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Automotive

Lithium Prices: What They Tell Us About the Popularity of Electric Vehicles

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6 minute read

From EnergyNow Media

By Jim Warren

The online database, Trading Economics, indicates that in June 2023 the global price for lithium had risen to $59,212 per tonne. But by November it had fallen by more than half to $27,218. Prices have continued to plummet. As of December 31, lithium was selling for just $18,242 per tonne.

How could this be? Electric vehicle (EV) mandates established in many rich developed countries over the past few years had analysts predicting that if targets were actually met, the world would need 388 new lithium mines by 2035. A Fraser Institute study suggests that getting enough mines built to satisfy all the mandates will be a problem. It takes from seven to ten years to get a mine financed, approved and built.

Canada’s Environment Minister, Steven Guilbeault is certainly trying to drive up demand for lithium. The federal government’s Zero Emissions Vehicle Standard insists that by 2030, 20% of all new passenger cars, SUVs and light trucks sold in Canada must be greenhouse gas emissions free. New battery plants are being handsomely subsidized in Canada to power all of the new electric cars that will presumably be required. With similarly aggressive mandates in Europe and US states led by California there should be heavy demand for lots of batteries and a mountain of lithium.

The most likely explanation for collapsing lithium prices is US consumers’ reluctance to embrace electric vehicles. The Economist reports that EVs accounted for just 8% of new vehicle sales in America this past year. GM was only able to sell 20,000 EVs, but it did manage to sell over half a million fossil-fueled vehicles. Disappointing demand for EVs prompted GM to shelve plans to spend $4 bn to convert one of its plants to electric pickup truck production. Ford has similarly lost enthusiasm for EVs. This past fall it decided to delay plans to invest $12bn in EV production. Companies that make lithium batteries for EVs have responded accordingly. This past fall battery plants in Georgia and Michigan laid off hundreds of employees. Fewer batteries translated into less demand for lithium.

It would appear that EV adoption goals established under Joe Biden’s eye-wateringly expensive green transition initiative (disguised as the “Inflation Reduction Act,”) are not being met. The Biden plan offers tax credits of up to $7,500 for people who purchase EVs. However that hasn’t been a sufficient sweetener. The average EV sold in the US has a $52,000 price tag and that doesn’t account for additional costs like wiring a home charging set up. California, Florida and Texas account for over half of US EV sales and are also responsible for high average sticker prices. Ostensibly virtuous EV buyers in the US have a bit of hypocrisy going on. They’ll happily drive EVs as long as they are full size SUVs. Batteries are heavy which makes EVs heavier than gas and diesel fueled vehicles. And, electric SUVs are especially heavy—heavy enough to increase the chances of deadly collisions. Tesla has apparently created a super-sized SUV, designed for wealthy California drivers, that makes the Hummer look like a toy. And, because they are extra heavy, driving them uses more electricity and it takes extra energy and materials to build them. Furthermore, given that fossil fuels still account for 60% of the electricity generated in the US, EVs are less environmentally friendly than advertised. They are far from being “emissions free.”

EVs are indeed more popular in Europe and China. In Europe 1.5 million EVs were sold this past year and 3.5 million were sold in China. The models sold in China are small, zippy units that don’t weigh much. However, like in the US, around 60% of the electricity consumed in China is generated by burning fossil fuels (mostly coal).

Despite having a copycat EV mandate that mirrors those in Europe, Canadian sales have been even less stellar than what the US has been able to achieve. In 2021, EVs accounted for just 5.3% of new car sales in Canada. Most of them were sold in Ontario, BC and Quebec (55,229) which makes sense—those are the provinces where most Canadians and most climate-alarmed Canadians live. In all the rest of Canada just 7,301 electric vehicles were purchased.

Clearly, the adoption of electric vehicles has failed to meet the overly ambitious targets set by environmentally-friendly policy makers. This result lines up with the litany of missteps and missed targets that have plagued green transition projects over the past two years. The failures include the big decline in demand for new solar and wind power projects and the reversal of greenhouse gas emissions reduction projects in the UK and Europe. An issue this could raise for us in Canada is that Steven Guilbeault might see the international data and worry that his transition plans need to be beefed-up. He could make them even more onerous, expensive and ludicrous.

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Automotive

New federal government should pull the plug on Canada’s EV revolution

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During his victory speech Monday night, Prime Minister Mark Carney repeated one of his favourite campaign slogans and vowed to make Canada a “clean energy superpower.” So, Canadians can expect Ottawa to “invest” more taxpayer money in “clean energy” projects including electric vehicles (EVs), the revolutionary transportation technology that’s been ready to replace internal combustion since 1901 yet still requires government subsidies.

It’s a good time for a little historical review. In 2012 south of the border, the Obama administration poured massive subsidies into companies peddling green tech, only to see a vast swath go belly up including Solyndra, would-be maker of advanced solar panels, which failed so spectacularly CNN called the company the “poster child for well-meaning government policy gone bad.”

