By on March 1, 2017

2017 Chevrolet Bolt EV

Automakers have promised us a near future filled with all the electric and plug-in hybrid vehicles we could ever want and, of course, time will tell whether that dream sinks or swims.

Key to keeping the electric momentum going is a combination of growing demand, which automakers are banking on in the future, and steadily declining production costs. A company getting into the EV game might be willing to lose money on a niche vehicle, but not an entire fleet.

Still, the promises are out there, and the models are starting to roll out. The green tide, whether it ultimately makes electricity the dominant source of automotive propulsion or not, is spurring a different kind of green wave — but not for automakers. This wave is made of cold, hard cash, and it’s soaking careful investors.

The money is being made thanks to a chemical element that’s also a color: cobalt. A crucial ingredient in the construction of lithium-ion batteries, the material can be traded like any other commodity. As for its value, well, you’ll wish your Christmas stocking was crammed with it.

Yesterday, the London Metal Exchange listed the cash price of cobalt at $49,750 per ton. At the beginning of December, the price hovered around $30,000 per ton, which is more or less the element’s average price going back to 2012. The dramatic uptick in price isn’t so much due to demand, but anticipated demand. Naturally, savvy investors are buying up as much as possible and sitting on it, waiting for its value to peak.

Some overseas investment companies have reportedly stockpiled large quantities.

Jeff Schuster, senior vice president of forecasting with LMC Automotive, told Automotive News that hype over self-driving vehicles — which will be electric when they arrive — is helping spur the cobalt rush. The amount of cobalt found in a battery pack isn’t tiny, and needs to be mined in huge quantities to fulfill anticipated demand for EVs.

Roughly 40 percent of the world’s mined cobalt ends up in rechargeable batteries, a number that’s expected to rise to 55 percent by 2019.

“That all means more demand for cobalt and the need to find additional sources of this rare chemical element,” Schuster said, who cautioned that the get-rich-quick scheme will probably has a short lifespan.

“Demand will most certainly increase for cobalt, which is good for those that have invested in it,” he said. “However, increased demand will lead to additional volume or new ways to extract and produce it, which could lower the price.”

[Image: General Motors]

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36 Comments on “People are Getting Rich from Electric Vehicles, But Not in the Way You’d Think...”


  • avatar
    bluegoose

    I wonder if certain investors are driving the price of Cobalt up to Kill the Electric Car!!

    By the way…this is an interesting read on what it is like to mine Cobalt.
    https://www.washingtonpost.com/graphics/business/batteries/congo-cobalt-mining-for-lithium-ion-battery/

  • avatar
    Kyree S. Williams

    So, I can sell you a 2007 Cobalt for $42,000? Well, hot diggity dog!

  • avatar
    cwallace

    Homer, I told you to sell your pumpkin futures before Halloween, BEFORE!

  • avatar
    Jerome10

    I bet that cobalt mining is really earth friendly. But at least your car doesn’t use oil!

    • 0 avatar
      Demon_Something

      Most carbon emissions come from the operation of a car, not production. Cobalt mining is not great for the Earth by a long shot, but point source pollution from mines is worth cutting the emissions from oil, IMO.

      • 0 avatar
        bluegoose

        Are people who care about the environment also going to care that the batteries in their electric car are made with the help of child labor?

      • 0 avatar
        stuki

        Says someone living far from the “point source pollution” in question….

        Ted Kennedy would undoubtedly have agreed, as long as there was no “point source pollution” of even his sightlines, from generating carbon free electricity to stuff into the batteries powering his these days undoubtedly electric car.

    • 0 avatar
      Brett Woods

      “Thanks for trolling with us today.” Yeah!
      ***
      Kids need something to do. Not everyone’s cut out for school. Cobalt mining not good enough for ya?

  • avatar
    SCE to AUX

    I’m glad someone is making money on EV production.

  • avatar
    dash riprock

    The need is for cobalt sulphates as well as nickel sulphates. There is a very real possibility of supply constraints. In contrast to oil where drills can be set up in the Bakken or permian and soon after there is black gold a flowing, a mine can take 10 years from initial discovery to commercial production. A company like Tesla is in for a fight as battery cell manufacturers scramble to guarantee access to the raw materials

    Less sexy is the requirement for a boring metal such as copper. It will also see a big increase in demand if EV’s gain a multiple of their very low market share. Copper also has supply issues in the near horizon as new giant mines to replace the aging mega mines are hard to find.

    • 0 avatar
      George B

      dash riprock, the Permian Basin has an amazing collection of hard working people and companies that keep oil flowing from an old oil field. Drove through that area on the day after Thanksgiving, at night, in the rain, and there were lots of oil field service trucks on the road, drilling rigs lit up, etc. They get oil wells up and running fast because experienced, hard working men are working 24/7 to make it happen.

      • 0 avatar
        dash riprock

        Hi George,

        Was not meant as a slight against oil workers in the Permian(have investments there)or anywhere else. My point is that the time lag between identifying a resource and extracting it is much shorter for oil than for a mineral 1200 meters below ground. This time lag is part of the reason why a mineral in supply deficit can see a rapid escalation in price.

  • avatar
    28-Cars-Later

    ” The dramatic uptick in price isn’t so much due to demand, but anticipated demand. Naturally, savvy investors are buying up as much as possible and sitting on it, waiting for its value to peak.”

