Source: Wall Street

On Thursday, local time, u.s. president Joe Biden announced plans to sign an executive order requiring electric cars to account for 40% of new car sales in the United states by 2030. 50%. Electric vehicles include pure electric vehicles, plug-in hybrid vehicles, and fuel cell electric vehicles.

For the United States, this is a goal that is not easy to achieve. According to Barron Weekly, at present, there are only about 2 million electric vehicles on the roads in the United States, and only 2% of the cars sold in 2020 are pure electric vehicles. With General MotorsFor example, the company delivered 1.3 million cars in the US in the first half of 2021, of which only 20300 were electric vehicles, or 1.6 per cent.

According to the International Energy Agency (IEA), the US accounts for only 17 per cent of the world's 10.2 million electric vehicles, lagging far behind China's 44 per cent of global electric vehicles and Europe's about 31 per cent. The growth rate of electric vehicles in the United States also lags far behind that of Europe and China, with a compound annual growth rate of 17% in the United States, 60% in Europe and 36% in China from 2016 to 2020.

Therefore, in order to achieve this goal, the United States needs a lot of capital investment, which will have a huge impact on the whole electric vehicle industry chain. Barron Weekly estimates that over the next nine years, in the United States alone, it will cost nearly $100 billion to produce enough cars and batteries and maintain the infrastructure to achieve Biden's goals.

The industrial chain is facing great changes.

The first is the battery industry. If 1 million electric vehicles require $8 billion in battery capacity, 8 million electric vehicles, or about 50 per cent of annual US light vehicle sales, require $64 billion in battery capacity.

Then there is the charging infrastructure. There are 150000 gas stations in the United States, but only a few thousand fast charging stations. According to Arcady Sosinov, CEO of FreeWire, the fastest chargers sell for about $100000 each, excluding installation. So if 50, 000 fast charging stations are to be reached, it is estimated that $10 billion will be needed.

In addition, automakers need to invest more in designing and assembling electric vehicles, which Barron Weekly estimates at about $22 billion. With FordFor example, it costs about $5 billion to $7 billion a year to maintain and update the assembly capacity of its 5 million to 6 million vehicles. TeslaAbout $5 billion has been spent in the past few years, and about 1.5 million electric vehicles have been assembled in factories in China, Germany and the United States.

In addition, lithium mineral energy is expected to increase significantly. In 2020, the world mined about 400000 tons of lithium, although only about 1/3 of global production is used in cars, which is enough to power 2 million to 3 million electric vehicles. But if the United States plans to produce 8 million electric vehicles a year and other countries also increase the number of electric vehicles, the world will need to mine an additional 5 million tons of lithium a year, a huge 13-fold increase for the industry as a whole.

After the release of Biden's new plan, China International Capital Corporation raised his forecast for global lithium demand. It is expected that the compound annual growth rate of demand in the power battery sector will be as high as 59 per cent in 2021-2025. Global lithium demand is expected to grow from 430000 tons of LCE in 2021 to 1.54 million tons of LCE in 2025, with a compound annual growth rate of about 38 per cent.

Chinese companies benefit from it.

CITICSaid that Biden pushed the car electrified, support continued to strengthen, exceeding market expectations. China's electrified suppliers, especially the lithium battery industry chain, are the most complete and globally competitive, and the cost advantage is very obvious:

Considering that the middle and upper reaches of China, such as lithium power, lithium materials, lithium equipment, thermal management, resources and processing, have provided in-depth support to global customers, and some enterprises have been or are preparing to build factories in the United States, high-quality Chinese suppliers in the middle and upper reaches of the industrial chain are expected to continue to benefit, especially Tesla's supply chain, which is expected to fully enjoy supporting performance flexibility in the short term, with high product barriers and strong demonstration effect in the medium and long term. There is more room for growth, which is worth paying attention to.

China International Capital Corporation believes that the executive order marks that the United States has put the new energy vehicle industry at the height of national strategy, and the process of global automobile electrification is accelerated. industrial chain enterprises will benefit from it: new energy vehicle enterprises are recommended in the whole vehicle and parts links, and leading parts companies in electric intelligence, including Tesla supply chain, thermal management suppliers, and North American supply chain.

China International Capital Corporation pointed out that there is a large gap between the planned capacity and demand of local batteries in the United States, which still needs to be filled by imports in the short and medium term:

At present, the domestic battery capacity in the United States is mainly the layout of Japanese and South Korean battery manufacturers. According to the current capacity investment and planning of Japanese and South Korean suppliers and Tesla, we estimate that there is still a large gap between the total planned capacity 305GWh of the United States by 2030 and the demand 763GWh of 2030. Considering the large investment in battery capacity and the long cycle of capacity construction in the United States, we expect that the US market will still need imports to fill the gap between supply and demand in the short and medium term. Domestic battery manufacturers will still compete in the US market and enjoy the high growth dividend in the US market by virtue of the advantage of manufacturing cost. As for the domestic lithium materials, enterprises that have cut into the supply system of Japan and South Korea will directly benefit from the local support of Japanese and Korean battery manufacturers, bringing performance growth flexibility.

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