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Riding the EV Revolution Rollercoaster Amid the West’s Electric Car Climbdown

Embarking on the electric vehicle (EV) revolution journey has felt like being on a rollercoaster filled with surprising developments, especially when we consider the insights from Jack Lifton, the Co-Chairman of the Critical Minerals Institute (CMI), who recently shared his thoughts on the opinion published in The Telegraph titled The West’s humiliating electric car climbdown has begun. Lifton’s sharp analysis pierces through the prevailing chatter, offering a lucid view of the EV market’s complex trajectory. He navigates us through the shifting sands of government and auto manufacturers’ strategies, the intensifying competition from the East, and the shifting tides of consumer demand. Lifton’s insights serve as a guiding light for deciphering the intricate forces shaping the EV landscape.

The recent shifts in the electric vehicle (EV) industry, as observed by Jack Lifton, Co-Chairman of the Critical Minerals Institute (CMI) and a notable expert in the field of technology metals, illuminate the complex interplay of government policy, market dynamics, and consumer preferences. Lifton’s insights provide a nuanced understanding of the challenges and potential misalignments within the EV sector, particularly as it pertains to the impact of government strategies, competition, and market dynamics, and the role of consumer demand in shaping the industry.

Impact of Government Strategies on the EV Market

Lifton critiques the effectiveness of state-led industrial strategies in the rapidly evolving EV market, highlighting the retreat of major manufacturers like Renault and Volvo from their ambitious EV initiatives. This move, compounded by a reduction in government support, raises questions about the foresight and adaptability of such strategies. Lifton notes, “It shows that, as always, the invisible hand of the market rules… the automotive companies have suddenly discovered the market’s supply demand… government doesn’t dictate markets.” This observation underscores the limitations of state intervention in forecasting and influencing market demands and suggests a need for more market-responsive approaches.

Competition and Market Dynamics

The competition from Chinese manufacturers has significantly influenced the trajectory of the Western electric vehicle industry. Lifton points out the stark reality facing Western EV manufacturers, stating, “The cost of making electric vehicles in the United States is too high… People are buying a Chevrolet EV for $50,000. That car cost $100,000 to make.” This price disparity, alongside the aggressive expansion of Chinese EV manufacturers into global markets, underscores the challenges Western companies face in maintaining competitiveness. The scenario posits a crucial reflection on the sustainability of the current business models and the need for innovation and efficiency improvements.

The Role of Consumer Demand in Shaping EV Industry

Lifton’s commentary on the shift in consumer preference back to petrol models reveals a significant misalignment between the production of EVs and actual market demand. He remarks on the sudden interest in hybrids by companies like General Motors, indicating a rapid strategic pivot to align with consumer preferences for efficiency and practicality. Lifton argues, “Hybrids… maximize the efficiency of electric and internal combustion and therefore will allow us to have the longest supply of fuels.” This perspective highlights the importance of flexibility in product offerings and the need to closely monitor and adapt to consumer demand trends.

Jack Lifton’s insights offer a candid reflection on the electric vehicle industry’s current state, pointing towards a future where adaptability, market intelligence, and innovation are paramount. His observations remind us that success in the EV market is not solely about ambitious government strategies or manufacturing prowess but about understanding and responding to the nuanced dance of supply, demand, and the global competitive landscape. As we consider the path forward, Lifton’s analysis underscores the importance of striking a balance between visionary goals and the pragmatic realities of consumer needs and market dynamics. The electric vehicle revolution is far from over, and its success will hinge on the industry’s ability to navigate these challenges with agility and foresight.




Collaboration Deal with Sumitomo, Nano One to Boost LFP Cathode Production in Canada

Nano One Materials Corp. (TSX: NANO) operates the sole North American lithium iron phosphate (LFP) production facility located in Candiac, Quebec, with plans to convert the existing facility to the One-Pot process for production up to 2,000tpa by the end of 2024. The company will expand the production in Quebec to meet demand and its business model incorporates licensing and joint ventures for global expansion.

In an announcement on September 14, 2023, Nano One reported significant progress in demonstrating full commercial scale volumes from the Candiac facility. The company states:

“Recent One-Pot trials at the Candiac plant have yielded LFP at commercial scale with results mirroring lab performance. Transitioning to full commercial size reactors, Nano One’s LFP is ready for Q4 customer evaluations. Moreover, installation and optimization of the 200tpa reactors are ongoing.”

Source: Nano One company presentation

Additionally, Nano One recently announced a collaboration agreement with global cathode materials giant Sumitomo Metal Mining on September 25, 2023. This announcement included a strategic equity investment of C$16.9 million commitment and will undoubtedly provide potential opportunities in sales, licensing, and partnership opportunities. Notably, Sumitomo is a supplier of materials to Panasonic which in turn supplies Tesla with battery cells which shows the quality of their client lists.

Sumitomo’s established role in the sector as a leading miner, refiner, and cathode active materials producer solidifies the significance of this collaboration.

With global trends leaning towards the electrification of transport and clean energy, the demand for batteries and cathode materials is surging. Forecasts predict the cathode market in North America and Europe alone to reach US$85 billion by 2035, presenting unprecedented opportunities for emerging market players.

Nano One’s Business Strategy

While Nano One’s strategy remains versatile, the primary focus will be LFP production initially in Canada at the Candiac facility. Its business model includes licensing and joint ventures with partners for global expansion in jurisdictions like the US, Europe, and Asia.