    Barring unforeseen geopolitical events affecting oil, I am going to love watching the muppets get pummeled here when the “EV demand” doesn’t meet projections over the next 24-36 months.

    • 0 avatar
      Big Al from Oz

      Demand for these minerals have increased markedly.

      With the anticipated inrease in batteries to augment solar power collection I do believe demand will continue to rise.

      This doesn’t include future industrial applications.

      It is far better to maximise existing tech ie, ICE for automotive use.

  • avatar
    brandloyalty

    Could those commenting here disclose their investment strategies that align with the views they express? Put their money where their mouths are? After all, if they are so sure their opinions are correct, and the issues are so clear and there is so much to be gained or lost by being ahead of everyone else, they could make lots of money.

    • 0 avatar
      dash riprock

      OK. I think there will be an increase in EV’s in the future. Some through consumer demand, some by the way of Government regulations. Have some real doubts as to the affect of this on auto manufacturers profit margins, think it leans to the negative.

      Battery cell production will follow the growth of EV’s. Think overtime there is the risk of batteries becoming closer to commodities. Therefore I am hesitant on these companies as margins can be squeezed as factories become more and more efficient in pumping out cells.

      The materials used to produce the batteries is what interests me. Lithium and graphite are very very plentiful with low barriers to entry, especially lithium. Copper is seemingly plentiful but it is getting harder to find and harder to find with good grades. Cobalt and Nickel sulphates have a real big supply issue going forward. Deposits are hard to find, and permits and financing can take a long time, and that is before they start to dig that hole in the ground.

      So, I believe in EV growth, and I have a sizeable, very sizeable set of investments in Copper mines, PPG Mines, and a Cobalt mine. They allow me to play the EV growth without trying to pick a winner among the auto or battery manufacturers

      • 0 avatar
        Big Al from Oz

        Your investments should be sound and productive.

        But, EVs are not future with anything like current battery technology.

        • 0 avatar
          dash riprock

          It is not solely dependent on EV’s being the best auto solution out there. Governments are acting to encourage change from ICE to EV’s. Gov’ts can enforce change and we are seeing the seeds of that in Europe, North America and China.

          I like EV’s but the economics do not work out for us as a family vs our present ICE/hybrid vehicles.

    • 0 avatar
      mcs

      I own mineral rights to parts of the Permian Basin, but some of that income goes to invest in battery technology. So, I guess I’m sort of neutral when it comes to investments.

      I agree with Big Al that we need new battery tech for EVs, mobile devices, and most important to me, robotics (my main line of work). EV battery tech (300 mile range) is okay for me personally right now, but I desperately need higher density batteries for robotics.

  • avatar
    Big Al from Oz

    I do recall submitting an article regarding this very issue a year ago. My comment was trashed by the socialist EV elitist.

    Cobalt is a by product of refining base metals. Only when demand for lead, copper and nickel (I think I have the correct base metals, it might be only nickel) increase will cobalt production increase.

    There is no magic wand.

    Battery prices will increase in price proportional to base metal demand.

    I think the link I put forward was in one of the original Giga Factory articles.

    EVs will not be viable, for a long time. They will be a toy for Greenies and wanna be Greenies as pickups are toys for rednecks and wanna be rednecks.

    • 0 avatar
      dash riprock

      In your country there is a cobalt/nickel mine in development(clq on the ASX). It is unusual as you are correct in the by product issue, artisinal mines in the DRC not included of course

      • 0 avatar
        Big Al from Oz

        Having mines is different to demand.

        Here in Australia mines open and shutdown based on demand.

        To make cobalt viable either a massive increase in nickel demand is required or the price of cobalt needs to rise significantly to offset low nickel pricing due to over production.

        Thanks for acknowledging the accuracy of my comment.

      • 0 avatar
        Big Al from Oz

        Oh, don’t forget the push for domestic and commercial applications for batteries.

    • 0 avatar
      mcs

      “EVs will not be viable, for a long time. They will be a toy for Greenies and wanna be Greenies as pickups are toys for rednecks and wanna be rednecks.”

      Look, I’m convinced that most of us that are buying EVs are not buying them to be green or to save money. There just damned nice vehicles to drive. Every other EV driver I’ve met including myself loves them more for the torque, smoothness, and performance. Once you’ve driven one, it’s tough to go back. I’ll endure a mid-trip charging session rather than take one of my ICE cars.

      • 0 avatar
        Big Al from Oz

        mcs,
        I would think most EVs are sold due to generous handouts, subsidies and manufacturer offers.

        If the true price of EVs were realised they would not be on the market.

        My greenie and redneck comments are tongue in cheek illustrations used by left and right wing supporters. Humour.

  • avatar
    mcs

    I took a look at some patents related to new electrode technology and I’m not so sure cobalt is required. They list alternative materials. I need to study the documents to be sure, but don’t have the time right now.

    • 0 avatar
      bunkie

      This is a great point. While there is no guarantee that such designs will make it to the mainstream, any long-term bet on the future value of a base commodity runs the risk of being devalued by development of alternate solutions.

  • avatar
    Master Baiter

    You can make LiIon batteries without cobalt. Energy density suffers somewhat, but it can be done with manganese and other materials.
    .
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