Hybrid Electric vehicles utilize a gasoline engine and electric motor which work simultaneously to increase fuel efficiency. The gasoline engine also charges the battery that powers the electric motor.
Plug-in Hybrid Electric vehicles (PHEV) operate primarily on the electric motor, using the gasoline engine purely as a back-up once the battery has run out of power. In order to recharge the battery, the PHEV must be plugged in.
A Battery Electric vehicle (BEV) runs completely on a battery powered electric motor and requires charging.
Automobile Sales Trends
Total auto sales in the United States have been between 14 million and 18 million per year since 2012 and have decreased each year for the past 3 years. Sales of PHEVs and BEVs, however have shown exponential growth since first being introduced in 2010
Similar trends have been seen in Europe...
And in China as well...
Total global sales of BEVs and PHEVs reached over 3.2 million in 2020 representing over 5% of all auto sales worldwide.
Conservatively, an equal amount of PHEV (132 lbs.) and BEV (183 lbs.) sales would equate to an additional 345 million pounds of copper needed over traditional combustion engine vehicles (51 lbs.), for vehicles sold in 2020 alone. BloombergNEF is forecasting global sales of EVs to eclipse 54 million by 2040, representing more than 50% of total auto sales.
Charging Stations
Additional EV demand for copper lies with the source of their power, the charging station. While the charger itself does not have much copper in it, the wires used to connect the charger to the electrical panel as well as the charging cable itself are the main sources of copper. Wood Mackenzie estimates by 2030, there will be over 20 million EV charging points globally, consuming 250% more copper than in 2019.
Copper Supply
According to the U.S. Geological Survey (USGS), 2019, global copper reserves are estimated at 830 million metric tons, with annual demand being 28 million metric tons. In addition, discovered and undiscovered deposits based on geological surveys, including reserves, total over 5 billion metric tons (USGS, 2014, 2017). Take into account that copper is 100% recyclable and it is safe to say that there is currently enough copper to meet EV demand.
Hedging Electric Vehicles
As electrification of the auto industry accelerates, demand for the metals that enable the shift from traditional combustion engine vehicles to electric vehicles increases. Whether it’s copper for wiring and cables, steel and aluminum for engine blocks or chassis, or lithium and cobalt for battery components, futures markets exist to hedge exposure to market fluctuations.
That’s important because if the forecasts are correct, demand for these metals will increase in the coming years. Copper especially could see changing demand cycles as housing and infrastructure booms and busts take shape at the same time the world demands
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