery boost while passengers step on and off pay fares then soon as driver sets off pantograph lowers until next stop. Seville what a lovely quiet clean transit system.
    My PHEV fits my requirements 25 miles short journeys around town then range when needed so easy to plug in the garage 5 seconds always charged up.
    6 years ago chargers at Mway services mostly vacant , now very often 3/4 cars waiting each point , just take longer coffee break.
    just bought Subaru hybrid for my wife the electric Solterra was 50% more to buy

    Be good when i see a return on my 12 year lithium & copper investments

  3. Rare Earths Investor Avatar
    Rare Earths Investor

    “It’s time that car makers performed a due diligence on the critical minerals’ supply space.”

    I think a lot of entities wanting to join the potential new ROW critical minerals value chains need to up their DD. Inflation and supply chain timelines alone are going to hammer a lot of pre-2022 feasibility project plans.

    In my area of interest RE, we already have the classic past struggles with Lynas in Malaysia showing how politics and processing problems can turn projected timeline and costs into large-scale overruns and investor dismay.

    Now we have e.g., the recent Vital Metals (I hold) 2023 projections showing large cost increases (approx.., 3X) for the buildout of the Saskatoon plant and the impact of REEtec’s own processing timelines on Vitals’ 2023 production guidelines and company focus.

    I don’t think that there is going to be a stage in these new value chains that isn’t seriously impacted by the actions or inabilities of all the others involved. Then throw in your bankers, critical metals pricing and consumer buying behavior vs theorized, etc., and you have one heck of a jigsaw puzzle out there.

    So, yes, I agree that 2023 could be a transformative year with a messy, chaotic 12 months (but with the potential for some rewarding selective retail investments just to 2024).

    As usual, thanks for the thought-provoking challenge.

    GLTA – REI

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