Saturday, 2 December 2017

Lithium Race: Electric Cars Already Cheaper To Own And Run Than Petrol Or DIEsel.

The Guardian reports great news today about much faster progress for electric cars than a lot of people are anticipating. Cheap lithium batteries change everything. Just a couple of years ago some of the best forecasters were talking about cost ownership parity between EVs and ICE cars to be reached by 2030. UBS made a lot of noise this year announcing that it will happen in 2018 and now this study reports that it is already happening in the UK, US and Japan.

All cars will be electric much faster than a lot of people are anticipating and it will drive the Energy Metals investment megatrend. This "sudden" shift will take industries totally unprepared and mass volume production of lithium batteries will be the major driving force for electric cars to become better and cheaper than comparable fuel-powered cars. Now we have only one Tesla Gigafactory ramping up production of lithium batteries on a truly mass volume scale, but more 25 Megafactories are coming online in the next few years and it will be the main game-changer for production of electric cars. Security of lithium supply to drive this Energy rEVolution is becoming the most critical issue in the exponentially growing market for electric cars.

We are in the exponential stage of the adoption rate for electric cars, but most of the investment banks who are following lithium batteries' supply chains are still estimating 5% - 10% of cars being sold in the next 5 years will be EVs. I have a different view: that all cars will be electric mush faster than a lot of people are anticipating. We are talking here about the disruption of $4 Trillion Transportation and $8 Trillion Energy industries. 

Energy storage for Solar and Wind power generation will be consuming, even more, lithium batteries than transportation in the future. Disruption of $12 Trillion industries is reliant on the lithium market which was last year around 200,000 T of Lithium Carbonate Equivalent ("LCE") in production terms. In monetary value, it was close only to $2.5 Billion dollars in sales even after the dramatic increase in lithium prices. 

This is why we are witnessing very strong prices this year, when spot prices in Shanghai are above $20,000 for both LCE and Lithium Hydroxide and long-term prices are reaching $15,000 per LCE T. This view of the ongoing fundamental shift and that The Switch is already happening, when millions of people will be buying electric cars, is finally making its way in the mainstream media and in the reports of government agencies and major financial institutions.

The views on the rate of adoption for electric cars can be different, but industry trends are already supporting this very bullish case for lithium. "Old Lithium Big Three": Albemarle, SQM and FMC "had to accept" the new aggressive players: Ganfeng Lithium and Tianqi from China. "The New Lithium Top Five" now looks more like: Albermarle, SQM, Ganfeng Lithium, Tianqi and FMC. But if we will be talking about lithium supply chain in terms of lithium chemical products used in lithium batteries, China is already in the lead and controls close to 75% of supply. For example, Tesla Gigafactory lithium supply chain goes all around the globe and back to China as well. And now there are 24 Lithium Megafactories announced to be built all around the world with the majority of them being located in China. Read more.

The Guardian:

Exclusive: Pure electric cars cost less over four years than petrol or diesel cars in the UK, US and Japan, researchers say, but China is set to lead the market

The Renault Zoe is one of the UK’s best selling electric car, coming behind Telsa’s model S, BMW’s i3 and, the most popular, Nissan Leaf. Photograph: Cyril Zingaro/EPA

Electric cars are already cheaper to own and run than petrol or diesel cars in the UK, US and Japan, new research shows.

The lower cost is a key factor driving the rapid rise in electric car sales now underway, say the researchers. At the moment the cost is partly because of government support, but electric cars are expected to become the cheapest option without subsidies in a few years.

The researchers analysed the total cost of ownership of cars over four years, including the purchase price and depreciation, fuel, insurance, taxation and maintenance. They were surprised to find that pure electric cars came out cheapest in all the markets they examined: UK, Japan, Texas and California. 

Pure electric cars have much lower fuel costs – electricity is cheaper than petrol or diesel – and maintenance costs, as the engines are simpler and help brake the car, saving on brake pads. In the UK, the annual cost was about 10% lower than for petrol or diesel cars in 2015, the latest year analysed. 

