Electric vehicle manufacturers eager to secure cobalt supplies
Apple (AAPL) has had talks about buying cobalt directly from miners, according to a Bloomberg report. Cobalt is a key ingredient in lithium-ion batteries used in smartphones, laptops, and electric vehicles such as those produced by Tesla (TSLA).
As more traditional automakers expand into electric vehicle manufacturing, they’re driving up the demand and price for cobalt. BMW, Volkswagen (VLKAY), and Ford (F) are some of the traditional automakers working on building electric vehicles.
Ford eyeing fully electric vehicles by 2022
Ford, for instance, is planning to increase its investments in electric vehicles to $11 billion by 2020. The company is looking to begin rolling out fully electric vehicles by 2022.
BMW and Volkswagen are some of the automakers said to be looking to secure multiyear cobalt supply contracts.
Ensuring sufficient cobalt supply
Apple has also been linked to electric vehicle work, suggesting that its need for cobalt could increase significantly. Apple could be racing to ink direct cobalt supply contracts to ensure that it has sufficient supplies of the key material for its iPhones, iPads, and future electric vehicle product. Samsung (SSNLF), also a leading maker of smartphones that use cobalt in their batteries, is pursuing long-term cobalt supply contracts.
Perhaps sourcing cobalt directly from miners would help Apple lower its component costs and overall expenses. Apple’s cost of revenue was $54.4 billion in fiscal 1Q18 (December quarter), representing an increase of 12.9% YoY (year-over-year). The company’s revenue increased 12.7% YoY in the quarter.