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(The opinions expressed here are those of the author, a columnist for Reuters.)
By Andy Home
LONDON, June 14 (Reuters) - The number of electric vehicles on roads worldwide rose to a record high of 2 million last year, according to the International Energy Agency (IEA).
That represented a doubling from the 2015 tally but electric cars still only accounted for 0.2 percent of the global count.
How many will there be in five years' time? Or in 10 years' time?
The answer to that question will determine the fortunes of multiple metals over the coming years.
Battery materials such as lithium and cobalt are already bubbling as supply chains which have historically evolved to meet niche applications adapt to the much bigger demands of the green technology revolution.
The likes of aluminium and copper can be expected to continue benefiting from greater usage across a transport sector increasingly defined by lightweighting and enhanced electrical circuitry.
Platinum and palladium, by contrast, could be losers as electrification reduces the need for catalytic converters.
But both supply and price are going to depend on what happens to demand. And that is the electric elephant in the room.
Analysts at Swiss bank UBS attempted to answer the question by tearing apart piece by piece a Chevy Bolt, which must top the list of fun things to do if you're a bank researcher.
They chose the Bolt because it is the first mass-market electric vehicle with a range of over 200 miles. It also "has a price tag and range similar to the upcoming Tesla Model 3, which is Tesla's long-awaited entry into the mass market." ("UBS Evidence Lab Electric Car Teardown - Disruption Ahead?", May 18, 2017).
Their surprise finding is that the Bolt's powertrain was $4,600 cheaper to produce than they expected "with more cost reduction potential left."
Their key takeaway is that the Bolt could reach consumer cost of ownership parity with a comparable internal combustion engine vehicle such as the Volkswagen Golf much sooner than expected, as early as next year in Europe.
That would represent a tipping point for demand and UBS has lifted its electric vehicle (EV) sales projections by around 50 percent accordingly.
"We now forecast 3.1m EVs sold in 2021 (battery-electric cars and plug-in hybrids) and 14.2m sold in 2025, instead of 2.5m and 9.7m previously."
Electric vehicles' share of new sales is forecast to rise from that marginal 0.2 percent last year to three percent in 2021 and 14 percent in 2025.
And if those numbers look a bit on the aggressive side, UBS' forecasts look decidedly pedestrian relative to those of RethinkX, a thinktank founded by Stanford University's Tony Seba.
"Rethinking Transportation 2020-2030", also released last month, generated a flurry of headlines about the imminent demise of the combustion engine.
"We are on the cusp of one of the fastest, deepest, most consequential disruptions of transportation in history," the report warns.
One which "will have enormous implications across the transportation and oil industries, decimating entire portions of their value chains, causing oil demand and prices to plummet, and destroying trillions of dollars in investor value."
RethinkX' core argument is that there is not one but two technical revolutions under way in the automotive sector.
Electrification of the global car fleet will coincide with the roll-out of autonomous vehicle technology with both trends feeding off each other.
"By 2030, within 10 years of regulatory approval of autonomous vehicles (AVs), 95 percent of U.S. passenger miles traveled will be served by on-demand autonomous electric vehicles owned by fleets, not individuals, in a new business model we call 'transport-as-a-service'".
It's an extreme vision but one that serves to underline the diversity of views as to what to expect over the coming decade.
In truth, there is no consensus whatsoever as to how fast electrification, or indeed automation, of the global vehicle fleet will happen.
There are simply too many moving parts to the equation, far more than the 24 the UBS team found in the Bolt's powertrain.
UBS' research aims to tackle the problem from a consumer choice model. When does the cost and convenience of owning an electric vehicle outweigh the advantages still enjoyed by existing internal combustion engine vehicles?
But in many parts of the world, consumer choice will be directly affected by government edict.
California led the way with its 2012 mandate that automakers selling more than 600,000 vehicles a year in the state must sell a stipulated amount of zero-emission-vehicles or risk losing the right to sell any at all.
China, which has its own problems with smog, is now picking up the compliance baton. Its proposed system, currently at the draft legislation stage, is much tougher. Nor has Beijing shown any signs of giving in to automaker pressure to push the start back from 2018.
There are multiple similar national and city initiatives.
London, for example, has stipulated that all new black cabs will have to be partly electric-powered by January next year.
Electrification of the 24,000-strong taxi fleet will go hand in hand with higher charges on diesel cars entering the city later this year.
So fast are these changes happening that the city's local and transport authorities are now racing against the clock to install the charging infrastructure necessary to support an all-electric cab fleet.
It's the interaction of consumer choice and government coercion that makes projecting EV growth rates so difficult.
Metals such as cobalt and lithium find themselves on the front-line of this green transport revolution because of their core role in batteries.
Explosive price hikes last year in lithium and earlier this year in cobalt were prime examples of what happens when supply chains are too slow to react to new demand drivers.
The initial lithium price shock seems to be fading as existing producers ramp up capacity and new operators enter the marketplace.
Cobalt, as traded on the London Metal Exchange, rocketed from $32,750 per tonne at the start of January to $56,250 in early April and has since also shown signs of flattening out at a current $56,500.
In both cases the initial price shock has passed.
But there is the potential for more price volatility going forward because producers, traders and analysts alike are struggling to construct consensus demand models.
That's the problem with revolutions. Once they start they evolve in wholly unpredictable ways.
The great technological jump of vehicle electrification is going to lead to some equally big moves in price.
Probably both. (Editing by Adrian Croft)