Photo credit: www.investing.com
Impact of Regulatory Changes on Electric Vehicle Demand and Lithium Mining
U.S. President Donald Trump’s recent decision to retract electric vehicle (EV) targets is projected to have a temporary effect on the demand for lithium and other essential minerals. However, analysts and industry leaders maintain that this rollback is unlikely to significantly disrupt the mining sector, especially due to the escalating global demand for electric vehicles.
On Tuesday, Trump annulled a 2021 executive order from former President Joe Biden, which aimed for electric vehicles to constitute 50% of all new car sales in the U.S. by 2030. This shift had prompted automakers to prepare for a significant upsurge in EV demand, largely driven by Biden’s initiative.
Following the announcement, shares of various companies, including Japanese car manufacturers, South Korean battery producers, and lithium mining firms from Australia, the U.S., and China, experienced declines. Nonetheless, industry experts predict that while North America’s demand may experience a slowdown, growth in other regions will likely counterbalance these effects.
Trump’s administration is also looking to implement additional regulatory changes aimed at diminishing support for electric vehicles and their charging infrastructure. Additionally, there are plans to reinforce restrictions on automobile and battery material imports from China.
Analyst Glyn Lawcock from Barrenjoey, an investment bank in Australia, emphasized that the removal of subsidies can negatively impact demand temporarily. However, he also expressed confidence that demand for electric vehicles will continue to grow, albeit at a slower pace in the U.S. under Trump’s policies.
Executives from Australian lithium producer Liontown Resources highlighted that the global shift toward electric vehicles is already in motion, independent of U.S. influence. CEO Antonino Ottaviano remarked during a recent analyst call that he does not foresee long-term demand issues due to these regulatory changes.
According to Liontown representatives, China currently leads the market, accounting for approximately 11 million electric vehicle sales, which constitutes about 65% of global sales. In stark contrast, North America represents only about 10%. The global market, excluding North America, has seen significant growth with 1.3 million EV sales last year and a year-over-year increase of 27%. This growth trajectory is projected to surpass that of North America within the next two years.
Chinese electric vehicle manufacturers are aggressively pursuing this growth potential, especially as they face access restrictions to the U.S. market imposed by tariffs on electric vehicles established during Biden’s administration.
Additionally, the demand for grid-scale batteries—capable of storing substantial amounts of electricity—is gaining traction worldwide. Notably, critical minerals are also integral in the production of various consumer electronics, as well as computer servers that support the burgeoning artificial intelligence sector.
Albemarle, the largest lithium company globally, chose not to comment on Trump’s actions. Similarly, Arcadium, a lithium producer on the verge of being acquired by Rio Tinto, and the International Lithium Association did not respond to inquiries.
While Rio Tinto refrained from commenting directly, CEO Jakob Stausholm conveyed optimism about lithium demand during the World Economic Forum, forecasting a fivefold increase over the next 15 years. Stausholm, who has owned an electric vehicle for over nine years, noted, “It’s just a better car” compared to traditional internal combustion engines.
David Klanecky, CEO of battery recycling company Cirba Solutions, anticipates a surge in U.S. demand for critical minerals by 2030, spurred not only by the rising popularity of electric vehicles but also by the increased usage of various electronic devices.
Despite the potential impacts of target rollbacks, miners are optimistic that initiatives aimed at reducing dependence on Chinese supplies will strengthen the market for their minerals. Darryl Cuzzubbo, CEO of the Australian rare earths developer Arafura, asserted, “We expect measures taken to build supply chain independence from China … to have a much greater impact than the rollback of a formal target for EV sales.” Cuzzubbo outlined a potential tipping point where electric vehicles might gain widespread acceptance without the need for specific targets and incentives.
Source
www.investing.com