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Electric vehicle makers are hunting for buried treasure, but not the kind you probably think. Instead of gold, they want its decidedly less glamorous cousin, copper.
The base metal, commonly found in the now-discontinued US penny, is critical to production of the vehicles, which are regaining popularity as the US war with Iran drives gas prices to an average $4.47 a gallon, according to AAA, up roughly 40% from a year ago.
More than half of US drivers surveyed for a recent report by HERE Technologies and SBD Automotive said they're more open to considering EVs than they were a year ago, and 57% of drivers said gas prices influenced their interest. In a mid-year review of the market, Cox Automotive found that 56% of shoppers say rising gas prices have made them more likely to consider a hybrid or plug-in hybrid car.
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The EV Explosion
It's a pivot with built-in challenges, since US carmakers had pulled back on electric vehicle production. Any ramp-up would require buying large quantities of copper, whose price has climbed as much as 20% this year amid concerns that the US will impose tariffs on imports of the widely used metal.
While Earth has abundant copper deposits, hence its designation as a base metal, locating them and extracting the ore is an expensive proposition. Spiking demand, meanwhile, has outpaced currently available supplies.
"The story with copper is really one of supply and demand being out of balance, and the fact that there's just such a long road between the start line and the finish line for a copper project and that we're not really seeing people even off to the races," Doug Daly, portfolio manager at CoreCommodity Management, told The Daily Upside, referring to both exploring for copper and starting mining operations. "Everyone knew this was coming. It's kind of like watching a train wreck in slow motion."
As a result, electric vehicle makers face pressure to raise price tags that were higher to start with than those on cars powered by traditional combustion engines. US buyers paid an average $54,813 for new electric cars in August, a premium of 9.4% compared with the market as a whole, according to Kelley Blue Book. The price differential, exacerbated by the expiration of Biden-era federal tax credits, has limited buyer interest enough in the past to prompt a course correction for large American automakers. Ford, for example, said in December it would take a $19.5 billion writedown after scrapping plans to build larger electric vehicles and focusing instead on gas-powered and hybrid cars. Global sales continued to accelerate, however, as drivers in China, Europe and elsewhere look to ditch trips to the gas pump, and analysts say conflict in the Middle East revived interest in used EVs in the US.
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