In Conclusion

Nano One’s evolution from a minor participant to a significant player in the cathode materials sector is evident. Collaborations with industry leaders like Sumitomo, Rio Tinto and VW place them prominently on the map. The company currently boasts a market cap of C$320 million.




The Chinese Rare Earths Monopoly Saga Continues

The blather in the media suggesting that China could or already be weaponizing the export of their “rare earths” to the rest of the world is so one-sided that it must make the Chinese wonder if non-Chinese “analysts” and “experts” ever bother to see the world from the perspective of “others.” For more than a decade China has been aggressively acquiring outright or buying the output of non-Chinese rare earth sources. At this point in time, China is the overwhelming buyer, worldwide, for example of the mineral monazite, which is produced primarily as a byproduct of the processing of heavy mineral sands, which are the source of zircon and ilmenite, source minerals for, respectively, zirconium and titanium.

We can speculate that China seeks heavy mineral sands for its world-dominating production of zirconium and titanium and that the rare earths are just an added extra attraction. But my survey of actual China experts, not those who’ve never been to China and work for “intelligence” gatherers and purveyors, tells me that China is focused on conserving its own rare earth resources and responding to internal pressure to clean up its massive rare earth industry’s pollution problems. We know that Baotou’s famous operations now include extracting rare earths from the massive tailings produced over the last 30 years of poor quality mining and that China Nuclear has been licensed to process up to 50,000 tons per year of monazite to recover up to 30,000 tons per year of total light rare earths while removing the uranium and thorium from the monazites, which typically contain up to 50% more of the desirable magnet precursors, neodymium and praseodymium, than Baotou’s (and MP Materials Corp.’s (NYSE: MP)) bastnaesite.

China has now also essentially shut down its domestic heavy rare earth production from its ionic adsorption clays due to environmental degradation from their in-situ processing. China gets the majority of its heavy rare earths from Myanmar ionic adsorption clays today. The production of the first Western ionic adsorption clay producers, in Burundi and Brazil, is already pre-sold to China.

Australia has the world’s first hard-rock heavy rare earth mineral mine, that of Northern Minerals Limited’s (ASX: NTU) xenotime deposit in Western Australia. It is controlled by Chinese interests.

China is doubling the size of its rare earth permanent magnet industry. It is said that this will happen by 2025.

This means that China needs more, much more of the magnet precursor rare earths and all of the heavy rare earths, in particular, that it controls.

It is the domestic Chinese market, the market of the Belt and Road countries, and the rest of the non-aligned with China world, in that order that is driving the Chinese rare earth markets with emphasis on value added in China.

When Western, Japanese, and Korean governments announce that they want to be independent of China for rare earth permanent magnet products, the Chinese simply calculate when, in the best and worst cases, they will no longer have demand for rare earth enabled products from those countries and focus on their key domestic and allied markets.

It is very unlikely that Western car and appliance makers will be able to replace any substantial quantity of Chinese sourced rare earth permanent magnet motors by any of the ridiculously short-sighted timelines dictated by government mandates. In fact, as is already happening in Europe, it is likely that Chinese EV makers will outcompete European car makers in their (European) home markets due to their cost and critical minerals availability advantages.

The United States is woefully unprepared for the EV transition. But the 25% Trump tariff on Chinese imported cars is helping stave off a Chinese tsunami in the US car market.

2030 is fast approaching, and it’s hard to see how the automotive and appliance industries are going to decouple from China.




BYD and Tesla are totally dominating global electric car sales in 2023

Many people would probably be surprised to hear how poorly legacy car manufacturers are doing in terms of electric car sales. They would also be shocked how just two companies are totally dominating global plugin electric car sales. Those two companies are BYD Co. Ltd. (OTC: BYDDF) and Tesla Inc. (NASDAQ: TSLA).

BYD dominates total sales with about half coming from pure electric cars and about half from plugin hybrids. Tesla dominates in terms of total revenues as well as profit per vehicle.

The chart below shows H1, 2023 global plugin electric car sales with BYD leading on 1,248,168 sales and Tesla on 888,879 sales.

The next closest is the Volkswagen Group with 425,761 sales, roughly a third of BYD and half of Tesla.

Top selling global plugin electric car auto groups Jan-June, 2023

Source: CleanTechnica

Tesla and BYD’s lead looks set to continue in 2023, currently with a combined 36.6% of the market

Tesla and BYD have been expanding their manufacturing facilities at a feverish pace for the past several years and the results are now showing. Furthermore, by the end of 2023, their lead will be even bigger, in raw number terms. Tesla targets 1.8 million sales and BYD a massive 3 million sales in 2023.

Results like this are leaving internal combustion energy (“ICE”) legacy auto companies at risk of becoming extinct this decade as the world transitions rapidly towards EVs. For example, Toyota only sold 46,171 pure battery electric vehicles globally in H1, 2023.

As shown on the chart below we are still in the early stages of the EV boom with sales forecast to increase exponentially over the next 10-15 years. Given the current dominance of BYD and Tesla, it is looking like they will get a major part of these future sales.

BYD is currently ranked number 1 globally with 21.4% market share YTD (Jan-June 2023).

Tesla is currently ranked number 2 globally with 15.2% global market YTD (Jan-June 2023).

Combined BYD and Tesla currently have 36.6% of the global plugin electric car market.

Global plugin electric car sales forecast to 2040 (green bars)

Source: Trend Investing

BYD sales continue to boom with 261,105 sold in July and 274,086 electric cars sold in August 2023. Tesla’s sales will be released at the end of Q3.

