In today’s article, I want to briefly explore the Electric vehicle car market, legislation that the Biden admin has been trying to pass and finally how the EV market has affected silver in recent years and how it will affect silver in future years.
So, what is the state of the electric vehicle market?
In a few words, not so good. After having some promising years around 2021, right now, in Feb 2024 automakers have been losing tens of thousands of dollars on each vehicle sale. It’s reported that Ford lost around 36,000 per electric vehicle sold in Q3 of 2023. Other quarters, it had similar losses leading to a 4.5 billion in losses from EVs in 2023.
While some companies tried to rush out EVs, other companies were smarter about the matter. Toyota refused to push them out as the company recognized that the product wasn’t ready. Toyota CEO Koji Sato said, “Carmakers shouldn’t rush EVs if the products aren’t ready, and demand isn’t sustainable”.
While these are just a few examples of what’s happening in the EV market, the bottom line is that consumer demand is not there for electric vehicles, yet the Federal government has been trying to push citizens into these cars. Many people don’t want them and for good reason. They cost around 50-60k and that’s with the generous government incentives.
What Legislation around EVs is currently being pushed?
Now all this said, many news outlets came out earlier this week (The Week of 2/20/2024) and wrote about how the Biden admin is backing off the strict requirements it is pushing for automakers. In sum, the administration was planning to have automakers have somewhere around 60% of their vehicles produced as EVs by 2030. Now though, this rule is being delayed since there is so much weak demand for EVs and the rule faced such opposition from automakers, unions and dealers. The fact of the matter is that the mass transition to EVs is going to take time, most likely decades, in my opinion.
Will backing off the EV push hurt silver’s price?
(Reasons to stack silver – read here)
Before discussing silver, it’s important to mention prices for cobalt and other materials that go in EV batteries are down significantly since 2023. This is because many EV battery manufacturers have shut down.
All this said, this is quasi backing off the EV push, I don’t believe will hurt silver. I think the mass popularity of EVs or the hype around them might have somewhat contributed to the spike in new silver stackers, but I think there are bigger factors that drove up interest in silver. One is simply that silver is extremely undervalued. Many bought in believing silver was going to reach $100 or $500 an ounce. There’s a lot to be said about where silver price should be, but the bottom line is that most silver stackers buy bullion to preserve their capital and have money outside the system.
So, how will a decrease in the EV push affect silver in the future?
In my opinion, not at all. The electrification push is still well under way, strong and silver will be needed for it. One example, which is a bit old, is China who opened a 1km solar powered highway to generate solar power and they use it to power 800 homes each year.
