The demand for electric cars in China remains robust. In February 2022, passenger vehicle sales in China grew 4.7% year-over-year to1.3 million. The boost in sales came on the back of new-energy vehicles.

In February, deliveries of electric cars jumped 180% to 272,000 units. BYD Co. Ltd, an electric carmaker backed by legendary investor Warren Buffett, shipped 87,473 hybrid and pure-electric vehicles (EVs) in February. Tesla Inc delivered 56,515 cars from its Shanghai factory—23,200 for the domestic market and 33,315 for export.¹

Starbucks locations could become another place to charge your electric vehicle. Starbucks Corporation, in a pilot program this year, is partnering with Volvo and Chargepoint Holdings Inc to install electric charging stations in its parking lots along a 1,350-mile route from Denver to Seattle. The EV charging stations will be available every 100 miles, as this route is considered a “charging desert.” There could be as many as 26 million electric cars on U.S. roads by 2030.²

Nickel, a key metal used in the lithium-ion battery cells of most EVs, has surged in price recently as Russia faces sanctions over its invasion of Ukraine. Russia is a key supplier of the metal. Not too long ago, the London Metal Exchange suspended nickel trading as its price more than doubled, surging past $100,000 a ton.

According to Morgan Stanley’s auto analyst, Adam Jonas, soaring nickel prices could result in a cost increase of $1,000 for the average EV in the U.S.³

Tesla Inc, increasing global EV reach

Leading U.S. electric car manufacturer Tesla Inc, opened a Gigafactory in Berlin, Germany. Years in the making and at an important location for Tesla to increase its global reach, this factory aims to produce 500,000 vehicles annually.

According to a report by Auto Motor Und Sport, Tesla is targeting an output of 2,000 EVs in the first few weeks of production at its Berlin factory. According to Troy Teslike, an independent Tesla researcher, the company will be making 1,000 vehicles per week by the sixth week of production and could be making 5,000 vehicles per week by the end of 2022.⁴

Tesla is also raising the prices of the vehicles it produces, as costs are increasing. The cheapest “Model 3” in the U.S. now costs $46,990. According to Dan Levy, an analyst at Credit Suisse, Tesla has raised its prices by three to five percent in the U.S. and China.⁵

Volkswagen AG, securing nickel and cobalt for China EVs 

Europe’s biggest automaker Volkswagen AG, is forming a joint venture with Huayou Cobalt Co., Ltd. and Tsingshan Group to secure nickel and cobalt for its EVs in China—and cut costs as raw material prices soar.

Volkswagen, Huayou Cobalt, and Tsingshan have signed a memorandum of understanding (MOU) for a joint venture in Indonesia to produce nickel and cobalt. Indonesia has 10% of the world’s laterite nickel ore reserves.

According to Volkswagen China, this joint venture will be able to supply the company with the raw materials for 160 gigawatt hours worth of EV batteries.⁶

Furthermore, as the demand for electric cars increases globally, Volkswagen says it’s sold out of some of its EV models for this year. The CFO of the company, Arno Antlitz, said the demand for electric cars is expected to be similar to the demand for combustion-engine vehicles much sooner than expected. The company now sees better scalability, better margins, and higher customer demand.⁷

Investing in Electric Cars with CARS ETF

If you’re looking to invest in an electric vehicle ETF, consider Canada’s first automobile innovation ETF, Evolve Automobile Innovation Index Fund (TSX Ticker: CARS). CARS ETF invests in global companies that are directly or indirectly involved in developing electric drivetrains, autonomous driving or network connected services for automobiles. Shift your investments into gear with CARS in your portfolio. For more information on this fund, please click here: https://evolveetfs.com/cars/

For the latest information on auto innovation investing and industry updates on related investment products, sign up for our weekly newsletter.

Sources:

1. “China’s February Auto Sales Get Boost From New-Energy Vehicles,” BNN Bloomberg, March 8, 2022; https://www.bnnbloomberg.ca/china-s-february-auto-sales-get-boost-from-new-energy-vehicles-1.1734151.
2. Peters, A., “Starbucks Wants to Become the Gas Station of the Future for EVs,” Fast Company & Inc, March 15, 2022; https://www.fastcompany.com/90730929/starbucks-wants-to-become-the-gas-station-of-the-future-for-evs?partner=rss&utm_source=rss&utm_medium=feed&utm_campaign=rss+fastcompany&utm_content=rss.
3. Rosevear, J., “Nickel’s Price Surge Could Threaten Automakers’ Ambitious Electric-Vehicle Plans,” CNBC, March 8, 2022; https://www.cnbc.com/2022/03/08/nickel-price-surge-could-threaten-automakers-ev-plans.html.
4. Shead, S., “Elon Musk Breaks Out the Dance Moves as He Opens New Tesla Factory in Germany,” CNBC, March 22, 2022; https://www.cnbc.com/2022/03/22/gigafactory-berlin-tesla-ceo-elon-musk-opens-electric-vehicle-plant.html.
5. Trudell, C., “Tesla Raises Prices Across Lineup; Cheapest Model Is Now $46,990,” BNN Bloomberg, March 15, 2022; https://www.bnnbloomberg.ca/tesla-raises-prices-across-lineup-cheapest-model-is-now-46-990-1.1737711.
6. “VW forms Asian JVs to Secure Battery Materials Supply,” Automotive News Europe, March 21, 2022; https://europe.autonews.com/automakers/vw-forms-asian-jvs-secure-battery-materials-supply#:~:text=VW%20will%20form%20JVs%20with,supplies%20for%20EVs%20in%20China.&text=SHANGHAI%20%2D%2D%20Volkswagen%20Group%20will,of%20surging%20raw%20material%20prices.
7. Raymunt, M., “VW Is Already Sold Out of Some Electric Models for the Year,” BNN Bloomberg, March 15, 2022; https://www.bnnbloomberg.ca/vw-is-already-sold-out-of-some-electric-models-for-the-year-1.1737847.

 

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