Takeaway for investors

BYD and Tesla are dominating global sales. They are really the only two companies selling electric cars at a profit and it shows with their tremendous growth in profits in recent years.

As reported on August 29, 2023, BYD posted a >200% surge in first half profit, with net profit in the first six months rising 204.68% to 10.95 billion yuan (US$1.50 billion), as compared to 3.6 billion yuan a year earlier.

Tesla’s Q2, 2023 net profit rose 20% YoY, despite massive price cuts for their vehicles. Tesla made ~$25 billion in revenue in Q2 (up 47% YoY), which puts them on a run rate of US$100 billion per annum in revenue. Q2 GAAP net income was a very nice US$2.7 billion. Looking ahead Tesla has multiple catalysts that can potentially surge revenue including – Cybertruck and Semi sales, Megapack sales, a Compact Tesla (Model 2) coming soon, and their AI potential via Full Self Driving (“FSD”) (robotaxis, Dojo, and Optimus robot).

Tesla recently revealed their updated Model 3 with sleeker styling, longer range, new interior features and much more

Source: Tesla Australia website

Closing remarks

For the skeptics out there who think the EV boom will not happen please read the next two sentences. Tesla Model Y became ‘the best-selling vehicle globally(of all types) in Q1, 2023. BYD is now ‘the 5th largest carmaker globally‘ with 4.7% market share, based on July 2023 sales.

The EV boom is not only happening, it is happening faster than what most people thought.

BYD and Tesla now sell 36.6% of all global plugin electric car sales and are totally dominating the market. Little wonder both companies have enjoyed spectacular investment returns for shareholders over the past 5 years and look set to continue this decade.

Investor.News will continue to update investors on the progress of Tesla and BYD in 2023, as well as give some updates on their new products and other business divisions such as energy storage which is growing even faster than EVs.




Lithium Prices Recover as China EV Sales Rebound Reigniting Investor Interest in Albemarle & Tesla

The first quarter in 2023 was a rough period for lithium stocks as the China lithium carbonate spot price crashed lower. However, the second quarter is looking a lot better.

FIGURE 1: China lithium carbonate spot prices appear to be rebounding after hitting a low in late April 2023

Source: Trading Economics

Global and China EV sales recovered strongly in March and April 2023

March 2023 global plugin electric car sales were over the 1 million mark and were the ‘second best month ever’. This was due to very strong sales in China and Europe, with the USA also contributing. It is already looking like the panic sell-off in lithium stocks has been overdone with stocks rebounding higher in the past 3 weeks.

Reports have it that Chinese lithium consumers are buying again after running down inventories in Q1/2023. Certainly, China plugin electric car sales have rebounded very strongly with over 500,000 sales in March and approximately 600,000 in April 2023. Those sales numbers are a huge increase over China’s January sales which fell 8% Year-over-Year to 343,000 as new energy vehicle (“NEV”) subsidies expired.

Lithium stocks rallying again

Strong EV sales in China are leading to early signs of a China lithium price recovery. Lithium contract prices remain much higher than spot prices reflecting the past lithium price rise and the strong outlook for lithium demand in 2023 and beyond.

As shown on the chart below, February, March, and April saw the leading lithium stocks (Albemarle Corporation (NYSE: ALB), Sociedad Química y Minera de Chile S.A. (NYSE: SQM), Livent Corporation (NYSE: LTHM), and Pilbara Minerals Limited (ASX: PLS)) follow spot prices lower; however, in May we can see a potential price recovery starting (green arrow in chart below).

FIGURE 2: Leading lithium stocks have been moving higher in May buoyed by improving EV sales and lithium prices (NYSE: ALB, NYSE: SQM, NYSE: LTHM, ASX: PLS)

Source: Yahoo Finance

Albemarle remains very positive on the lithium market with takeover offers and expansion plans

During the lithium price collapse of early 2023, Albemarle was moving in the opposite direction as it made several key announcements that indicated its strong belief that the lithium market would rebound. Below is a brief summary:

Furthermore, Albemarle announced on May 3, a net sales increase of 129% for Q1/2023. Albemarle CEO Kent Masters commented:

“Compared to last year, first quarter net sales more than doubled, adjusted diluted earnings per share more than quadrupled providing a robust start to the year. … We see strong sales volume growth for the rest of the year but have modified our guidance to reflect softening lithium market pricing. We remain confident in the underlying market strength of our world-class asset base and our long-term growth strategy.”

Albemarle knows the lithium market better than most, especially given it has been the industry leader for over a decade. Currently, they have numerous expansion plans globally including:

  • The Salar Yield Improvement Project in Chile;
  • The above-mentioned Kemerton trains III & IV lithium hydroxide production expansion in Australia;
  • An under-construction lithium conversion facility in Meishan China; and,
  • The Kings Mountain mine development in the USA that will eventually feed their planned new South Carolina lithium processing facility.

Added to these items is the attempted takeover of Liontown Resources Limited (ASX: LTR) for A$2.50 or US$1.66 per share in cash, which values Liontown at A$5.2 billion or US$3.4 billion on an enterprise basis, at the time of the offer.

Both Bank of America and Scotiabank have recently upgraded Albemarle. The latter assigned a US$250 price target, which is well above the current price of US$195 at the time of writing.

Closing remarks

Several negative events in early 2023 caused a dramatic fall in China spot lithium carbonate prices. The lithium price had increased over 10x and was due for a fall, with Q1 typically being a weak quarter due to seasonal impacts causing lower EV sales.

