Europe’s car industry says it is facing an unprecedented crisis as the coronavirus emergency halts production and shuts off retail outlets. Crude oil prices have slumped below $30/bl for the first time in four years. So where does this all leave the electric vehicle (EV) revolution, which only three months ago looked poised for its big breakthrough in 2020?
Setting aside the automotive industry’s deepening crisis and its potential impact on EV development, plunging crude prices alone would once have been enough to sideline the EV project. Even before the recent crude price retreat, drivers across middle America were citing cheap fuel as a reason to stick with the internal combustion engine, delegates to the Argus Metals Week event in London last month heard.
Before this month’s price collapse, crude last slipped below $30/bl in early 2016 as OPEC tussled with shale producers for market share. But a lot has changed since then. The weight of pressure on governments and industry to achieve net zero carbon has increased exponentially. For many investors, action on carbon has gone from nice-to-have to deal breaker. More importantly, carbon has become seriously unacceptable to growing numbers of mainstream consumers. Before coronavirus, climate action was centre stage.
China, emerging from its own coronavirus crisis, last week signalled its new energy vehicle ambitions remain intact, with top planning officials floating the idea of subsidies at regional levels to speed up growth.
The growth of EVs in Europe and in the US — still in its infancy but gaining momentum until coronavirus struck — will obviously slow this year and possibly beyond as the whole vehicle market contracts. And governments that had started cranking up subsidies and tax breaks to support the uptake of EVs now have much bigger economic priorities on their agenda. On the ground, recently emerging supply chains for the manufacture of batteries in Europe will face temporary setbacks as the commodity markets for key metals such as lithium, nickel and cobalt are rattled by the coronavirus crisis.
But the long-term commitment to going electric will not be reversed by the current turmoil.
Argus Metals International provides a suit of price assessments for key battery materials including lithium hydroxide and carbonate, nickel sulphate, cobalt hydroxide, graphite and manganese sulphate. For further information check out argusmedia.com/argusmetals.