Did the Electric Car Come Too Soon?
Herbert Diess has left VW. The 63-year-old served as CEO since 2018, focusing primarily on expanding e-mobility. Leadership will now be assumed by current Porsche CEO Oliver Blume, who will lead both companies. He also supports e-mobility, but is it the right path?
The trend appears unbroken: According to its own statements, the company delivered more electric vehicles than ever before in 2021. The firm delivered approximately 369,000 electric cars to customers that year, an increase of 73% compared to the previous period. Following the conversion of the Zwickau site into a pure electric vehicle plant, Emden, Hanover, and Chattanooga (USA) are now set to follow. From 2033 onward, the corporation intends to produce only electric cars. An interim goal is to increase sales of these vehicles to 70% by 2030. Nevertheless, the success of this expansion depends on the impact of supply chains on the corporation and the global economy.
65% of the commodities required for electric motors come from authoritarian China. Political upheaval cannot be ruled out. Any resulting supply disruptions could mean supply bottlenecks for production. One alternative would be hydrogen cars. The dependency on raw materials for the fuel cells and hydrogen technologies required for them would be lower, with a dependency on China of only around 17%. Important “hydrogen metals” such as platinum, iridium and ruthenium come from South Africa, a country with which Europe wants to cooperate more closely in the future. Noble Elements will also be flying there at the beginning of next year to look into participating in a mining project.
Did Diess therefore back the wrong horse? We do not know. What is certain, however, is that hydrogen-powered cars have advantages. Their range is greater than that of electric cars, they can be refueled quickly, and they are environmentally friendly. Unlike gasoline and diesel vehicles, they emit only water vapor instead of CO2 and particulate matter. They are particularly climate-friendly when green hydrogen is used. One argument against hydrogen cars, however, would be their relatively low energy efficiency. While electric cars achieve 70%, hydrogen cars only reach 15%. The reason for this is the numerous energy conversions of hydrogen, from its production to its conversion into kinetic energy.
Nevertheless, the platinum metals required for the various electrolysis processes present good opportunities for investors. For example, only 7.7 tons of iridium, the currently irreplaceable anode material, are produced annually. According to a study by the German Mineral Resources Agency (DERA), between 20 and 267 tons of the precious metal will be required in 2035, depending on technology usage. We therefore anticipate rising prices.