Consulting firm McKinsey put a note out on Thursday calling attention to "three surprising resource implications from the rise of electric vehicles".
Number one is that oil & gas investors can sleep well for at least the next decade as the impact of the move away from internal combustion engines will only modestly impact demand for fossil fuels.
In fact, demand for natural gas fired power stations - all those EVs need to be charged after all - will increase by 20% if half the cars on US roads were electric. Even coal would get a bump from EVs says McKinsey.
Secondly, the need for millions of public charging stations (China alone plans to build 4.8m by 2030) could open up the possibility of a land squeeze becaus it takes "multiple rapid 120-kilowatt charging stations with eight outlets to dispense a similar amount of range per hour as the standard-size gas station of today."
While concerns such as a "cobalt cliff" exist and demand implications could present a temporary speedbump, the constraints and uncertainties should be addressable.The research consultants calculate that since battery costs make up 40-50% of your average vehicle, costs for the unit would have to fall to below $100 per kilowatt hour from $220-$225/kwh today to "achieve cost parity with ICE vehicles".
Finally McKinsey asks if the availability of cobalt, lithium, copper, nickel and rising prices for raw materials would constrain greater EV penetration:
Optimistically, no. Even with the predicted rise in input costs, batteries can still come close enough to the $75 to $100 per kilowatt threshold needed to approach broad ICE price parity.
While concerns such as a "cobalt cliff" exist and demand implications could present a temporary speedbump, the constraints and uncertainties should be addressable.
Shifting to other battery chemistries can mitigate risks of shortage. Mining more of the raw materials will also be needed, which, we estimate, will require investments of $100 billion to $150 billion.
As well, mining's hard realities will still apply, including lead times of up to several years and ecological and social concerns in regions within Africa and South America where much of these raw materials are found.