Copper, lithium markets to receive major support from autonomous vehicles
From SAFE
Expectations have grown that autonomous vehicles (AVs) will eventually shake up global oil markets, altering fuel consumption patterns through increased electrification, ride-sharing, and efficiency.
But what will be the impact on other commodities?
The copper and lithium markets are set to see major disruptions in years ahead. Although vehicle ownership may decline over time, the number of AVs manufactured for fleets, ride-sharing, personal use, and car-sharing will soar. The average car needs around 30-50 pounds of copper, but if the majority of AVs will be electric, the thirst for copper will grow even more: An electric car uses roughly four times as much copper wiring than one with an internal combustion engine.
Mining behemoth BHP Billiton estimates that while 140 million EVs would cut 2 million barrels per day of oil, it would also boost copper demand by 8.5 million tons. This increase would be worth about a third of total global copper demand—some $38 billion out of a $100 billion annual market. By comparison, that same number of electric vehicles would displace about 2 million barrels per day, $37 billion worth of oil annually out of a $1.8 trillion market.
With many parallels to oil markets, the copper outlook is fraught with risk. Like many energy commodities, copper cooled off over the past few years as a result of slower demand and rising supply, but it is tightening now and is expected to boom over the next 5-6 years. The coming AV-EV revolution will only add strain to the market.
Wood Mackenzie says that this year it expects copper, which bottomed out early last year below $2 per pound, to continue to rebound as a supply-demand deficit emerges. Prices are now at $2.60 per pound. By early next decade, though, stock levels will have “eroded sharply” and prices ought to spike by 2023. In addition to increasing demand from Asia, the market also has to contend with unexpected supply disruptions where production is concentrated—not unlike oil. Recently, there have been interruptions in three major producers: Indonesia, Peru, and Chile. Furthermore, with most of the easily available supply already tapped, copper produced in the future will be more expensive and harder to access.
Copper isn’t the only market set for disruption. Lithium is already booming from the growth in EVs, with significant upside given the expected electrification of the AV fleet. Many analysts and industry sources believe the lithium market, needed to power batteries for EVs as well as personal devices, is now only in its infancy, and demand growth has just begun. Lithium, which isn’t traded on a public exchange, is now priced above $9,000 per ton, up from $1,400/ton in 2005. Cobalt, which can also be used in batteries, may also see a demand surge since it is easier to buy and store than lithium and has a greater diversity of supply. Cobalt prices have soared from $33,000/ton to $55,000/ton since the beginning of the year.
Sharp price rises in copper and lithium ought to spur supply-side investments to temper the market. But many of the same uncertainties that persist in the oil market will remain true for these other commodities, and it’s still increasingly difficult to understand when exactly an inflection point will occur and how the industry will adapt.
From Wired
Detroit Is Stomping Silicon Valley in the Self-Driving Car Race
A Navigant report finds Ford—yes, the Detroit-based, 113-year-old giant—is winning the race to build the self-driving car, with General Motors running a close second. Renault-Nissan, Daimler, and Volkswagen round out the top five. Meanwhile, Waymo—aka Google’s driverless car effort—sits in sixth place, with Tesla in twelfth. Uber languishes in sixteenth, behind Honda and barely ahead of startup Nutonomy and China’s Baidu.
That may sound all kinds of wrong to anyone who has seen Uber, Waymo, and Tesla flaunt their tech, and regards Detroit’s old guard as ill-prepared for the robotic future. But it’s the state of the race according to Navigant Research, whose newly released “leaderboard” report ranks these players not just on their ability to make a car drive itself, but on their ability to bring that car to the mass market.
“The technology is great, but unless you can build tens of thousands of cars and get people in those cars, it’s not really all that useful,” says Navigant’s Sam Abuelsamid, who wrote the report with David Alexander and Lisa Jerram.
The report selected the 18 biggest companies pursuing fully driverless cars, and ranked them based on nine criteria, including tech, go-to-market strategy, production prowess, staying power, and sales, marketing, and distribution.
Ford and GM both score in the low to mid 80s on the technology front; it’s their old-school skills that float them to first and second place. They’ve each spent more than a century developing, testing, producing, marketing, distributing, and selling cars. Plus, each has made strategic moves to bolster weak points. Ford just dumped a billion dollars into an artificial intelligence outfit. It acquired ride-sharing service Chariot and invested in Velodyne, a company producing lidar, the laser scanning tech many argue is necessary for self-driving cars. GM scooped up self-driving expertise via a startup called Cruise, and partnered with Lyft to put the eventual result on the road.
Waymo, by comparison, scores top marks for technology but drags in the production strategy and sales, marketing, and distribution buckets. The company plans to work with legacy automakers to put its tech in cars, but has not yet struck any major deals. “They have almost every piece of this—except the product strategy,” says Abuelsamid.
