World may not be as ready for electric vehicles as predicted

6 days ago 32

NEW YORK (REUTERS) - The debate over how soon a significant share of individual car and truck buyers in the world's major car markets want to switch to an electric vehicle (EV) is supposed to be over.

But is it?

Let us start with Wall Street. Investors have gone cold on most EV company shares, slashing US$400 billion (S$557 billion) from the market caps of 10 leading EV start-ups in the past six months.

Of the combined market caps of those 10, Tesla makes up US$935 billion, or more than 90 per cent of the total. Rivian, with a market value of US$28.5 billion, accounts for more than 40 per cent of the remainder.

Rivian shares are down 69 per cent for the year to date, which makes General Motors' flat performance for the year look stellar. Remember when Detroit chief executives wanted to be valued like tech companies? Not so much anymore.

Investors are reacting to a wide range of factors, including the end of free money from the United States Federal Reserve. But there are a lot of questions about how ready the world and the battery vehicle industry are to have half or more new vehicles sold be electric by 2030.

A looming issue for the EV industry is whether there will be enough battery manufacturing capacity to supply all the vehicles manufacturers intend to build by the end of the decade.

Benchmark Mineral Intelligence, a consultancy which tracks global battery capacity and raw materials supplies in detail, sees a nearly 9 per cent shortfall in battery production versus EV demand by 2030.

The good news for EV manufacturers is that between now and 2025, Benchmark forecasts EV battery-makers will have more than enough capacity to supply projected EV production. The next five years are less certain.

Benchmark senior analyst Aran Waid cautions that it can take two to five years for a new battery plant to produce at 80 to 85 per cent capacity, and mature plants in China can still run at as low as 65 per cent capacity.

This is why car industry executives are scrambling to lock in battery-supply deals, and why governments - including the United States Joe Biden administration - are prepared to subsidise batte...

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