Discussions about sodium-ion batteries did not help either. As it turns out, market participants are now realizing that lithium demand is still very strong, despite some short-term volatility. Sodium-ion batteries, at best, will have limited use cases in energy storage, and cheap, small EVs, mostly sold in China, due to inferior volumetric energy density.

For investors, the recent market dip in lithium stocks may prove to be a good time to go shopping. The long-term demand wave for lithium is a supercycle with 2037 demand forecast to be 35x higher (according to Trend Investing) than 2020 levels.

Certainly, Albemarle, the lithium leader, remains extremely bullish on the lithium sector with a multi-billion dollar takeover offer and expansion plans.

The EV and stationary energy storage booms are here and will only grow stronger this decade. The Tesla Inc. (NASDAQ: TSLA) Master Plan 3 reports that we need 240 TWh (240,000 GWh) of energy storage for the world to run on 100% renewable energy, most from lithium-ion batteries. Given global lithium-ion battery production in 2022 was only about 700 GWh you can draw your own conclusions. Albemarle and Tesla already have shown us what they think. The latter is breaking ground on a new billion-dollar lithium refinery in Texas this week.




Auto OEMs are heading to Indonesia to secure nickel for their EV batteries, but what about North America & Australia?

In recent months the rush to secure nickel has begun, with Indonesia taking the main stage. What does this mean for the nickel market? And what about Western sources of nickel, have they been forgotten?

The nickel rush to Indonesia

Recent news highlights the rush and includes:

  • February 1, 2023 – Reuters – “Exclusive: President Jokowi “confident” Tesla will invest in Indonesia.”
  • March 30, 2023 – Reuters – “Ford in $4.5 billion deal for EV battery materials plant. Ford has joined PT Vale Indonesia and China’s Zhejiang Huayou Cobalt’s as their new partner in a $4.5 billion nickel processing plant in Indonesia….”
  • April 17, 2023 – Reuters – “Volkswagen to partner on Indonesia EV battery ecosystem……Volkswagen…….will work with Vale, Ford, Huayou (Cobalt), French miner Eramet and several Indonesian firms like Merdeka Gold Copper, the parent company of Merdeka Battery, and energy firm Kalla Group.”

As many readers would know, Indonesia has the world’s largest nickel reserves and is working to develop the downstream to produce batteries and EVs. Indonesia does NOT have a free trade agreement with the USA, meaning nickel coming from Indonesia would not qualify for the Inflation Reduction Act (“IRA”). As a result, Indonesia is currently pushing for a limited free trade deal with the US on critical minerals.

Will Tesla invest next in Indonesia or will they choose North America or Australia? The latter two are safer and qualify under the IRA

Source: iStock

What does this mean for the nickel market?

The boom in interest in Indonesian nickel means we will likely see a burst of investment into Indonesian nickel miners and an increase in nickel supply out of Indonesia. We already saw this when on March 28 it was reported that “Merdeka Battery Plans Indonesia’s 2nd-Largest 2023 IPO……. Merdeka Battery is tapping into the surging global demand for electric cars by refining its nickel into battery materials.” Interestingly the largest 2023 IPO in Indonesia looks like being another nickel company, with the IPO of Harita Nickel at about US$659 million.

Market experts are mostly forecasting a nickel surplus in 2023, mostly Class 2 nickel used in stainless steel. The Class 1 nickel market, used in EV batteries, looks much tighter. Later this decade it is looking like we will see significant Class 1 nickel deficits as the EV boom continues to gain traction.

What about Western sources of nickel, have they been forgotten?

The short answer is yes, to some degree. Due to the problems or permitting it appears the auto OEMs are choosing Indonesia over North American or Australian nickel supply. Ford is a classic example. On March 26, 2023, Ford (NYSE: F) CEO Jim Farley stated: “Batteries are the constraint……Both lithium and nickel are really the key constraining commodities. We normally get those from all over the world — South America, Africa, Indonesia. We want to localize that in North America, not just the mining but the processing of the materials.” Then on March 30, 2023, Ford announced their $4.5 billion deal for EV battery materials plant in ‘Indonesia’.

What is going on? Ford says they want to “localize that in North America” and 4 days later their actions are to invest US$4.5 billion in Indonesia!!! North American and Australian junior nickel & cobalt miners must be shouting out loud – “What about us?”

One great example would be Jervois Global Limited (ASX: JRV | TSXV: JRV) with their Idaho Cobalt Project shutdown announced on March 29, just weeks before production began. Admittedly their operation is a cobalt-copper project, but it still paints a similar picture. Another would be Australia’s Ardea Resources Limited (ASX: ARL) with their massive nickel and cobalt resource (one of the largest in the Western world with 5.9 million tonnes of contained nickel and 384,000 tonnes of contained cobalt), still on hold for several years waiting for funding. Western junior miners face a much tougher road to make it to production and they are not getting anywhere near the same support as the refiners or battery factories.

USA, Canada, and Australia have numerous nickel and cobalt projects just waiting for funding or permitting. These obstacles remain despite all the rhetoric of sourcing from home.

Closing remarks

Congratulations to Indonesia. They now look like getting huge funding and support from Western OEMs to develop nickel and cobalt mining and refining in ‘Indonesia’.

Commiserations to most western nickel and cobalt junior miners as they get nothing. The exception to date would be Talon Metals Corp. (TSX: TLO) who got a nickel supply agreement from Tesla and a US$114 million U.S. government grant. It should be noted that Vale Canada signed an off-take deal with General Motors (NYSE: GM) in 2022.

