Commentary: Win or lose on electric

20 April 2017 17:04 Source:ICIS Chemical Business

Electric vehicles are a disruptive technology which will come to dominate the automotive market over the next few decades with big implications for raw materials suppliers, includ-ing chemicals.

According to a new report from analysts Bernstein, electric vehicle production could rise rapidly with a complete transformation of the market to electric vehicles taking place by 2035 under its “rapid adoption” scenario.

Over 20m tonnes of batteries would be required over the same period. With chemicals comprising 53.4kg of the 252.3kg of a battery pack, there are clearly huge opportunities for the industry.

The shift from a carbon-based economy to one based on renewable sources of energy to tackle glob-al warming is a lofty aim which governments can easily ignore.

Bernstein argues that another factor has now emerged which is more likely to drive a legislative and societal shift to clean energy and mobility – the health impact of pollution. Smog, pollution and its health impact has gone right up the political agenda in China, for example.

“We are reaching an inflexion point in the adoption of electric vehicles, moving firmly from the first wave of early adopter environmentalists to mainstream premium adopters,” says the report.


There will be three waves of adoption by the market. The first wave was driven by environmentalists who were prepared to pay a premium for a vehicle with a small driving range based on expensive and more primitive battery technology.

As the technology has improved, the premium auto market has grown swiftly into electric vehicles, with 12% of that sector already comprising electric vehicles.

As prices come down and battery technology improves, electric vehicles will enter the mainstream sector, which comprises around 87% of the market as a whole.

The $1.8tr auto market is likely to change fundamentally as traditional original equipment manufacturers (OEMs) lose out to manufacturers of core components such as battery systems and the battery supply chain, with big opportunities for chemicals and polymers suppliers.

OEMs will have to invest heavily in new production assets as existing ones based on the internal combustion engine become obsolete.

Bernstein says the main driver of incremental costs for electric vehicles is the battery pack, which for a 500km range/60kWh capacity costs around $14,000 today compared with a gasoline engine that costs around $5,000.

Add to that another $2,000 for the electric motor and inverter, and the gap is even wider. However, annual running costs even now are around $1,000/year lower.

Apart from metals such as copper, lithium, nickel, cobalt and graphite, chemicals and polymers are vital components of battery cells, cooling and management systems as well as the packaging.


However, there will be some losers as well as winners. Electric motors operate at much lower temperatures than internal combustion engines.

According to ICIS, demand for some high temper-ature-resistant polymers in the polyamide (nylon and nylon 6,6) sector may lose out from the switch to electric.

The Berstein report also suggests that apart from the battery pack, considerably less plastics (160.6kg, -11%) and chemicals (26.5kg, -14%) will be required in the rest of the average 1.4 tonne vehicle.

The big gains in electric vehicles minus battery packs are in aluminium (206kg versus 80.9kg) and copper (125.8kg versus 22.3kg).

By Will Beacham