World running out of EV batteries by 2025? Not quite
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There’s much hullaballoo in the latest news cycle that the world will run out of electric batteries by 2025, with media outlets quoting a report from Bank of America Global Research.
Let’s be a little clear, what the bank actually says is that demand for EV batteries could outstrip supply as early as 2025.
Not quite as dramatic as some may have you believe, but it’s still noteworthy.
The bank’s research arm noted in its report that its updated battery supply-demand model suggests the global EV battery supply will likely hit a ‘sold-out’ situation between 2025-26.
Global battery shortages are expected to intensify further in the period between 2026 to 2030 due to a continued rise in EV penetration across all markets.
This also reflects a bullish outlook for the EV sector with the Bank of America lifting its estimated global penetration for all EVs – including plug-in hybrids – up to 23%, 40% and 67% respectively for 2025, 2030 and 2040 respectively.
Australia is unlikely to see such take-up anytime soon, given the level of hostility that the federal government (and some state governments) seem to show to EVs.
There are several takeaways from this forecast.
Firstly, tightening supplies are like to result in prices for EV batteries going up, which will in turn impact on the cost of EVs.
This could potentially impact on EV demand, which was the cause of the projected tightening battery supplies in the first place.
Secondly, strong demand will also drive more investment in battery factories as companies seek to secure a piece of the pie for themselves.
Indeed, the Bank of America Global Research has flagged this very point, noting that with global operating rates of EV batteries set to rise about 121% by 2030, another round of substantial capital expenditure cycles will likely kick in within the next two to three years.
And that last point is likely to be of the most interest in ASX resource companies.
After all, strong battery demand correlates directly to strong battery metals demand.
Macquarie has already forecast that the lithium market would move into perpetual supply deficit from this year while Credit Suisse said the lithium supply glut had ended.
Unsurprisingly, Australia’s lithium big 3 have all reported strong quarterly results and price forecasts.
Nickel also continues to perform strongly with prices closing out last week at about US$8.60 per pound, leading stockbroker Guy Le Page to say that US$20K per tonne is “looking likely in the near term”.
Time to pick up the shovels again.