Graphite end-market focus: Q2 2014

By Andrew Miller
Published: Wednesday, 16 April 2014

Downloadable: IM Data analyses recent developments in the electric vehicle market

Long touted as a major new end market for natural graphite, electric vehicles (EVs) have the potential to inflate sales into the lucrative lithium-ion battery sector. While growth has been slower than many had hoped for, reasons for optimism remain.

Government failures

Slow uptake in the world’s two largest economies, means original government EV sales targets in the US and China are unlikely to be met.

While sales in some smaller countries, such as France and Norway have been impressive, growth in these areas alone is unlikely to be sufficient enough to impact the graphite market. With only 56kg of graphite being used per EV, large volume sales will be required to have a noticeable impact on graphite producers.

President Obama had pledged to get 1m EVs on the roads by 2015 in the US, but with sales of only 100,000 cars in 2013 this target looks increasingly unrealistic.

Meanwhile, China’s New Energy Vehicle Industry Development Plan has already been branded a failure by many market analysts. Plans to reach 500,000 sales by 2015 appear unattainable.

China: unattainable goals

Incentives laid out by China’s national government to encourage the uptake of EVs domestically have been shown to be economically impractical.

The government had pledged to subsidise EV prices by 120,000 RMB ($19,600*), 50% of which was meant to be financed by provincial governments.

This would place an unsustainable burden on regional governments if China were to reach its sales targets.

While the Chinese market remains a major source of growth for EVs – particularly as the government pursues greater environmental sustainability – costs will have to decrease to promote greater consumption.

Tesla: plans to pioneer

The North American EV market was given a boost with the news that Tesla plans to create a new gigafactory which could double the size of the current market.

Plans to internalise lithium-ion battery production is being designed to cut costs in order to make a price-competitive product.

With the cost of EVs being one of the major hurdles in their uptake, Tesla’s announcement could have wide-reaching implications for the global EV market; increasing production efficiency and expanding the size of the market.

Although plans are at an early stage, Tesla aim to have the plant open by 2017, reaching a maximum production capacity of 35 gWh by as early as 2020.

* Conversions made March 2014

Download full outlook here


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