If the West truly wants a safe independent supply chain then it needs to fix the mining problems, namely permitting is too slow and funding is too little. There has been much talk about getting this fixed, but time is running out as China dominates and now Indonesia moves to become a key part of the EV supply chain.

Come on western governments, auto OEMs, support your local nickel & cobalt miners as we have seen happen with lithium in the past year.

It is a win-win situation for all.




EV Sales Expected to Grow in 2023 Despite a Slow Start in Q1, Now Fueled by Tesla-Led Price Wars

After a stellar 2022, which saw global plugin electric car sales increase by 55% year on year (“YoY”) to 10.522 million and reach approximately a 13% market share, what will 2023 bring? We already saw a soft start to the year in January, which resulted in a Tesla-led price war. February and March sales of electric cars have seen some improvement.

Overall in Q1/2023, global plugin electric car sales are growing YoY, just not as fast as in 2022. BloombergNEF is forecasting 13.6 million deliveries in 2023, compared to Trend Investing’s forecast of 14.35 million (up 36% YoY).

Auto Shanghai 2023

Looking at Auto Shanghai 2023, which is on now in China, it appears that interest in EVs is at an all-time high, with 70 of the 100 new models on display being electric. China continues to dominate global electric car sales, selling almost 60% of global electric cars in 2022.

Image 1: Auto Shanghai 2023 – Embrace the new era of automobile industry

Source: Auto Shanghai 2023

Q1/2023 sales

Global plugin electric car sales in Q1/2023 are estimated to have reached approximately 2.3 million to 2.4 million units (January 662,000, February 812,000, March approximately 850,000 (estimate)). At first glance, it may seem like the yearly targets of 13.6 million or 14.3 million look out of reach, but this may not be the case. The first quarter is always the slowest quarter of the year and it was negatively impacted this year by the end of Chinese Federal subsidies and Covid-19 impacts in January in China.

A lot has happened since then, including a ‘price war’, where EV car manufacturers are significantly discounting prices to secure growth and market share. Reuters recently reported March China sales stating: “Sales of new energy vehicles (NEVs), which include pure battery electric cars and plug-in hybrids, rose 21.9% in March and accounted for 34% of the month’s sales…….More than 40 brands have joined a price war started by Tesla this year.”

Q1/2023 sales by manufacturing group

BYD Co (HK: 1211 | OTCPK: BYDDF) remains the global sales leader having sold 552,076 new energy vehicles (“NEVs”) in Q1/2023. BYD’s sales are up 92.81% YoY.

Tesla (NASDAQ: TSLA) is at number two globally with 422,875 sales in Q1/2023.

Next in terms of Q1 sales is Volkswagen Group (Xetra: VOW | OTCPK: VWAGY) followed by Geely Automobile Holdings Ltd. (HK:0175 | OTCOK: GELYY).

In terms of the better-known U.S. brands, they are still a very long way behind. For example, General Motors (NYSE: GM) sold 20,670 electric cars in Q1/2023 and Ford (NYSE: F) sold only 10,866. Rivian (NASDAQ: RIVN) sold 7,946 electric pickup trucks in Q1/2023.

The Chinese upstarts Li Auto (52,584 sales), Nio (31,041 sales), and XPeng (18,230 sales) performed ok but failed to deliver significant numbers in Q1/2023.

A conclusion from all of the above is that the big are getting bigger, BYD and Tesla dominate, and Volkswagen Group, Geely, and others are all chasing.

Image 2: Tesla has slashed their prices in 2023 – Model 3 now sells in the USA for US$39,990, and much less after various incentives

Source: M. Bohlsen

2023 EV trends – Price wars and U.S changes to the IRA and the EPA proposed aggressive new ‘clean vehicle’ standards

The emerging trend of 2023 in a sluggish global economy is an all-out ‘EV price war’. Fierce pricing competition has emerged in order to boost sales growth. Falling commodity prices (notably lithium) are helping battery prices to come down and hence also helping EV makers to pass on cost savings.

The big winner so far in 2023 is the consumer. Tesla ‘slashed prices‘ in 2023 thereby starting the price war. You can now buy a Tesla Model 3 RWD in the USA for US$39,990, which drops by the federal tax credit of US$3,750 for eligible buyers (and a further US$2,000 for California eligible buyers). Tesla has the highest auto margins and can afford to cut prices and still remain very profitable (Q1 net GAAP income fell 24% YoY, but remains profitable with 19.3% gross margin).

BYD recently launched their small electric car ‘Seagul’ at an astonishingly low price (from approximately US$11,400) in China, receiving 10,000 new orders on the first day.

The incumbent ICE companies and lower volume manufacturers/startups are the ones who will really feel the pinch, with many of them making a loss on their EV sales. At this rate, 2023 may see a few smaller EV startups go bankrupt and potentially some industry consolidation.

Another key trend in 2023 is the changes to the Inflation Reduction Act (“IRA”). As reported by Bloomberg on April 18, 2023: “Only 10 electric and plug-in hybrid vehicles will qualify for $7,500 federal tax credits in the US after stricter battery-sourcing rules take effect and render most plug-in models ineligible……General Motors, Tesla, and Ford Motor all have at least one EV that will qualify, while Ford and Stellantis NV (NYSE: STLA) each have one eligible plug-in hybrid model….”

