As noted previously, mining companies are realigning their portfolios to position themselves favorably amid the expected surge in electric vehicles (QQQ) (NDX-INDEX). The availability of some commodities such as cobalt could be of concern for automotive companies. Recently, Reuters reported that Volkswagen was in talks with suppliers such as Freeport-McMoRan and Glencore to secure a long-term cobalt supply. Glencore is currently the largest cobalt supplier.
We can draw some analogies between vehicle electrification and the retail sector. The retail sector has seen disruption led by the likes of Amazon (AMZN) and Alibaba (BABA). The success of e-commerce, not to mention the soaring market capitalizations of companies such as Amazon, has forced established retail companies to pursue online sales to complement their existing store business. Traditional brick and mortar companies such as Walmart (WMT) are aggressively targeting the e-commerce space.
In the electric vehicle industry, Tesla has been synonymous with electric vehicles. While Tesla’s (TSLA) shipments are only a tiny fraction of legacy automakers, the company’s rising market capitalization could be the envy of established automakers. Leading global automakers are now launching a range of electric vehicles.
Could the electric vehicle industry disrupt the global automotive industry like e-commerce did to the retail sector? We’ll have to wait and see. Some market observers aren’t too optimistic about the pace of vehicle electrification. They believe that while electric vehicle sales could continue to grow rapidly, it could take a long time for them to outsell internal combustion engines.
We could also see the demand increase for some battery metals. We’ll look at that in detail in the next part.