What progress with the electric vehicle revolution?
One in ten of all new cars sold in the UK during August was an electric vehicle, according to figures released by the Society of Motor Manufacturers and cited by broker SP Angel.
That’s higher than the usual running estimate of somewhere over 5%, but comes as overall new car sales dropped, while sales of battery-powered vehicles rose from 3,147 in August 2019 to 5,589 this year.
It’s a trend that’s been mirrored across the Atlantic too. Electric vehicle sales, notably from Tesla (NASDAQ:TSLA), have held up well in comparison to sales of cars powered by hydrocarbons.
At the same time though, there’s still a deep-seated reluctance amongst many in the motoring community to convert to electric cars.
The most commonly cited reasons not to buy electric, according to a UK-based survey released by Ford Motors today, are “range anxiety”, suitability of charging infrastructure, and the overall cost of charging.
And on that last point, in particular, it seems consumers have a point. Research conducted by the RAC Foundation earlier this year showed that overnight charging at home can typically be done for as little as 8p per kWh. However, the price can leap to as much as 69p per kWh at a public rapid charge point. This means that to a greater degree than with petrol and diesel, how you get your fuel is crucial to the economics of travel.
The RAC calculated that fuel costs for a 100 mile journey in a 2018 Nissan Leaf could be anywhere between £2.67 and £23.00.
The same journey in a 1.5 litre petrol-engine Ford Focus would cost around £12 in fuel, while a similar Ford Focus with a diesel engine might do it using around £10 of fuel.
So do you save, or don’t you?
According to research by What Car? a driver is likely to pay £45.89 to charge an Audi E-tron from 10% to 80% at an Ionity ultra-rapid charger.
However, the same charge on a domestic charger at an average night-time energy tariff of 7p per kWh and would cost just £4.66.
These issues feed back into the second of the concerns most cited by consumers – charging infrastructure. Many drivers with on-street parking are unlikely to be able to charge their cars overnight on a regular basis, and so the incentive to go electric will be greatly reduced.
On the other hand, as far as range is concerned, that’s increasing by the year. Some Tesla vehicles now have a range of over 400 miles, which is enough to drive all the way from London to Edinburgh, admittedly without any margin for error. But it remains a key area of technological development for the industry, and a major focus of Tesla.
That in turn, leads us to the batteries that power these cars. They are being refined all the time, but what we know at the moment is that they are likely to continue to contain sizeable amounts of nickel and lithium, with some variants more heavy on the cobalt than others.
Is there a way for investors to capitalise on this opportunity?
Yes there is. Companies like Savannah Resources (LON:SAV), which has a sizeable lithium deposit in Portugal, and European Metals Holdings (LON:EMH), which has a stake in the Cinovec lithium project in the Czech Republic, look likely to benefit from the anticipated demand for these metals in the medium term, and because neither are producing yet, the upside ought to be greater.
Both these companies are trading at considerably lower levels than the highs they hit in the latter part of the last decade, meaning that the current price could represent an attractive entry level. Another company which could benefit from the likely surge in nickel demand is Horizonte Minerals (LON:HZM), which has a huge nickel project in Brazil. Its shares have recently hit a five year high after financing plans moved one step closer to completion. And it’s also likely to meet the demand for ethical production which Elon Musk called for vocally a few months back.