The 2 main candidates in the 2020 US presidential election had radically different visions for environmental policy. For the most part, President Trump has been committed to defending the interests of the fossil-fuel industry, while President-elect Biden has committed to putting the country on track to achieve net-zero emissions by 2050.1 As part of that mandate, a Biden administration is expected to advocate measures that would both directly support ownership of electronic vehicles (EVs) and tighten environmental regulations for manufacturers of vehicles that use internal combustion engines. The chart below shows historical and projected EV sales and market share from 2010 through 2050. However, if the new presidential administration undertakes policy action to further promote EV ownership, sales and market share could far exceed these projections.
For example, many expect Biden to quickly reinstate the legal basis for California’s zero-emission vehicle rules and begin the process of reversing the Trump administration’s decision to ease fuel-efficiency and carbon-emission requirements through 2025. Automakers could also face sharply higher penalties for failing to meet fuel-efficiency requirements. At the same time, Biden has promised new tax incentives, including rebates to buy EVs, as well as a significant expansion of EV charging stations. Under President Trump, the White House rejected new tax credits for electric vehicles.
The global EV market is powered by batteries reliant on lithium, cobalt, and nickel, and is expected to grow significantly over the next 2 decades. While the near-term outlook for lithium and some other commodities is clouded by oversupply, there could be a supply crunch by the mid-2020s. In fact, we believe that robust demand for lithium-ion EV batteries means that overall demand for the metal could enjoy double-digit annual growth, with EV batteries making up more than 80% of total demand by 2030. Copper is also a major component of EVs, as it is used in electric motors, batteries, inverters, wiring, and charging stations.
The use of wind and solar power for electricity generation offers similarly intriguing possibilities, as Biden has pledged to support U.S. generation of clean electricity to achieve a carbon pollution-free power sector by 2035.2 Falling costs for renewable energy have brought us much closer to “grid parity,” the point at which the cost of producing electricity from renewable sources is on par with production from fossil fuels.
Even assuming a divided government, we expect more of a policy focus on environmental issues in the years ahead. Therefore, we see potential opportunities in copper, lithium, nickel, steel, and many other commodities needed to manufacture green energy solutions in 2021 and beyond.
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