In a further twist of the knife to the internal combustion engine (“ICE”) manufacturers, it was reported in April 2023 that the EPA proposes aggressive new ‘clean vehicle’ standards, stating: “The agency projects that EVs could account for 67% of new light-duty vehicle sales and 46% of new medium-duty vehicle sales in 2032, bolstered by the EPA proposals.”

Closing remarks

Global electric car sales are off to a sluggish start in 2023, but the recent price war looks to be helping with sales momentum growing in February and March 2023. Tesla appears to be determined to grow EV sales volumes at an average of 50% YoY this decade. Given Q1/2023 growth was 44% YoY, it looks like Tesla will continue the price war for some time.

In terms of 2023 EV trends, it looks like being a year of reckoning. BYD and Tesla are getting stronger and the ICE laggards and struggling EV startups are being left behind. At this rate, we may see some casualties before year end. At least the EV consumer is now getting some great deals!




The Second Fuel Crisis and the Potential Doom of the Domestic Automotive Industry

Economic illiteracy in general and a complete lack of understanding, in particular, of the economics of what the oft-cited political mantra refers to as “working families” by political elites and the new growing class of industrial elites has doomed the domestically owned OEM automotive industry.

Mark Twain is reputed to have said, “History doesn’t repeat itself, but it often rhymes.”   

In the 1960s, when oil was cheap, less than $2 per barrel (“bbl”), I heard a General Motors (NYSE: GM) executive say that, ” ‘we’ predict that the domestic American auto market in 2000 will be 28 million cars, and we are preparing for that.” (Note: In 2000, 17.8 million new cars and trucks were sold.) In those far-off days, the big three American OEM automakers had 99% of the domestic market and were vertically integrated, so they were designing and building not only assembly plants but also component plants en masse.

No one in Detroit, then as now, gave any thought to the issue of fuel. They made cars and trucks. The oil industry could take care of finding, producing, refining, and distributing “fuel.” Purdue and the General Motors Institute produced all of the engineers that GM would ever need, and no one at GM even knew if either of those institutions had oilfield engineering or oil refining courses.

The car makers specified the fuel requirements, and it was up to the oil industry to provide the products.

First Fuel Crisis – 1972 Arab Oil Embargo

In 1972, the Arab Oil Embargo hit and suddenly resource nationalism, although not called that then, hit the American OEM automotive industry like a brick wall. I am going to call this series of events the First Fuel Crisis.

Up until 1972, American oil production had not been anywhere near enough to meet domestic demand, but even with freight from the Persian Gulf, oil from the Middle East was so much cheaper than domestic oil that there was little point in increasing domestic production. Except for the West Coast, which was too far from the Middle East to make transportation economical and southern California was covered with pyramidally shaped structures, which were in fact producing oil wells. When I lived in Los Angeles in the late 1960s, I paid no attention to these structures which were common along the coast.

What was called the “Arab” oil embargo shocked the domestic American OEM automotive industry. Up until then, fuel efficiency was nowhere near as important as muscle cars.

When Crisis Meets Opportunity

But the oil shock and its concomitant rise in fuel costs opened a window for Asian and Western European car makers, who by necessity, had been engineering and producing inexpensive fuel-efficient cars for their economically devastated post-war populations.

By the end of the 1970s, Japanese cars were making headway into the US market. But they were poorly designed and not really ready for the US market. Young people, however, flocked to buy them, because they were affordable. U.S. domestic car makers scoffed at “Japanese junk,” but the Japanese were quick learners and they not only rapidly improved their products, but they kept the prices low so that they were “buying” market share.

American government regulations began to weigh heavily on OEM costs. First, there were mandatory safety requirements (Unsafe at any Speed), then the fear of air pollution brought about the catalytic converter requirement, and then competition and spiraling fuel costs mandated engineering improvements that drove margins down.

The Koreans entered the American market with the same scheme as the Japanese had originally had, the purchase of market share.

On top of that desire, as the Japanese and Korean economies boomed and even automation could not contain home country manufacturing costs, both the Japanese and the Koreans began to build assembly and even parts plants in the USA (and Europe, Canada, and Mexico). Even the Germans joined the move to assemble vehicles in the USA and their supply bases soon followed.

The domestic American OEMs had shed their vertical integration in the 1990s to raise much-needed cash and claim that not controlling their supply chains was more efficient for just-in-time manufacturing.

China’s vertically integrated EV supply chain

Meanwhile, a rough beast was slouching towards America, not the Chinese OEM automotive assembly industry but the Chinese total supply chain control of OEM industries.

China’s car industry began with fossil-fueled vehicles, but that soon led to enhanced air pollution in its cities where steel factories already poisoned the air.

China watched as a young South African émigré to the USA, after making his first fortune in the online bill-paying industry, revived the battery-powered electric car, which emitted no chemical pollution. Elon Musk forced the global car-making industry to look at the lithium-ion battery as the right technology to finally underpin a mass-producible, electric-powered car.

China created a resource security and resource processing sufficiency-based industrial policy to support its entry into electric vehicle (“EV”) development and manufacturing from the start of its entry into the mass production of this technology. These steps, up until just now, have been ignored by the American (and European) OEM automotive industry, which abandoned vertical integration for outsourced just-in-time delivery at the same time that China, as a nation, moved in the opposite direction to support its fledgling automotive industry both for fossil-fueled and, critically, for battery-powered EVs.

Today, these policies, developed and implemented over the last 15 years have given China dominance or outright control in all of the critical minerals and their processing into end-user forms to support the world’s largest fossil fuel and EV car industry.

