General Discussion, page-125

Fin Review article, wonder if Goldmans considered this?

One-fifth of new cars will be powered by batteries by 2025

Global demand for battery-powered cars is racing ahead faster than expected, Boston Consulting Group said as it brought forward sales forecasts despite concerns over shortages of batteries and charging infrastructure.

The consulting group now forecasts that battery electric vehicles (BEVs) will account for one-fifth of global light vehicle sales in 2025, and 59 per cent in 2035, and that there will be more battery electric vehicles sold than any other type of light vehicle (including hybrids and petrol-fuelled cars) by 2028.

BCG had previously forecast that BEVs would have 11 per cent of the global market in 2025 and 45 per cent by 2035.

James Tilbury, a climate specialist at the consulting group, said European and US policies to cut carbon emissions from cars and incentives for consumers to switch to BEVs were helping drive demand, as well as manufacturers’ plans to halt production of petrol-fuelled vehicles.

This week, lawmakers in the European Parliament voted to back a proposed ban on the sale of new petrol and diesel vehicles from 2035. The ban still needs to be approved by members of the European Union.

However, BCG has warned that purchases of BEVs could be held back by shortages of metals used to make batteries, such as lithium and nickel, and insufficient charging infrastructure.

This is partially due to the global supply chain crunch, the war in Ukraine and rising energy costs, which have pushed up the prices of minerals - although lithium prices recently retreated after Goldman Sachs forecast there would be excess supply of the commodity in 2023.

Scott Nichols, a BCG principal specialising in supply chains, said battery makers had to compete with other industries such as aerospace and electronics for minerals as industries try to reduce carbon emissions. “Demand’s coming from lots of clean energy sources and beyond,” Mr Nichols said.

EV makers have not been immune from rising transport and materials costs, with Sweden-headquarter carmaker Polestar raising the starting price of its “Polestar 2” sedan to $63,900, up $4000, in April – just a month after it entered the Australian market.

While Australia has enough charging stations to support its relatively low numbers of BEVs, it will need to keep expanding charging infrastructure as more of the vehicles are sold, Mr Tilbury said.

The new Labor government has pledged to use the money that the Commonwealth allocates to roads around Australia to “encourage” the construction of more EV charging infrastructure.

It also plans to co-invest in EV charging infrastructure along with motorists’ associations such as the NRMA and build a national network of charging stations about 150 kilometres apart.

Global electric light vehicle sales were up 65 per cent in the first four months of 2022 compared with the same period a year earlier, according to Macquarie. The bank forecasts worldwide sales of all kinds of electric vehicles will rise 43 per cent to 9.5 million vehicles over the full year compared with a year earlier.

In Australia, sales are being hampered by long delivery delays. The there were just 925 BEVs sold in Australia in May, and 695 plug-in-hybrid vehicles, according to the Victorian Automotive Chamber of Commerce.

Ride-share group Uber said this week that it would halve service fees for the first 2500 drivers that carry passengers in BEVs until June 2025 to help speed up the shift away from petrol vehicles. Fee reductions will be capped at $3500 per year per driver.

Some banks are also trying to capitalise on the burgeoning BEV market, with Westpac last month announcing that it will offer cheaper loans to customers financing electric vehicle