Proactive Investors - Copper demand is set to grow from renewables and electric vehicles (EVs) as pillars of the energy transition but less so from EV chargers and grid upgrades despite the up to $60bln opportunity in US EV charging infrastructure, according to analysts at UBS.
“We are bullish out the outlook for copper demand from EV and renewables but have been sceptical on the materiality of the EV chargers and grid upgrades,” the analysts wrote in a note to clients.
“While EV chargers and grid upgrades are additional decarbonisation demand drivers; they are unlikely to be a game changer,” they wrote.
Sizing up the copper demand uplift from EV chargers, the analysts said accelerating US EV demand combined with federal and state charging infrastructure incentives suggests 1.1 to 5.7mln chargers would be needed to be installed by 2030, compared to 130,000 today, to match UBS US EV forecasts.
They noted their estimates were materially above the Biden administration goal of 500,000 by 2030, which does not specify Level 2 (L2) versus Level 3 (L3) chargers.
“The key driver of the number of chargers/copper demand is the split between Level 2 chargers that deliver 7.5 to 20kw and contain 5 to 14 kilograms versus DC Fast chargers (Level 3) that deliver 350kw and directly contain about 60kg, but up to 500kg including grid transformer upgrades.”
“We estimate that every DC fast charger built reduces the need for 24 Level 2 chargers.”
On the ability of the US and other grids to handle EV adoption, UBS believes the current grid can handle increased EV demand and would not require material investments until EV penetration reaches 30%-plus, noting it forecasts EV penetration of about 19% by 2030.
“Grid investment will remain a key copper demand driver at 20 to 25% but we believe it will be a source of stable demand, not transformational growth,” they concluded.