Hybrid cars which cannot be plugged in and attract lower subsidies, were usually a little more expensive than petrol or diesel cars. Plug-in hybrids were found to be significantly more expensive – buyers are effectively paying for two engines in one car, the researchers said. The exception in this case was Japan, where plug-in hybrids receive higher subsidies. 

“We were surprised and encouraged because, as we scale up production, [pure] electric vehicles are going to be becoming cheaper and we expect battery costs are going to fall,” said James Tate, who conducted the research published in the journal Applied Energy with Kate Palmer and colleagues at the University of Leeds, UK. “It is a really good news story.”

Pure electric cars receive a sales subsidy of about £5,000 in the UK and Japan and £6,500 in the US. “The subsidies are reasonably expensive at the moment but they are expected to tail off,” said Tate. He estimates that an electric car such as the Nissan Leaf will become as cheap to own and run as a petrol car without subsidy by 2025. Renault expects this to happen in the early 2020s.

The push to roll out electric cars, which produce less climate-warming carbon emissions, has been supercharged by concerns over air pollution, particularly from diesel cars. In the UK, where toxic air is at illegal levels in most urban areas, sales of diesel vehicles have plummeted by 30% in the last year while sales of electric cars have soared by 37%. 

At current rates, sales of electric cars could outstrip diesel cars as early as May 2019, according to analysis by Matt Finch, at the Energy and Climate Intelligence Unit in the UK: “This date is incredible, as clearly it is only 18 months away.” Tate said: “The challenge is whether the manufacturers have the capacity to generate these vehicles. Demand significantly outstrips supply.”

Viktor Irle of analysts said there are now good electric car options at the low cost end, like the Nissan Leaf, and high cost end, like the Tesla Model S, but not in the middle range, where family cars usually sit. “There are no good options there at the moment,” he said. “I guess the traditional car manufacturers are a bit afraid it will cannibalise sales of their conventional cars, which are bestsellers.”

Air pollution concerns are especially acute in China, which is now the biggest market for electric cars and growing rapidly, mainly driven by domestic manufacturers including BYD, Geely and Beijing Auto. “China is stealing the march on everybody and they will be the leaders of that market,” said Tate. “The European and US motor industry have been caught napping.”

However, Steve Gooding, director of the RAC Foundation, said the UK electric car market remained small at present: “There are 32m cars in the UK – only around 120,000 are ultra-clean [electric]. The petrol and diesel juggernaut will take some halting.”

He also warned that governments could in future start taxing electric vehicles to recoup the large sums lost from falling fuel duty. “And cost [of ownership] isn’t everything,” he said. “Practicality and usability are key. We need a public charging network that is extensive, reliable and offers recharging at the speeds car owners require.”

The government announced £200m in funding for charging infrastructure on 22 November, to be matched by industry. Transport minister Jesse Norman said: “The UK now has over 11,500 publicly accessible charge points, including over 900 rapid charge points. This is one of the largest rapid networks in Europe.”

Tate said one aspect which also needs addressing is social equity, as wealthier people who can afford the upfront cost of an electric vehicle and who have off-road parking for home charging have easier access to cheaper motoring.

UK’s top-selling pure electric cars

         Nissan Leaf - 22,250 sold
            The four-door Leaf starts at £21,500 – after the government’s £4,500 subsidy – and has a real-world range of about 100 miles
         BMW i3 - 8,800 sold
            The zippier i3 starts at £28,840, with a range of 125 miles, or over 200 miles with an additional range extender
         Tesla Model S - 6,283 sold
            This starts at £65,000, and does 0-60 mph in 4.2 seconds, with a real-world range of about 250 miles
         Renault Zoe - 6,227 sold
            The Zoe starts at £14,250, but there’s compulsory battery hire of £49 a month on top. The range is about 70 miles in cold weather, 100 in warm
         Nissan e-NV200 - 2,742 sold

            This van starts at just over £20,000, including subsidy and VAT, and the range is about 70 miles"

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