Love them or hate them, electric vehicles will soon dominate British roads. The Government has banned the sale of new petrol and diesel cars from 2030, and by 2035 all new cars and vans must have zero emissions.
BlackRock, the fund manager, said there would be more changes in the transport sector in the next 10 years than there have been in the past 100, as electric cars take over and they become more connected and even autonomous. The boom has already started, with electric car sales in Britain jumping 185pc last year despite the pandemic, it said.
A colossal change like this brings investment opportunities, but predicting which car manufacturer will become the king of electric is fraught with risk as all major players are attempting to go green at the same time.
A safer bet lies in buying companies which have already established themselves as indispensable in the electric vehicle supply chain. That way, no matter which car company wins, investors can profit.
Zehrid Osmani, of investment manager Martin Currie, said: “In the 1840s gold rush, it was the sellers of picks and shovels, not the miners, that made the best returns. Similarly, for investors seeking the best returns from this monumental shift to electric, they should look past the car companies.”
Telegraph Money looks at how best to profit from the electric vehicle boom.
Batteries are the bedrock on which electric vehicles are built. Production and innovation is already dominated by just a few players, which makes for a great investment opportunity as car companies have no choice but to use their technology.
Asian companies dominate, according to Mr Osmani. The main players are South Korea’s LG Chem and Samsung SDI, together with the Chinese national champion CATL and Tesla’s partner, Japan’s Panasonic.
“Rechargeable lithium-ion batteries have been around for almost 40 years, but they are here to stay. Companies are creating the technologies of the next decade,” said Mr Osmani.
Battery Raw materials
An eclectic mix of minerals and precious metals go into batteries. The most important are lithium, nickel, copper, cobalt, tin and silver, and already prices are rocketing on greater battery demand, with most up 50pc in the past year.
The frenzy for raw materials will continue, according to the World Bank, which estimated that demand for battery raw materials would increase by nearly 500pc by 2050. Lithium is the most important, accounting for around 40pc of the cost of an electric vehicle battery, according to Mr Osmani.