How EVs Will Forever Change the Copper Landscape

Photo: How EVs Will Forever Change the Copper Landscape

Electric cars are by no means new. In fact, most people don’t know that electric cars existed before gas-powered cars.

The first vehicle to reach 100 km/hr was electric.

The first car designed by Ferdinand Porsche - yes, that Porsche - was electric (the P1).

In 1900, a third of all cars on the road were electric vehicles (EVs).

But then, Internal Combustion Engines (ICEs) came along. These petroleum powered vehicles could be produced at a fraction of the cost of electric cars.

Suddenly, the electric vehicle movement became dead on arrival.

Now, more than a century later, Porsche is circling back to its origins. Their second-ever electric vehicle, the Taycan, is on the road today.

What changed?

Well, battery technology has gotten much, much better.

But more importantly, by the mid-2020s, the price to build an EV will be on par with most ICEs.

Here’s why that’s so important to our portfolios. EVs are built with three times more copper than ICEs.

As you can imagine, that will have a huge impact on the price of copper over the next decade.

“The Price Will Be So High… You’ll Need a Telescope to See It.”

If you don’t know the name Robert Friedland by now, you should.

Friedland is one of the world’s richest and most successful mining entrepreneurs.

His first huge score (the one that made him a young billionaire) was Diamond Fields.

His team was originally looking for diamonds and stumbled on a world-class nickel deposit instead. That discovery sent Diamond Fields from $0.25 a share to more than $160 per share—a 64,000% gain.

Friedland’s next play was Ivanhoe Mines, with which he discovered and developed a massive copper-gold deposit in Mongolia. Ivanhoe was sitting at $1 a share in 2001. By 2011, under Friedland’s leadership, it had hit $28.

Friedland sees the demand for EVs growing—fast.

He predicts this will force the price of copper to skyrocket over the next decade. In his words: “so high you’ll need a telescope to see it.”

For investors in the right stocks, this is the time to make a fortune.

The Internal Combustion Engine Market Is Going into a Meltdown

EVs aren’t just competing with conventional cars—they’re beating them. Again.

They’re faster, offer higher performance, are more environmentally friendly and they’re becoming much, much cheaper.

We’ve already reached peak ICE passenger vehicle production. From 2020 onward, fewer ICE vehicles will be sold each year.

Battery electric vehicles (BEVs) will all but take over the market in just two decades.
BloombergNEF, the industry standard for data feeds, estimates that by 2040 there will be 500 million passenger EVs and 40 million commercial EVs on the road.

Every single one of those cars will require a substantial amount of copper.

Copper is the Lifeblood of EVs

You see, copper is the ideal metal for creating the heart and veins of an EV. It’s conductive, cheap, lightweight, recyclable and malleable.

It may not be the most used material by volume, but it goes into the most critical parts of the car:

The motor can use more than a mile of copper wiring.

Copper wiring connects the battery packs to all electronics (Tesla’s Model S uses another mile of copper wiring here).

The battery pack itself is 8% copper.

All of that means that EVs take much, much more copper than ICEs do.

Average ICEs contain 18-49 pounds of copper. Current battery electric vehicles (BEVs), on the other hand, take around 183 pounds of copper – over three times more.

As you can see from the chart below, the bigger the vehicle, the bigger the copper usage.
And there’s another piece of the EV demand puzzle, that even the savviest investors sometimes forget …You need to charge your EV.

It is estimated that 20 million EV charging points will be required by 2030 –and each of which will require more than a cars’ worth of copper.

Make no mistake, as EVs take over, demand for copper will rise significantly.

That begs two billion-dollar questions: Just how much copper will the EV market require? And what will that do to the price of copper?

In Ten Years, Expect a Significant Copper Price Rise

To answer the first question, we’ve borrowed a chart from Katusa Research. It shows the EV copper consumption forecasts from Robert Friedland, Marin Katusa and BHP and Glencore (two of the largest mining companies in the world).
The data above is based on two estimates:

How much copper each EV will consume in the future, and

How many EVs will be on the road in the future.

For the future per-vehicle copper requirements:

Robert Friedland estimated 359 pounds per vehicle,

BHP claims EVs will require 288 pounds each,

Katusa Research is predicting 211 pounds per EV, and

Glencore estimates 206 pounds per car.

If Robert Friedland’s high forecast is correct… more than 20 billion pounds of copper will be required in 2040 just to meet the copper demand for EVs.

That is about 40% of today’s total copper demand.

Now naturally, Friedland is going to promote an extremely bullish scenario.

But, even the always-conservative Katusa model indicates that by the end of this decade, EVs will consume 4.2 billion pounds of copper per year.

The problem is that this demand is 1.5x greater than the annual production of the world’s largest and most productive copper mine, Escondida.

The world can’t supply that much copper at the current price of less than USD$2.50 per pound. It’s just not economically feasible.

It’ll require at least $3.50+ copper.

BHP (the world’s largest mining company) predicts that copper will go above $5/pound.

Friedland is expecting even higher. He thinks copper will rise to $8/pound.

In short, it doesn’t matter who you believe. Even Tesla issued a public warning last year of a coming copper shortage.

All four scenarios above show that copper is going a lot higher.

And if our recent Vancouver Resource Investment Conference is any indication, NO ONE is talking copper stocks right now.

Which is exactly why we should be paying attention.

The only certainty in this market is that investors in companies that own large, high-quality copper deposits in mining-friendly jurisdictions will be happy.

Because if Friedland is right, you’ll need a telescope to see the share price of those companies.

Remember, the increase in demand for copper from EVs is only half of the story.

Supply is the other half of ‘supply and demand’.

And even though demand for copper is healthier than ever… copper supply is struggling.

Click here for the next article on the coming Copper Crunch. And how the global copper supply is going to have trouble keeping up with the EV revolution.

Jay Martin