Rare Earth AdvisoryNEWSLETTER
Rocky Thoughts for a Rocky Road
“OEMs: paddling upstream is hard – but the only way to counter Chinese hegemony”
COVID-19 has hit the automotive market hard, spoiling what should have been the breakout year for Electric Vehicles. The large-scale capital deployment required to electrify transport will likely be delayed by 1-2 years, but EV medium-term prospects remain bright with policymakers’ support fully intact.
Still, China’s predominance in rare earth elements and all materials critical to the battery supply chain put Western countries’ electrification plans at risk unless properly addressed. While it looks clear to us that China will now struggle to secure additional critical raw material resources, we think swifter action upstream is needed, in Europe in particular, to reduce dependence on China.
Upstream integration looks key to OEMs’ electrification success. Our screening of several critical battery materials and REE projects suggests that vertically integrated projects are the most viable options.