One might think that such a spectacular failure might have served as a cautionary tale for today’s politicians. But one would be wrong. Even as the EV transition slammed into stiff headwinds, the Trudeau government and Ontario’s Ford government poured $5 billion in subsidies into Honda to build an EV battery plant and manufacture EVs in Ontario. That “investment” came on top of a long list of other “investments” including $15 billion for Stellantis and LG Energy Solution; $13 billion for Volkswagen (or $16.3 billion, per the Parliamentary Budget Officer), a combined $4.24 billion (federal/Quebec split) to Northvolt, a Swedish battery maker, and a combined $644 million (federal/Quebec split) to Ford Motor Company to build a cathode manufacturing plant in Quebec.

How’s all that working out? Not great.

“Projects announced for Canada’s EV supply chain are in various states of operation, and many remain years away from production,” notes automotive/natural resource reporter Gabriel Friedman, writing in the Financial Post. “Of the four multibillion-dollar battery cell manufacturing plants announced for Canada, only one—a joint venture known as NextStar Energy Inc. between South Korea’s LG Energy Solution Ltd. and European automaker Stellantis NV—progressed into even the construction phase.”

In 2023, Volkswagen said it would invest $7 billion by 2030 to build a battery cell manufacturing complex in St. Thomas, Ontario. However, Friedman notes “construction of the VW plant is not scheduled to begin until this spring [2025] and initial cell production will not begin for years.” Or ever, if Donald Trump’s pledge to end U.S. government support for a broad EV transition comes to pass.

In the meantime, other elements of Canada’s “clean tech” future are also in doubt. In December 2024, Saint-Jérome, Que.-based Lion Electric Co., which had received $100 million in provincial and government support to assemble batteries in Canada for electric school buses and trucks, said it would file for bankruptcy in the United States and creditor protection in Canada. And Ford Motor Company last summer scrapped its planned EV assembly plant in Oakville, Ontario—after $640 million in federal and provincial support.

And of course, there’s Canada’s own poster-child-of-clean-tech-subsidy failure, Northvolt. According to the CBC, the Swedish battery manufacturer, with plans to build a $7 billion factory in Quebec, has declared bankruptcy in Sweden, though Northvolt claims that its North American operations are “solvent.” That’s cold comfort to some Quebec policymakers: “We’re going to be losing hundreds of millions of dollars in a bet that our government in Quebec made on a poorly negotiated investment,” said Parti Québécois MNA Pascal Paradis.

Elections often bring about change. If the Carney government wants to change course and avoid more clean-tech calamities, it should pull the plug on the EV revolution and avoid any more electro-boondoggles.

Kenneth P. Green

Senior Fellow, Fraser Institute
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Automotive

Major automakers push congress to block California’s 2035 EV mandate

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Quick Hit:

Major automakers are urging Congress to intervene and halt California’s aggressive plan to eliminate gasoline-only vehicles by 2035. With the Biden-era EPA waiver empowering California and 11 other states to enforce the rule, automakers warn of immediate impacts on vehicle availability and consumer choice. The U.S. House is preparing for a critical vote to determine if California’s sweeping environmental mandates will stand.

Key Details:

  • Automakers argue California’s rules will raise prices and limit consumer choices, especially amid high tariffs on auto imports.

  • The House is set to vote this week on repealing the EPA waiver that greenlit California’s mandate.

  • California’s regulations would require 35% of 2026 model year vehicles to be zero-emission, a figure manufacturers say is unrealistic.

Diving Deeper:

The Alliance for Automotive Innovation, representing industry giants such as General Motors, Toyota, Volkswagen, and Hyundai, issued a letter Monday warning Congress about the looming consequences of California’s radical environmental regulations. The automakers stressed that unless Congress acts swiftly, vehicle shipments across the country could be disrupted within months, forcing car companies to artificially limit sales of traditional vehicles to meet electric vehicle quotas.

California’s Air Resources Board rules have already spread to 11 other states—including New York, Massachusetts, and Oregon—together representing roughly 40% of the entire U.S. auto market. Despite repeated concerns from manufacturers, California officials have doubled down, insisting that their measures are essential for meeting lofty greenhouse gas reduction targets and combating smog. However, even some states like Maryland have recognized the impracticality of California’s timeline, opting to delay compliance.

A major legal hurdle complicates the path forward. The Government Accountability Office ruled in March that the EPA waiver issued under former President Joe Biden cannot be revoked under the Congressional Review Act, which requires only a simple Senate majority. This creates uncertainty over whether Congress can truly roll back California’s authority without more complex legislative action.

The House is also gearing up to tackle other elements of California’s environmental regime, including blocking the state from imposing stricter pollution standards on commercial trucks and halting its low-nitrogen oxide emissions regulations for heavy-duty vehicles. These moves reflect growing concerns that California’s progressive regulatory overreach is threatening national commerce and consumer choice.

Under California’s current rules, the state demands that 35% of light-duty vehicles for the 2026 model year be zero-emission, scaling up rapidly to 68% by 2030. Industry experts widely agree that these targets are disconnected from reality, given the current slow pace of electric vehicle adoption among the broader American public, particularly in rural and lower-income areas.

California first unveiled its plan in 2020, aiming to make at least 80% of new cars electric and the remainder plug-in hybrids by 2035. Now, under President Donald Trump’s leadership, the U.S. Transportation Department is working to undo the aggressive fuel economy regulations imposed during former President Joe Biden’s term, offering a much-needed course correction for an auto industry burdened by regulatory overreach.

As Congress debates, the larger question remains: Will America allow one state’s left-wing environmental ideology to dictate terms for the entire country’s auto industry?

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