China’s domestic electric power grid has simultaneously managed to support the supply of electricity for charging its world’s largest and fastest-growing domestic fleet of “new energy” cars, trucks, and buses.

No other nation has undertaken such a massive and comprehensive support program for an OEM automotive industry transformation of power trains from fossil fuels to electricity.

Second Fuel Crisis – Critical Minerals and Battery Metals

The second Fuel Crisis has thus hit the non-Chinese car industry even harder than the Arab oil embargo.

Natural resources are limited in their production. They are not organic, self-replicating resources. The metals and metalloids critically necessary for the production of the key components of batteries, miniaturized electronic switches and controls (“chips”), and the most efficient electric motors are scarce and or secondary, i.e., they are byproducts of the production of other metals. Thus the main issue of producing them is cost because capital and capital allocation are not infinite resources either.

The controlled production, distribution, and storage of electricity necessary to “fuel” battery-powered electric vehicles was never considered by those building those systems. It is a conceit of those ignorant of electrical engineering to just assume that the systems can accommodate a massive influx of irregular demand without added costs, if at all. It is beyond belief that anyone assumes that the developing nations will prioritize electric vehicles over electric lights as they build their domestic production and distribution systems for electric power, so it is clear that electric vehicles will remain an agenda item of only the developed nations and then only for so long as electricity is affordable.

Today’s OEM automotive industry would never consider converting away from fossil fuels if it were not for governmental mandates, themselves based on a dubious climate change agenda, making the manufacturing and sale of fossil-fueled vehicles prohibitively expensive.

Paradoxically, it is only through the continued sale of the largest fossil-fueled vehicles, SUVs, pickup trucks, cargo vans, and freight trucks that the American OEM automotive industry can continue to operate, and that only so long as government subsidies and grants for electric vehicles and new manufacturing facilities continue.

Where is my EV ‘gas’ station

But, back to fuel production and distribution. The unelected bureaucrats and academics who execute the policies prescribed by the elected politicians are quiet with regard to the rebuilding and repowering of the electrical distribution grid that is necessary to accommodate the addition of tens of millions of electric vehicles needing charging at random times across the 5 time zones that encompass the US. This is because the US economy does not have the ability to fund such a massive undertaking and continue on its climate crisis agenda alongside its massive “entitlement” system.

Studies estimate that the electricity-transmitting capacity supplying power to households that own an EV must increase by 70% to 130% to accommodate EV charging. Upgrading the electrical grid to meet this demand could cost from $10-$25 billion nationwide by 2030. In addition, when you add the additional costs for electrical generation and storage, customer-side infrastructure, and EV chargers, the total investment could range from $75-$125 billion. While utilities are likely to see an increase in revenue from EV users, it may not be sufficient to cover all of the additional expenses across the electric power supply chain.

The true crisis of on-demand electric fuel is that it is an impossible goal if the current American standard of living and quality of life are to be maintained.

Contrary to what the priesthood of climate change preaches, there is no infinite resource of critical minerals and even the processing of what we can produce or obtain of them is no longer possible in the US. The disorganized US government and OEM industries do not have the capital, much less the expertise, to address a slow-motion, non-catastrophic collapse of the US cheap-energy-based economy. Printing money has only accelerated the decline of American manufacturing as ignorant pronouncements from Washington replace market-based economics.

Goodbye American OEMs, it is too little, too late

The random moves by OEM automotive to reform its century-old procurement system to recognize total supply chains over immediate suppliers have resulted in the chaotic allocation of money to high-risk (aka, unproven) and poorly selected place-holders in total supply chains for not only critical minerals but also for their refining and end-user fabrication vendors.

Only those OEMs that have chosen wisely will survive, and they will be only those that make a mix of vehicles using both types of fuel, fossil and electric. For the rest, their unsold inventory of expensive EVs will be auctioned off by their bankruptcy trustees.

Around 20% of the world’s annual production of motor vehicles is assembled in North America. Yet, as the chart below shows, the US only has 6% of the global battery-making capacity. Even more disconcerting is the fact that the US has only 4% of the world’s lithium production capacity.

This is not a formula for success or even for the continued existence of an industry.

Battery manufacturing capacity by country (2022)




Peter Moore of Sierra Nevada Gold Discusses Drilling for Gold and Copper in Nevada

In this InvestorIntel interview during PDAC 2023, Tracy Weslosky talks with Peter Moore, Executive Chairman of Sierra Nevada Gold Inc. (ASX: SNX), about the Company’s five projects in Nevada (1 copper-gold porphyry and 4 high-grade gold projects). Sierra Nevada Gold is a US-based company that was listed on the ASX in Australia in May 2022.

Peter mentions that the Company has already invested $15 million in developing the projects and assembling the land positions. Last year, they drilled 4 of the 5 projects, including the Warrior Project, with some “good results” and the drilling will continue this year.

To access the full InvestorIntel interview, click here.

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About Sierra Nevada Gold Inc.

Sierra Nevada Gold (SNX) is a listed ASX company actively engaged in the exploration and acquisition of precious and base metal projects in the highly prospective mineral trends in Nevada, USA since 2011. The Company is exploring five 100%-controlled projects in Nevada, comprising four gold and silver projects and a large copper/gold porphyry project, all representing significant discovery opportunities for the company.

To learn more about Sierra Nevada Gold Inc., click here.

