During the budget presentation, UK chancellor Rishi Sunak committed to make it cheaper to buy low emission vehicles and cutting taxes on clean transport.
Among other measures, the budget extends the UK grant scheme for plug-in vehicles until the 2022-23 financial year.
Sunak said the government will provide £532.5 million to support the plug-in car grant – the scheme designed to promote the uptake of EVs in the UK, including vans, taxis and motorcycles.
Furthermore, the budget announced the exemption of zero emission cars from vehicle excise duty (VED), the so-called “expensive car supplement”.
“We will invest and cut taxes on clean transport, we are introducing a comprehensive package of tax and spend reforms to make it cheaper to buy zero or low emission cars, vans, motorbikes and taxes,” Sunak said.
EV demand to grow in the UK
The UK government’s measures to support the shift to greener transportation are likely to be bullish for growth in the EV sector in the country, and scaling up EV production would require sourcing of battery raw materials, such as lithium, cobalt and nickel. Lithium carbonate is a critical component of EV batteries.
William Adams, head of battery materials and base metals research at Fastmarkets, said: “The scarcity of charging points is no doubt a concern for would-be EV buyers, so the more charging points they see the more likely they will feel comfortable making the transition to an EV.
“The EV era is rolling out in front of us but the more charging infrastructure there is the quicker the roll-out is likely to be.“
Fastmarkets assessed the lithium carbonate, 99.5% battery grade, spot price cif China, Japan & Korea
at $9.50-10.50 per kg on March 5. By comparison, the assessment was priced $11.50-13.50 per kg a year ago.
Lithium prices declined during 2019 due to additional capacity expansions that outstripped demand growth.
A similar trend has dictated the cobalt market.
Fastmarkets' daily price for cobalt standard grade, in-whs Rotterdam
was $17-17.30 per lb on March 11.
The price hit almost $45 per lb at the start of April 2018 on the back of anticipated demand for cobalt from the EV market.
This demand has not yet materialized because automakers have struggled due to consumer uncertainty regarding the uptake of EVs and global economic headwinds.
The price dipped to $12.20 per lb in July last year, with its recovery aided primarily by trader-miner Glencore’s decision to mothball its Mutanda mine
in the Democratic Republic of Congo.
Other countries have policies in place to support EV development and adoption. For instance, market participants in China, the world’s largest EV market by volume, attribute the growth of the EV sector largely to the government's subsidies to EV automakers.
However, the cut in the subsidy in June 2019 has curbed demand for EV raw materials due to financial pressure on manufacturers following the reduction in support.
The country's EV sector is now awaiting the 2020 new energy vehicle (NEV) subsidies, with the Ministry of Industry and Information Technology (MIIT) saying there will be no significant reduction in subsidy for this year
The UK 2020 Budget has been unveiled against a backdrop of the global outbreak of the novel coronavirus (2019-nCoV) which threatens to trigger a global economic slowdown – this in turn would dent demand for electric vehicles and battery raw materials.
The UK Budget 2020 allocates a significant chunk of public spending towards protecting the UK economy from the impact of the global pandemic.
Nevertheless, the UK government expects the economic impact of the deadly virus to be “temporary.”