Global EV battery industry will be ‘sold out’ by 2025: BofA

symbol indicating a place to charge an electric car with energy in Spain Catalonia

According to an Bank of America Global Survey (BAC) there is an imminent threat that the global battery supply for electric vehicles (EVs) will be dry as early as 2025.

“Our updated supply-demand model for EV batteries suggests that global EV battery supply is likely to increase [a] ‘sold out’ situation between 2025-26, with a global business ratio of more than 85%,” the report reads.

The report states that BofA expects global battery shortages to increase further in the period between 2026 and 2030 as a result of continued increases in EV penetration across all markets, reflecting an “incrementally bullish” outlook for the EV industry. BofA Global Research increased its estimated global penetration for all EVs, including battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs), to 23%, 40% and 67% for 2025, 2030 and 2040, respectively.

Research from BofA Global cited a greater likelihood of tighter CO2 emissions regulation for mainstream cars by 2030, increased BEV volume targets by major OEMs over the past six months, and upward revisions to EV penetration forecasts for the US market as the key drivers. reasons for his optimistic view of EVs.

“We predict that the global operating rate of EV batteries will increase to approximately 121% by 2030, based on announced capacity to date, implying another round of substantial CapEx cycles in the next 2-3 years. will take place,” the report added.

The BofA report noted that the potential swing factors for the future of EVs in the US lie in regulation and incentives. In the bull-case scenario, BofA’s US auto team predicts that electric vehicle penetration in the US market would increase to approximately 25% and 50% in 2025 and 2030, respectively, compared to the base case of 7% and 20% in the same scenario. period .

The bull case assumes about $450 billion in federal incentives, or a $10,000 subsidy for each of the 45 million EVs sold. Accordingly, this suggests that the global operating rate of EV batteries could reach nearly 83% by 2024, likely pushing ahead an impending battery shortage by as much as a year compared to the baseline scenario, the report said.

The decline in oil and gasoline demand during the pandemic has coincided with significant gains for renewables, with solar and wind power expected to increase by 19% and 10% respectively for 2020. This could serve as a catalyst for electric vehicle penetration as more OEMs and other companies look to take on the world Environment, Social and Governance (ESG) standards in their business models and adopt electric vehicles for use in business operations.

symbol indicating a place to charge an electric car with energy in Spain Catalonia

symbol indicating a place to charge an electric car with energy in Spain Catalonia

Thomas Hum is a writer at Yahoo Finance. Follow him on Twitter: @thomashumTV

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