Insights

Is the EV industry driving toward a dead end?

By Paul Reid

28 March 2024

end of evs

The signs are emerging and undeniable. Enormous car lots around the world are filling up with EV vehicles that nobody wants. Rental giant Hertz recently canceled its order of 100,000 Tesla vehicles, but other rental companies are also reducing their EV fleet goals for 2024 and beyond.

Environmental concerns and reports are emerging claiming that extracting lithium, cobalt, and other materials for batteries can be resource-intensive and highly polluting. Currently, there are almost 1.5 billion cars on the road worldwide. That’s a lot of batteries needed to replace the combustion engines that keep the world turning.

Traditional car manufacturers like Ford are also announcing that EV sales are waning and production costs are rising. Moreover, civil engineers in multiple countries are now claiming their grids and underground electrical conduits are insufficient for an all-EV society.

The reasons for abandoning fully electric cars are mounting. Eventually, alternatives such as Hydrogen fuel cells will likely be explored, but right now the solution topping the list of likely replacements seems like a bit of a backward step at first glance… but is it?

The rise of e-fuel

Imagine pulling up at the fueling station in a twin-turbo sports car, filling the tank in minutes, then screeching away for a long drive, all along knowing your vehicle has a carbon-neutral footprint and can reach your destination without any doubt. This is not a fantasy, the technology already exists to make this a reality.

E-fuel or electrofuel represents a fascinating innovation in the realm of renewable energy. It's a type of synthetic fuel created through the process of capturing carbon dioxide (CO2) from the atmosphere and then combining it with hydrogen produced through the electrolysis of water. This hydrogen is generated using electricity that ideally comes from renewable sources like wind, solar, or hydroelectric power.

The beauty of e-fuel lies in the potential to provide a carbon-neutral alternative to fossil fuels. Since the CO2 used in production is essentially extracted from the atmosphere and then emitted back when the fuels are burned, the overall process can achieve a closed carbon cycle. This means that e-fuels could potentially power existing internal combustion engines in cars, ships, and even planes, with minimal modifications required, offering a pathway to reducing greenhouse gas emissions without needing to overhaul existing transportation infrastructures.

One of the most exciting aspects of e-fuel is its versatility. It can be designed to mimic the properties of various traditional fuels such as gasoline, diesel, and even jet fuel, making it a potentially seamless replacement in a range of industries.

But if e-fuel really is the future, what’s going to happen to dedicated EV companies like Tesla?

The end of the road for EVs?

Not long after the world embraced Tesla and other battery-powered electric vehicles, range anxiety crept into commuter conversations. And when China stepped up its EV production, Tesla felt the pinch once again. TSLA has already taken a hit over the last year, and if battery-powered vehicles are doomed, one might imagine Tesla will be the first casualty, but it’s not the only asset that will be influenced by a shift to e-fuel.

Considering a shift from battery electric vehicles (EVs) to e-fuel, several assets could be impacted. This shift would likely affect industries and commodities closely related to the automotive and energy production sectors.

Palladium (XPDUSD) and Platinum (XPTUSD) are used in automotive catalytic converters. A move towards e-fuel, which might emphasize different technologies for reducing emissions, could alter demand dynamics for these metals.

Nickel (XNIUSD) is a critical component in EV batteries. A reduced focus on battery EVs might impact nickel demand, especially since e-fuel technologies do not require such materials.

Lead (XPBUSD) is commonly used in batteries. Shifts in automotive battery technology or decreased reliance on traditional battery solutions could influence lead prices.

Automotive stocks such as Ford (F), Li Auto Inc. (LI), NIO Limited (NIO), and XPeng Inc. (XPEV) are currently involved in EV production. A global transition to e-fuel could significantly influence their future direction, stock performance, and market strategy.

As you can see from the graph that starts in January 2024, only Ford is holding on, and that’s not because of its EV offering. Ford's 2024 sales are positive overall, driven by a 23.7% year-over-year increase in SUV sales.

Oil (USOIL and UKOIL) are also in the crosshairs. An increased emphasis on e-fuels, depending on their source and production methods, could impact global oil demand and prices. This shift could be particularly influential if e-fuels become a viable alternative to not only gasoline but also to the current EV battery technology, thus affecting the broader energy market.

Conclusion

When it comes to practicality and environmental concerns, e-fuel offers many advantages over battery vehicles or hydrogen fuel-cell technology, but it’s only in the concept phase right now.

Only if the world embraces this new fuel alternative will we see the markets react, so for now, your job is to keep your eye on the automobile industry. When the next groundbreaking release comes out, ask yourself if it supports EVs or e-fuel. 

It’s very important to account for how market sentiment affects share prices. In the past, we’ve seen massive selloffs from Telsa, Google, and Meta because of overreacting sentiment, so be ready for the unexpected. Open the Exness Terminal, and place a few risk-free orders on the demo account to get a feeling for the price ranges and sentiment of the assets mentioned above.

Assuming the conclusions of this article are close to accurate, you, as a trader, are now far ahead of the research and news, so be patient and wait for the news and market sentiment to catch up with you. For now, just make sure your Exness trading account is active and ready for a market shift.


This is not investment advice. Past performance is not an indication of future results. Your capital is at risk, please trade responsibly.


Author:

Paul Reid
Paul Reid

Paul Reid is a financial journalist dedicated to uncovering hidden fundamental connections that can give traders an advantage. Focusing primarily on the stock market, Paul's instincts for identifying major company shifts is well established from following the financial markets for over a decade.