Excuse the expletive near-miss but does anyone else feel like screaming today? More sleaze debates in Westminster, more NPHET ‘models’, more COP26 cop-outs and more Trump gang arrests would suggest the media at home and abroad is on endless repeat mode and George gLee is about to scare Santa away. However, I’m going to try and focus on some newer developments and keep on truckin’ as Eddie Hendricks once sang. In fact, I’m going to run with the trucking theme and highlight five data points which should blow your mind and prompt potential positive thoughts, even opportunities. Here we go.…
- Rivian, the US electric pick-up truck manufacturer, was mentioned in a previous article here as an interesting new listed company(IPO) in New York. Well, the $75 billion valuation of this electric vehicle(EV) play had interested this writer because the company had yet to generate a single dollar of revenue. Now, I’m fascinated; Rivian’s share price and valuation has doubled to $150 billion in a less than a week of trading and has surpassed the value of the largest auto company(by revenues) on the planet, VW. It’s not just Tesla capturing investors’ minds. The whole EV sector is on fire.
- Consultants McKinsey estimate that by 2030 there will be $4 trillion in annual vehicle sales and Goldman Sachs just upped their estimate of EV penetration of that market by 43% . Goldman now believe EVs will account for one in every 4 vehicles purchased in 2030. So if EV sales are going to rocket what about the raw materials needed to drive this revolution? Lithium is a critical component in lithium-ion batteries and UBS estimate demand for this raw material alone will increase by a factor of….. 10. Think that’s demanding? Try Nickel – demand is expected to increase 14-fold. And now try thinking about supply. Current supplies of graphite, nickel, cobalt and lithium might be half, or even a third, of what demand projections are telling us. Then factor in that the average time to develop/open a mine is about 7 years.
- Even if the raw materials are secured, the race to build EV battery gigafactories is truly on. Swiss-Swedish engineering giant, ABB, reckon current global battery capacity at 450 Gwh will need to increase to 2857 Gwh by 2030. That’s a 6–fold increase in battery production in less than 10 years with Europe alone requiring its gigafactory base to expand by a factor of 16x !
- As the auto industry grapples with supply chain issues in 2021, particularly in semi-conductors, one wonders about another politically significant raw material in EV battery production. Permanent magnets are the hidden enablers of much of today’s technology from robots to laptops to satellites. These magnets are made possible by chemistry and heavy elements known as “rare earths” which feature in 95% of all EV motors. By value and volume these rare earths do not sound significant at €6.5 billion and 5,000 tonnes(EVs) respectively. However, the EU currently imports 98% of its demand from China and EV usage is expected to rise from 5,000 tonnes to 70,000 tonnes by 2030. Whisper “Taiwan” carefully. The strategic value of controlling the rare earth supply chain is enormous so it is no surprise to see the US and EU scrambling for alternative sources.
- In a week which witnessed iconic firms like GE, Johnson & Johnson and Toshiba announcing corporate break-ups it is interesting to note Big Tech going in a different direction. Google is way off piste from search ads as it pursues opportunities in its self-driving car project, Waymo. Indeed, analysts believe Waymo could be worth $30 billion to Google which isn’t far off the value of Amazon’s 20% stake in Rivian. It is striking that Big Tech is showing strong interest in an old economy industrial sector like autos but then technology loves disruption and the internal combustion engine(ICE) is well overdue a revolution. It is staggering to think that ICE technology has really stayed much the same since its “modern” iteration was created in …. 1876. The shift in investor focus from ICE to EV is stark. Proud US giants of the global auto industry ,Ford and GM, delivered 11 million vehicles in 2020 and have a combined market value of just over $170 billion. This week two EV manufacturers, Rivian and Lucid Motors, achieved a combined value of $240 billion with total vehicle deliveries in 2021 heading for a grand total of……..1000 units.
Blows my truckin’ mind anyway.
