Electric vehicle demand estimated to scale up 40x by 2030
According to International Energy Agency (IEA), the number of electric cars which includes battery-electric, plug-in hybrid electric and fuel cell electric passenger light-duty vehicles, increased by 57% in 2017. Total number of EVs worldwide rose to a record high of 3.1 million. China accounted for 40% of the global volumes.
Why is this important
IEA has forecasted that there will be 125 million EVs on the road by the year 2030, which could see a bull case of 220 million if climate change policies become more stringent. R&D, policy support, charging infrastructure investment and production improvements are resulting in lower battery costs and higher EV demand.
Battery cost is the major component of EV costs and this shift will increase the demand for materials like cobalt and lithium-ion batteries. IEA has estimated that Cobalt demand can increase 10 times to 101 kilotonnes(kt)/year and lithium demand can go up to 91kt/year by 2030.
Stocks to be impacted
Himadri Speciality Chemicals (CMP: Rs. 135, Market Capitalisation: Rs. 5,669 crores, FY2020 P/E:13.7) manufactures anode material for lithium-ion batteries and can see a jump in its revenue as the EV demand scales up.
Tata Motors Ltd. (CMP: Rs. 286.6, Market Capitalisation: Rs. 82,693 crores, FY2020 P/E: 6.9) has recently come out with an all battery operated car, I-Pace and plans to make all its model hybrids by the year 2020.