China: Electric Vehicle Trends a Double Victory for Metals Powerhouse

(12 February 2020) Tesla by far and away leads in sales of electric vehicles globally and now not only has company CEO Elon Musk thrown down for a 40x increase in annual production but in doing so could escalate natural resource and geopolitical pressures. Electric vehicles (EVs) experienced record sales growth in the second half of 2020, and Musk is perfectly poised to use that momentum to scale towards his production goal of 20 million EVs per year by 2030. Aggressive production plans from Tesla and other EV manufacturers coupled with unprecedented growth of sales raises concerns, however, about the sufficiency of known metals reserves and current metals supplies.

• Estimates from MINING.COM show that if Tesla reaches its target annual production rate, Tesla alone will consume more than 30% of current global nickel production, almost 60% of global cobalt production, over 90% of global graphite production, and 165% of global lithium production. The obvious exceptions to this outcome include changes in metals production and/or required EV manufacturing inputs.
• Another critical unknown is the absolute reserve volume of key metals as opposed to known reserves and whether EV demand could outstrip reserves. Extrapolation of MINING.COM estimates to accommodate a fortyfold increase of global EV production from Tesla alone shows that the world would run out of nickel and cobalt. EV production requirements would require tripling known reserves of nickel and more than doubling known reserves of cobalt.

Any EV outlook needs to also account for the geopolitics of business, particularly in light of the trade tensions between the US and China in recent years. China is not only the largest EV market but also the only country that appears in every top 10 list of countries with the largest reserves and production of metals currently required for EV manufacturing. This fact implies that China's natural resource base and production capacities make it the most sustainable EV manufacturer to met Musk's production aims.