US carmaker Ford (NYSE:F) has outlined plans to invest $11 billion to develop electric vehicles (EVs) by 2022, bringing new excitement to the battery metals sector, including the graphite space.
Ford has increased its investment target significantly, hiking it from $4.5 billion by 2020 to $11 billion by 2022. That includes the cost of developing dedicated EV architecture.
“We’re all in on this and we’re taking our mainstream vehicles, our most iconic vehicles, and we’re electrifying them,” Ford executives said on Sunday (January 14) at the Detroit auto show. “If we want to be successful with electrification, we have to do it with vehicles that are already popular.”
Ford is now catching up with other carmakers such as Volkswagen (FWB:VOW), which announced last November that it would spend $40 billion on electric cars, autonomous driving and new mobility services by the end of 2022.
Overall, the electric revolution seems unstoppable at this point, and as demand for EVs soars the need for key elements used in the batteries that power them will also increase.
Commenting on the news, Benchmark Mineral Intelligence Managing Director Simon Moores said he doesn’t expect any let up in EV sentiment this year. “It will just take 1-2 years to filter through into actual supply chain deals, [but it will bring] more demand pressure for after 2020,” he said.
Even so, he also believes real demand for graphite, lithium, cobalt and nickel chemicals, all of which are used in EV batteries, isn’t being driven by the big carmakers yet. In fact, according to the expert, the biggest future consumers are “yet to enter the real market.”
Looking ahead to what may happen in the graphite market this year, Benchmark Mineral Intelligence senior analyst Andrew Miller recently said that “the developments in anode production capacity and the balance between natural spherical and synthetic graphite will be key for the market throughout 2018.”
According to Roskill, China’s continuing closure of processing plants to curb emissions will be a key factor to watch, as it has set the scene for speculation about surging prices. The research firm expects prices to increase this year as battery demand continues to rise and flake graphite producers rush to ramp up new production.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.