Battery Metals: The New Gold Rush for Electric Cars
In 2017, cobalt went from $25,000 to $100,000 per ton. Quadrupled in a single year. Not because someone cornered the market or because a mine collapsed. It happened because the world suddenly realized that electric cars need batteries, and batteries need metals. Lots of metals. Chapter 41 of Torsten Dennin’s “From Tulips to Bitcoins” tells the story of how Tesla, Elon Musk, and the EV boom turned obscure industrial metals into the hottest commodities on the planet.
The Man Behind the Wheel
You cannot tell the EV story without talking about Elon Musk. Born in 1971 in Pretoria, South Africa. Co-founded PayPal, which eBay bought for $1.5 billion in 2002. Then he started SpaceX to build rockets and Tesla to build electric cars. He also launched Neuralink, which is working on brain-computer interfaces. The man has a thing for ambitious projects.
By February 2018, Musk’s net worth was over $20 billion. He was ranked the 53rd richest person in the world and the 21st most powerful. And he was running a car company that was burning cash at about $8,000 per minute. That is roughly $500,000 per hour, every hour, around the clock. Tesla was based in Palo Alto and specialized in electric vehicles, lithium-ion battery storage, and solar panels. The company had a massive Gigafactory in Reno, Nevada, producing batteries.
In 2017, Tesla produced and sold about 100,000 cars. That sounds like a lot until you compare it to the German automakers. BMW, Mercedes, and Audi together sold 6.6 million cars that same year. Tesla was a rounding error in the global car market. But it was not the size of Tesla that mattered. It was the direction Tesla was pointing.
OPEC Gets Nervous
Here is where it gets interesting. In 2016, OPEC revised its projections for electric vehicle growth. Not by a little bit. They revised upward by 500%. The original forecast was 46 million EVs on the road by 2040. The new number was 266 million.
Think about what that means for oil. The world consumes roughly 100 million barrels of crude oil every day. About 75% of that goes to transportation. If 266 million electric cars replace gasoline cars, oil demand could fall by 8 million barrels per day by 2040. That is around 8% of total global consumption. For an industry where a 1-2% shift in supply or demand can send prices swinging wildly, an 8% drop would be catastrophic.
OPEC had spent decades worrying about supply disruptions, wars, and rival producers. Now they had to worry about their customers simply not needing oil anymore.
The Numbers in 2017
The EV market was still small in absolute terms but growing fast. Global electric passenger cars exceeded 3 million. That is out of a total global car fleet of about 1.2 billion, according to BMI Research. So EVs were about 0.25% of cars on the road. Tiny.
But look at the growth rates. China was the biggest market. Half of all global EV sales happened in China. In 2017, China sold 579,000 electric vehicles, up 72% from the year before. That kind of growth rate turns small numbers into big numbers pretty quickly.
Germany, the homeland of BMW and Mercedes, was still barely in the game. In 2017, there were about 55,000 new EV registrations, and half of those were plug-in hybrids, not fully electric. That was just 1.6% of the 3.4 million new cars registered that year. Out of 43.8 million cars on German roads, electric cars were basically invisible.
Bloomberg New Energy Finance projected that by 2040, EVs could account for 35-40% of all new car registrations globally. That is a massive shift from 1-2% to more than a third of the market in just over two decades.
The Battery Metal Bull Market
Here is the thing about electric cars. They do not just need electricity. They need batteries. And batteries need raw materials. Lithium, cobalt, graphite, nickel, aluminum, copper, manganese. The list is long.
Cobalt was the star of 2017. The price went from roughly $25,000 per ton to about $100,000 per ton. A four-times increase in one year. Investors who had been ignoring cobalt for decades suddenly could not get enough of it.
And the projections said this was just the beginning. By 2040, analysts expected surplus demand for all the major battery metals: graphite, nickel, aluminum, copper, lithium, cobalt, and manganese. “Surplus demand” is a polite way of saying there will not be enough of these metals to go around. When demand exceeds supply, prices go up. Sometimes they go up a lot.
Lithium batteries were already everywhere. Your phone, your laptop, your wireless headphones. Almost every mobile device on the planet runs on lithium-ion technology. But personal electronics are small. Cars are big. An EV battery uses thousands of times more lithium and cobalt than a phone battery. When you multiply that by hundreds of millions of cars, the numbers get very large very fast.
Bigger Than Cars
Dennin makes a point in this chapter that I think a lot of people miss. Electric cars are just the tip of the iceberg.
The real story is energy storage. Wind turbines and solar panels have a problem. The wind does not always blow, and the sun does not always shine. For alternative energy to really work, you need a way to store electricity when it is being generated and release it when it is needed. Batteries are the missing link.
By 2025, the market for power banks and power walls for home energy storage might actually exceed the market for car batteries. Think about that. Your house, storing energy from solar panels on the roof, using battery technology that was originally developed for cars. That is a bigger market than the cars themselves.
Wind, solar, and water power all need storage. Without it, they are unreliable. With it, they could replace fossil fuels entirely. And all of that storage needs metals.
The New China?
Dennin ends the chapter with an interesting comparison. He calls electrification the potential “new China” for commodity markets.
If you were in commodities in the 2000s, you remember what China did to the market. China’s industrialization created massive demand for iron ore, copper, coal, oil, basically everything that comes out of the ground. Commodity prices went on a multi-year bull run. Fortunes were made.
The EV and energy storage boom could do the same thing. Different metals this time. Lithium instead of iron ore. Cobalt instead of coal. But the same basic dynamic: a structural shift in demand that lasts for decades and pushes prices higher.
Of course, Dennin wrote this in 2017-2018, when the excitement was building. Whether battery metals actually become the “new China” depends on how fast EVs are adopted, whether new mining supply can keep up, and whether battery technology shifts to different chemistries that need different materials. But the direction was clear. The world was moving toward electrification, and that was going to need a lot of metal.
What Stays With Me
A few things from this chapter stick with me.
First, the scale of the shift. The world has 1.2 billion cars. Almost all of them run on gasoline or diesel. Replacing even a fraction of them with electric vehicles requires an enormous amount of raw materials. Not just for the cars, but for the charging infrastructure, the energy storage systems, and the grid upgrades to handle the extra electricity demand. Every part of that chain needs metals.
Second, the cobalt price. A 4x increase in one year. That is the kind of move you see in speculative bubbles. But this was not speculation about some imaginary future. Electric cars were real. Tesla was producing 100,000 of them a year. China was selling over half a million. The demand was real. Whether the price was justified at $100,000 per ton is a different question. But the underlying trend was not going away.
Third, the energy storage angle. I think Dennin is right that this is the bigger story. Cars get all the headlines. Elon Musk gets all the attention. But the ability to store energy at home or at grid scale could change everything about how we produce and consume electricity. And it all runs on battery metals.
Tesla was burning $500,000 an hour and had sold only 100,000 cars. The German giants were selling 6.6 million. By any normal business measure, Tesla was a footnote. But sometimes the footnote is more important than the main text. Musk was not trying to compete with BMW in 2017. He was building the infrastructure for a world that runs on batteries instead of oil. Whether he would succeed was not yet clear. But the commodity markets had already placed their bets. Cobalt at $100,000 a ton was the market saying: this is real, and it is coming.
Based on Chapter 41 of “From Tulips to Bitcoins” by Torsten Dennin (ISBN: 978-1-63299-227-7, River Grove Books, 2019).
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