Changes in Big Automakers’ Strategies
Changes in Big Automakers’ Strategies Won’t Affect the Demand for Battery Metals
The current market is difficult for giant legacy car makers like Ford, General Motors (GM), Mercedes, Volkswagen, etc. High interest rates slowed demand for new electric vehicles (EVs). That forced changes to the “all electric” transition plans.
However, this is more about moderation than the end of EVs. For example, both Ford and GM plan to roll out plug in hybrid EVs as well as fully electric. Plug in hybrids use both electric motors as well as traditional combustion engines. The batteries can be charged by plugs or by regenerative braking. Automakers view them as a transition step for buyers interested in EVs but not ready to fully commit to all electric.
For some automakers, these strategic changes come with big price tags. For example, Ford scrapped plans for a large electric SUV. The company expects that to cost about $1.9 billion in write-downs and related costs.
According to CEO Jim Farley, the company will focus on an array of electric options, including plug in hybrids. The goal, according to a company press release, will be to increase range and decrease prices for the consumer.
The issue for Ford is battery costs. CEO Jim Farley said, “An affordable electric vehicle starts with an affordable battery. If you are not competitive on battery cost, you are not competitive.”
It’s clear that the company has not succeeded in recreating its most popular SUV models at a competitive price point. And the higher interest rates don’t help.
However, that shift from full EV to plug-in hybrid does not change our investment thesis on battery metals. The decrease in copper demand is about fifty pounds per vehicle (from about 180 pounds for an EV to about 130 pounds for a plug-in hybrid).
That’s a tiny savings, compared to the massive increase from just fifty pounds per traditional car. Focus on marketing plug in hybrids, rather than full EVs, will continue to drive demand for battery metals like lithium, nickel, and copper. And Mangrove Investor will continue to find the best investment ideas in that sector.
For the Good,
The Mangrove Investor Team
Numbers You Need to Know
72,600
1.8 Million
1.2 Million
Hybrid electric vehicle sales experienced rapid growth in 2023 increasing by 53% from 2022, reaching a new high of nearly 1.2 million vehicles sold. (Energy.gov)
What’s New in Sustainable Investing
Ford is making major changes to its electric vehicle strategy
Ford on Wednesday acknowledged America’s electric vehicle market just isn’t what the automaker expected it to be: Customers are increasingly price-conscious and range-anxious. So, Ford is making big changes to its EV plans, focusing on hybrids and affordability.(CNN)
Companies Haven’t Abandoned Sustainability. They’re Just Talking About It Less
Companies are talking less about sustainability in earnings calls and marketing materials, but they are mentioning it nearly as frequently as ever in their financial reports and disclosures. (Wall Street Journal)
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Hybrid vs. Plug-in Hybrid: What’s the Difference
Plug-in hybrids are becoming more and more popular, but how are they different from regular hybrids? Edmunds’ Nick Yekikian tells you all about the differences between hybrid and plug-in hybrid powertrains.
