How the outlook for Canada’s miners may hinge on Volkswagen’s $66-billion gamble on electric vehicles – by Scott Barlow (Globe and Mail – March 14, 2019)

Global mining giant Glencore PLC estimates that the production of an electric vehicle will require 84 kilograms of copper, 30 kilograms of nickel and eight kilograms of cobalt. Demand for battery powered cars then is not only of interest to oil patch investors concerned about future demand, but also potential investors in Canada’s base-metal miners.

We will find out a lot about future demand for electric vehicles in 2019 as global auto companies attempt to eat into Tesla Inc.’s leading market share.

Consumer excitement about Tesla cars is expected to wane significantly. Morgan Stanley analyst Adam Jonas, in a report Tuesday, noted that the Tesla brand is losing its “aura of exclusivity” because of recent price cuts. “We see TSLA hitting an air pocket in demand that is coming earlier than we expected,” he said. Mr. Jonas also cut his stock price target for Tesla to US$260 from US$283.

Volkswagen AG, however, is betting heavily on a big upswing in electric vehicle sales. According to Bloomberg, Volkswagen is spending €44-billion (about $66.3-billion) through 2023 on electric and connected cars and now plans to build 22 million battery-powered vehicles over the next 10 years.

That’s up from an earlier goal of 15 million. General Motors Co., by comparison, expects to sell one million electric vehicles annually by 2026.

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