For years now, we’ve been hearing about how electric vehicles (EVs) are going to disrupt the automotive market.
But while the hype and hyperbole were strong, reality was a little different. EV sales have certainly been growing, but they still usually represent a fraction of total car sales.
In fact, in Australia, this is still largely the case.
Only 3.39% of all cars on Aussie roads are electric, a fact that makes us one of the slowest adopters of these new vehicles.
And that makes perfect sense, because unlike other countries, we haven’t really invested in the necessary infrastructure. On top of that, Australia is a big country with sparse communities and towns. The limited range of a single charge on some of these cars, for now, just doesn’t work for a lot of people.
But I digress…
Because while Australia may be behind the curve, Europe certainly isn’t.
For the first time ever, in the fourth quarter of 2022, electric and hybrid car sales in Europe beat their petrol-powered counterparts…
Going electric for good
Yes, 54.8% of new cars sold in Europe during the last three months of 2022 were either battery-, electric-, or hybrid-powered. The tipping point for EV sales, in Europe at least, is finally arriving.
Granted, there’s still a long way to go before the majority of cars on our roads are run on batteries. But if Europe is any indication, it is a market that’s finally delivering on all that was touted.
As the Financial Times reports:
‘The size of the global electric vehicle market is projected to grow from $287bn in 2021 to $1.31tn in 2028, predicts data company Sustainalytics.’
The trend is well and truly underway.
For investors like yourself, this is why stocks with exposure to the EV supply chain have been such good investments of late. If you’re a regular reader of Money Morning, then I don’t need to tell you about how well lithium miners have performed lately.
Lithium was certainly one of the best investment trends of 2022, and it hasn’t slowed down yet. But it’s not the only winner, other crucial materials like rare earths are also poised to benefit from the EV boom.
Take Arafura Rare Earths [ASX:ARU], for example. This rare earth explorer has rocketed 594% higher over the past five years as the market has cottoned on to the huge potential ahead of it. The company’s promising project north of Alice Springs could turn them into one of the biggest rare earth producers in the world.
It has already cemented them a supply deal with Hyundai, and I wouldn’t be shocked if more automakers seek them out in future.
That’s just one example of the many stocks thriving from this EV revolution.
Outliers and obstruction
Here’s the thing though, perhaps the most intriguing aspect of this whole EV narrative is what’s going on geopolitically. After all, our post-pandemic world has turned the tables on globalisation and free-flowing trade.
Now, more than ever, we’re seeing protectionist policy-making and restrictions on certain trade. As an example, outside of the EV space, you can look at the recent US-China chip ban.
The US’s decision to restrict certain semiconductor technology from being sold to China is just the latest in a string of trade bans or limitations. And when it comes to basic materials and metals, things aren’t all that different when it comes to governments clashing with corporations…
As my colleague James Cooper told readers of The Daily Reckoning Australia yesterday:
‘Political leaders are leaning ever closer toward nationalistic idealism…
‘As Reuters reports, Chile has set the constitutional groundwork that could allow it to bring its massive mining operations under State control…you can read more about that here.
‘Unsurprisingly, it’s sparked an angry response from major mining firms, including Australia’s own BHP.
‘The mine, an enormous porphyry deposit located in Northern Chile sitting in the Atacama Desert, provides around 6% of the world’s entire supply of copper!
‘It’s a HUGE cash cow for the company…but it’s also juicy, low-hanging fruit for a government looking to reap more from its copper riches.
‘It forces BHP and other multinationals to rethink their long-term strategy in the country.’
These kinds of outlier events are precisely why Aussie miners are proving some of the best investments for EV suppliers. Because while our land is not only rich with the key minerals and materials, Australia is also fairly reliable when it comes respecting the business side of things too.
That’s what makes Aussie miners so reliable and such a great investment.
We avoid the outlier scenarios because we’re a mining nation through and through.
So, while most of us may not be driving an EV anytime soon, you can at least make some money for yourself off of others doing so.
Regards,
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Ryan Clarkson-Ledward,
Editor, Money Morning
