BHP More Bullish on Electric-Vehicle Revolution
By Rhiannon Hoyle
SYDNEY--BHP Group Ltd. (BHP.AU) sounded an increasingly
confident tone on the electric-vehicle revolution, a forecast that
will help to shape the miner's investment in commodities including
copper and oil.
The world's biggest miner by market value on Tuesday raised its
expectations for the number of electric vehicles that it expects on
the roads in coming decades, citing declining battery costs and
rising interest among automakers, particularly in China.
"Globally established automakers and China's up-and-coming
indigenous firms are embracing EVs, with model availability
increasing steadily and many self-imposed sales targets
instituted," said BHP's chief economist, Huw McKay.
BHP said it now expects electric vehicles to account for at
least 7% of the light-vehicle market come 2035, up from a forecast
of at least 5% two years ago. That is equal to 132 million electric
vehicles on the road at that time, it said.
The miner thinks market share could swell as high as 36% should
more governments invest in infrastructure to support charging and
ban the sale of cars powered by traditional internal-combustion
engines. BHP said its forecasts include wholly battery powered and
plug-in hybrid vehicles, but not traditional hybrids such as the
Electric vehicles have faced some speed bumps recently as China,
the world's largest car market, has cut subsidies. Umicore--which
makes cathodes used in electric-car batteries--issued a profit
warning and pushed back targets for sales and plant investments,
citing slowing Chinese demand.
Still, countries and cities elsewhere--particularly in
Europe--are pressing for change by announcing bans or restrictions
on diesel and gasoline vehicles.
Mr. McKay called electric vehicles "one of the mega-trends
expected to shape our long run operating environment."
BHP's electric-vehicle forecasts are "essential to establishing
the plausibility of our long run copper, nickel, oil and power
demand ranges" and consequently making decisions on future
investments, said Mr. McKay.
Last week, the mining company said it no longer plans to sell a
large nickel-mining and processing business in Australia because of
growing optimism over the use of nickel in batteries for electric
A strong electric-vehicle boom would be particularly positive
for BHP's copper business. Electric vehicles use up to four times
as much copper as other cars.
BHP has in recent years shifted its focus to producing more
copper, away from steelmaking materials iron ore and coal, because
of expectations demand for consumer products, including electric
vehicles, would lead the next commodity boom.
It has also focused on investments in petroleum, which could be
hurt by stronger-than-expected electric vehicle sales. The first
100 million electric vehicles on the road will likely reduce global
oil demand by 1.3 million barrels per day, said Mr. McKay. World
demand currently stands around 100 million barrels a day.
Write to Rhiannon Hoyle at email@example.com
(END) Dow Jones Newswires
May 20, 2019 22:14 ET (02:14 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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