People Are Getting Rich From Electric Vehicles, But Not in the Way You'd Think

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]