Bloomberg New Energy Finance has just released its latest EV report.
When it comes to data analysis in the EV market, no one does it better than Bloomberg. Over the years, its analysis has been far more accurate than the EIA and IEA, and quite frankly, has served me well as an investor.
So clearly, when I got the new report in my email, I had to share with you the highlights.
Check it out …
- EV sales continue to surge in the next few years, rising from 10.5 million in 2022 to almost 27 million in 2026. The EV share of global new passenger vehicle sales jumps from 14% in 2022 to 30% in 2026.
- Shares in some markets are much higher, with EVs reaching 52% of sales in China and 42% in Europe. Some European car markets move even faster, with the Nordics at 89%and Germany at 59%.
- In the US, a major push from the Inflation Reduction Act means EVs make up nearly 28% of passenger vehicle sales by 2026, up from 7.6% in 2022.
- Sales of internal combustion vehicles peaked in 2017 and are now in long-term decline. By 2026, sales of combustion vehicles are 39% lower than their peak in 2017, and the combustion vehicle fleet peaks in 2025.
- Light commercial EV sales are set to rise quickly due to attractive economics, more models available, growing fleet commitments and city policies, reaching almost 70% of global sales by 2040, led by China.
- The economics of electric heavy trucks improve rapidly throughout the 2020s and become as cheap as diesel equivalents even for long-haul applications.
- Electric vehicles of all types are already displacing 1.5 million barrels/day of oil demand. This rises dramatically in the years ahead, leading to a peak in overall road fuel demand in 2027.
- Demand in the US and Europe has already peaked, while demand in China is set to peak in 2024. Global oil demand from two-wheelers, three-wheelers and buses has also already peaked and demand from passenger cars is set to peak in 2025. Commercial vehicles take longer to shift as heavy trucks continue to rely on diesel to move booming freight demand.
- Several important next-generation battery technologies are entering the commercialization phase. These will drive further performance and cost improvements. Improvements in battery energy density to date have been driven by advances in cathode materials, such as the move towards chemistries with higher nickel content.
- Next-generation technologies including silicon anodes, solid-state batteries and sodium-ion batteries will bring further improvements in performance and cost. They will also shift raw material supply chains. The next generation anode technologies in our basecase displace 46% of graphite in 2035 compared to an all-graphite scenario. Similarly, in our base case sodium-ion cells displace 7% of lithium demand in 2035, compared to a no sodium-ion scenario. However, in the case of solid-state batteries, BNEF estimates that 45% to 130% more lithium would be needed on a battery cell level if the solid-state electrolyte were to substitute both the liquid electrolyte and separator. Solid electrolytes contain more lithium due to slower diffusion of lithium ions through the solid electrolyte than a liquidone.
- The shift to electrification creates a very large economic opportunity. The cumulative value of EV sales across all segments hits $8.8 trillion dollars by 2030 and $57 trillion by 2050.
- EVs and batteries are now a central part of many countries’ industrial policy and competition to attract investment is likely to increase in the coming years.
- Annual lithium-battery demand continues to grow rapidly, approaching 5.7TWh annually by 2035 Meeting this demand requires large, but achievable increases in materials, components and cell production. There is over 7.4TWh of nameplate cell manufacturing capacity planned by 2025. This is more than projected demand in the same year, but actual excess supply will be lower due to varying utilization rates, commissioning delays and abandonments.
- Increasingly, governments and automakers are seeking to localize their respective supply chains through a number of policies ranging from direct subsidies to battery ‘passports’. Sustained investment will be required in the second half of the decade to keep up with demand.
That last one is of particular interest to us, as we do see a lot of opportunity here to profit from the continued rise in demand for certain critical components of EV batteries. These include, but are not limited to …
- Albemarle (NYSE: ALB) – Lithium
- Norsk Hydro (OTCBB: NHYDY) – battery recycling and aluminum used in EV manufacturing
- Lundin Mining (OTCBB: LUNMF) – copper
These three in particular are undervalued at current levels, too.