With the global appetite for electric vehicles (EVs) now waning, a timely review of the underlying demand for both these vehicles and the commodities used to make them is now warranted.
Up until recently, any mineral critical to EV battery production was ascribed a premium due to its perceived importance.
There has been an implied assumption that the world was veering towards non-fossil-fuelled vehicles at breakneck speed.
However, the notable consumer shift away from EVs suggests these assumptions are no longer bankable.
EV speed bump
With cracks now surfacing in the global uptake of EVs, the jury’s also out on the capacity of the industry to consume the ever expanding supply of critical minerals being found to feed and support it.
This had a material impact on commodity prices.
The $64000 question now is whether government-led initiatives to prop up the EV sector - through subsidies, tax credits, and ambitious targets - and the billions car manufacturers have invested in electrifying their fleets have all been in vain.
Recent announcements from major automakers, plus recent data and surveys in the U.S., Australia, and Europe, suggest EVs may no longer be the smartest purchase for consumers.
It’s not just market sceptics trash talking EVs: Manufacturers are doing their own bidding in taking the oxygen out of the EV market, with production pullbacks fuelling consumer indecision.
Cracks appear
The previous Midas touch ascribed to anything EV related has given way to some serious navel-gazing by large EV manufacturers on their all-in approach to EV production.
Weaker-than-expected demand also fuels unprecedented financial losses.
For example, in the U.S., Ford and General Motors (GM) have made no secret of their retreat from previously ballsy EV plans.
Ford has reported losing US$18 billion on EV production over three years, amounting to a whopping US$50,000 loss per EV sold.
In addition to scaling back EV production in 2024, Ford turned its gaze to hybrids, with plans for an all-electric SUV now shelved.
GM has also slashed its 2024 EV production target by an estimated 50,000 units. This is after admitting that consumers aren’t transitioning to fully electric models as expected.
Then there’s dear old Tesla, which while remaining an EV market leader, has faced its own unique basket of challenges; none the least being broad market backlash to CEO Elon Musk's involvement with the Trump administration.
Closer to home
Here in Australia, Tesla maintained its downward sales trajectory in February.
While the country’s best-selling electric vehicle brand recorded 1,592 sales in February - double the disastrous 739 deliveries notched in January - it remains 70% down on the 5,665 sales of February 2024.
The latest data from the Federal Chamber of Automotive Industries (FCAI) and the Electric Vehicle Council (EVC) reveals 5,684 full-battery-electric vehicles were sold in Australia in February, compared to 10,111 in the same month last year.
A total of 96,710 new vehicles were sold in Australia during February, including cheap Chinese EVs. This means EVs comprise a mere 5.8% of sales.
Twelve months earlier, EVs almost nudged a double digit (9.6%) share of the market and this is before cheaper Chinese models were available in significant quantities.
Having read the market tea leaves, major manufacturers like Toyota, refocused their attention on hybrids rather than aggressively pushing EVs onto the market.
EU sales
The carnage experienced by EV manufacturers is also experienced across Europe.
According to the European Automobile Manufacturers’ Association (ACEA), Volkswagen recorded a 27% year-to-date drop in battery-electric vehicle (BEV) sales in Germany.
Meanwhile, Volvo, which previously committed to full electricity by 2030, has reneged on this timeline.
The Swedish car manufacturer concedes that market infrastructure and consumer acceptance are nowhere near where they were expected to be.
Consumers have spoken
Consumer scepticism and disillusionment with EVs is evident in surveys across all regions.
For example, a Pew Research Center survey found that only 38% of Americans were likely to consider an EV for their next purchase, down from 42% a year earlier.
Globally, 29% of current EV owners told McKinsey in 2024 that they planned to switch back to gasoline or diesel vehicles, citing dissatisfaction with their ownership experience.
Key concerns vocalised by consumers include high upfront costs - circa 10-50% more expensive than internal combustion engine equivalents - and concerns around charging availability.
A 2024 S&P Global forecast slashed its 2025 EU battery-electric vehicle market share prediction from 27% to 21%, reflecting economic pressures and a lack of affordable models.
Closer to home consumers, especially outside urban centres, are equally concerned about range anxiety.
While EVs like the Tesla Model 3 command a premium price – around $60,000 compared to $40,000 for a comparable hybrid – fewer consumers recognise the cost-benefit.
Infrastructure and market realities
The EV charging infrastructure – or lack of it – also remains a critical bottleneck.
In the U.S., despite US$5 billion allocated in 2022 to build EV charging stations, only 17% of Americans in the Pew Research Centre survey were confident this would materialise effectively.
In Europe, the ACEA warns that the EU’s charging network isn’t keeping pace with demand, with gaps in rural areas undermining EV practicality.
Australia fares poorly, with just 3,000 public chargers nationwide as of 2023, compared to over 12,000 in Norway, a country with a similar population.
The hybrid alternative
While hybrids offer fuel efficiency without the full commitment to electric, Toyota’s success with the Prius and Ford’s pivot to hybrid F-150s suggests consumers are happy to trade off greener options without the issues associated with EVs.
Down but not out
While the EV dream isn’t dead, Roger Montgomery founder and chairman of Montgomery Investment Management says it’s clear the hype has outpaced reality.
Until prices drop, infrastructure catches up, and manufacturers stop bleeding cash, Montgomery suspects putting your money into an EV might be more of a gamble than a smart investment.
The greatest risk for lithium producers and explorers, adds Montgomery is that alternative technologies may supersede lithium and battery-electric vehicles.
“For now, the road ahead looks bumpier than the glossy electric vehicle advertisements suggest.”
