Visualizing The Massive Impact Of EVs On Commodities

What would happen if you flipped a switch, and suddenly every new car that came off assembly lines was electric?

It’s obviously a thought experiment, since right now EVs have close to just 1% market share worldwide. We’re still years away from EVs even hitting double-digit demand on a global basis, and the entire supply chain is built around the internal combustion engine, anyways.

At the same time, however, as Visual Capitalist"s Jeff Desjardins notes, the scenario is interesting to consider. One recent projection, for example, put EVs at a 16% penetration by 2030 and then 51% by 2040. This could be conservative depending on the changing regulatory environment for manufacturers – after all, big markets like China, France, and the U.K. have recently announced that they plan on banning gas-powered vehicles in the near future.

THE THOUGHT EXPERIMENT

We discovered this “100% EV world” thought experiment in a UBS report that everyone should read. As a part of their UBS Evidence Lab initiative, they tore down a Chevy Bolt to see exactly what is inside, and then had 39 of the bank’s analysts weigh in on the results.

After breaking down the metals and other materials used in the vehicle, they noticed a considerable amount of variance from what gets used in a standard gas-powered car. It wasn’t just the battery pack that made a difference – it was also the body and the permanent-magnet synchronous motor that had big implications.

As a part of their analysis, they extrapolated the data for a potential scenario where 100% of the world’s auto demand came from Chevy Bolts, instead of the current auto mix.

THE IMPLICATIONS

If global demand suddenly flipped in this fashion, here’s what would happen:

Some caveats we think are worth noting:

The Bolt is not a Tesla

The Bolt uses an NMC cathode formulation (nickel, manganese, and cobalt in a 1:1:1 ratio), versus Tesla vehicles which use NCA cathodes (nickel, cobalt, and aluminum, in an estimated 16:3:1 ratio). Further, the Bolt uses an permanent-magnet synchronous motor, which is different from Tesla’s AC induction motor – the key difference there being rare earth usage.

Big Markets, small markets:

Lithium, cobalt, and graphite have tiny markets, and they will explode in size with any notable increase in EV demand. The nickel market, which is more than $20 billion per year, will also more than double in this scenario. It’s also worth noting that the Bolt uses low amounts of nickel in comparison to Tesla cathodes, which are 80% nickel.

Meanwhile, the 100% EV scenario barely impacts the steel market, which is monstrous to begin with. The same can be said for silicon, even though the Bolt uses 6-10x more semiconductors than a regular car. The market for PGMs like platinum and palladium, however, gets decimated in this hypothetical scenario – that’s because their use as catalysts in combustion engines are a primary source of demand.

Chevy Forced To Extend Shutdown Of Bolt Plant After Realizing That Literally No One Wants A Bolt

General Motors launched it"s much-hyped, all electric Chevy Bolt at the end of 2016.  The Bolt was expected to make a splash as it was the first electric car in the U.S. market to offer 200 miles of driving range at an affordable price starting around $35,000.  The only problem is that pretty much no one seems to want one.

Unfortunately, that lack of demand is about to earn a bunch of UAW workers at GM"s Orion, Michigan plant an extended summer vacation.

As AOL Finance points out today, GM has managed to sell just over 7,500 Chevy Bolts through the first six months of 2017.  Moreover, since dealers are sitting on about 111 days worth of inventory, we"re going to go out on a limb and say the Bolt launch slightly underperformed expectations.  All of which has resulted in GM"s decision to extend the shutdown currently in effect at it"s Orion plant for just a little while longer.

General Motors Co has extended a shutdown at the Michigan factory that builds the new Chevrolet Bolt electric car as part of a broader effort to get control of bulging inventories of unsold vehicles in the United States.

"Shutdown periods vary by plant based on launch timing of new or refreshed models across the portfolio and our ongoing efforts to align production with market demand," GM said in a statement.

But it"s not just the Chevy Bolt that GM is having a hard time selling.  Overall, the company is battling a massive inventory glut, some 126 days of supplies, in passenger cars.  As such, the company has extended summer vacation shutdowns at three other North American assembly plants. The assembly plant at Lordstown, Ohio, that makes the Chevrolet Cruze and a plant near Kansas City, Missouri, that produces the Malibu sedan both have three additional weeks of downtime. An assembly plant in Oshawa, Ontario, will be idled for two extra weeks to reduce inventories of the Chevrolet Impala large sedan.

Of course, this shouldn"t be much of a surprise for our readers as we recently pointed out that GM"s "channel stuffing" hit a new all time high for the restructured company in June 2017, with the number of GM vehicles parked at dealer lots and patiently waiting for a buyer rising to the highest since the summer before recession officially began, when GM was still pre-bankruptcy GM, with far greater (if ultimately superfluous and in need of restructuring) production.

All of which kind of makes you wonder just how well that other, highly-anticipated, mass-produced, affordable, all-electric vehicle will perform when/if it officially starts to ship later this year.

First Production Model 3 pic.twitter.com/TCa2NSUNI3

— Elon Musk (@elonmusk) July 9, 2017