Disclaimer: This interview, which was produced by InvestorIntel Corp., (IIC), does not contain, nor does it purport to contain, a summary of all the material information concerning the “Company” being interviewed. IIC offers no representations or warranties that any of the information contained in this interview is accurate or complete.

This presentation may contain “forward-looking statements” within the meaning of applicable Canadian securities legislation. Forward-looking statements are based on the opinions and assumptions of the management of the Company as of the date made. They are inherently susceptible to uncertainty and other factors that could cause actual events/results to differ materially from these forward-looking statements. Additional risks and uncertainties, including those that the Company does not know about now or that it currently deems immaterial, may also adversely affect the Company’s business or any investment therein.

Any projections given are principally intended for use as objectives and are not intended, and should not be taken, as assurances that the projected results will be obtained by the Company. The assumptions used may not prove to be accurate and a potential decline in the Company’s financial condition or results of operations may negatively impact the value of its securities. Prospective investors are urged to review the Company’s profile on Sedar.com and to carry out independent investigations in order to determine their interest in investing in the Company.

If you have any questions surrounding the content of this interview, please contact us at +1 416 792 8228 and/or email us direct at [email protected].




Can the Global Automotive Industry Source Enough Critical Minerals to Meet EV Production by 2030?

American President, Joe Biden, has decreed, and the U.S. Congress has mandated, that, by 2030, 50% of new domestic American OEM automotive production must be of electric vehicles (EVs). Further, the U.S. government now requires by law that, by 2028, for a new EV purchaser to receive a tax credit of up to $12,500, then 80% of the vehicle’s components must have been made in the United States from raw materials produced and processed in the United States.

American OEM automakers are losing money hand-over-fist on making and selling EVs. Ironically, it is their profits from internal combustion engine (ICE) vehicles that are keeping them afloat. Without subsidies, also known as “tax credits,” no one could continue to make and sell EVs. And, quite frankly, without ICEs, Tesla could not afford to be in the EV business. The supply chains for universal automotive components used both by ICEs and EVs could not exist without the scale and sales of the ICE industry.

Sourcing Critical Minerals for EV production

I think that the idealogues, both elected and unelected, in North America and Europe need to answer some questions. Today I am asking, “How does the global non-Chinese OEM automotive industry plan to source enough critical minerals and metals, annually, to meet government-mandated, not market-driven goals for the production of EVs by 2030?

In the following discussion, I’m going to limit myself to the critical minerals and materials needed for the production of EVs just in the United States. Keep in mind that American domestic OEM automotive production is just 10% of the global annual total production.

The domestic American OEM automotive assembly industry most of which is owned and operated by foreign-owned manufacturers is building today, in North America, at least nine new factories to construct lithium-ion batteries for EVs. In addition, a half dozen EV drive train factories and a dozen assembly plants will be built or converted to pure EV production by the end of this decade.

Calculating the amount of Critical Minerals needed

The figures below are averages used in a variety of lithium-ion types. The only constants are for lithium and graphite, which are calculated for a 100 kWh Tesla battery no matter what the cathode chemistry.

The figures for material usage for rare earth permanent magnets are for one drive motor. American cars typically use two.

For the battery:

Material/Metal Usage per BEV For 7,500,000 EVs
Lithium (no matter which chemistry) 6-8 kg (measured as metal) 45-60,000 metric tonnes
Nickel 40 kg 300,000 metric tonnes
Cobalt  12.5 kg 93,750 metric tonnes
Manganese 24.5 kg 183,750 metric tonnes
Copper 53 kg 397,500 metric tonnes
Graphite 66 kg 495,000 metric tonnes

For the drive motor and the 25 accessory micro-motors:

Neodymium / praseodymium  (75:25 ) 1.5 kg 56,250 metric tonnes
Dysprosium 0.05 kg 562 metric tonnes
Terbium 0.01 kg 112 metric tonnes
Gallium tbd

Note that the amounts above are annual needs for 50% of projected American domestic production using a production number baseline of 15,000,000 vehicles per year, which is more than 2022 production and sales but far less than the 21st-century average.

The material usage per vehicle comes from the most recent estimates of the International Energy Association (“IEA”).

Finally, note that the amount of lithium required, up to 60,000 tonnes, measured as metal, is equal to 360,000 tonnes, measured as lithium carbonate equivalent (LCE), which is more than half of the global production of LCE in 2022!

Assuming that 50% of global OEM automotive production in 2030 will be EVs, you need to multiply the above demand numbers each by a factor of between 5 and 10 just to assume that the total global production of vehicles remains the same in 2030 as today, about 100,000,000 vehicles per year.

The amount of lithium necessary for enough stationary storage to manage a world totally converted away from fossil fuels is estimated to be 3.5 times as much as is necessary for the conversion of the global automotive fleet, so you need to add that demand to the above totals. I do not know how much of the world’s energy production in 2030 will be from non-fossil fuels, but even if it is just 20% of the total the above demand numbers would double.

The question we need to ask…

The core questions are:

  1. Can the world’s economies divert enough of their total capital and natural resources to effect the above transformation(s)?
  2. Even, if so, are there sufficient resources of the critical minerals and processing capacity for transforming them into end user products to carry out even this percentage of the transformation in just 7 years?, and
  3. Would even the attempt to transform the global energy production economy from fossil-fuels to alternate energy destroy wealth creation and its wide distribution bringing about the decline of the Western standard of living and the destruction of any hope that the developing world has of achieving that standard?  

It’s time to decide if it’s all worth it.