The shift driving electric vehicles

The shift – increasingly being supported by sustainable financing – is an opportunity not just for manufacturers but those who produce the raw materials needed to build the technology necessary for the transition.

“Governments are getting behind the push. China wants 20 per cent of all new cars sold to be electric by 2025. In the US the target is 50 per cent by 2030. That’s big change in a small amount of time.”

Electric vehicles (EVs) in particular present significant opportunities for growth as big automakers around the globe make moves indicating their growing interest.

It’s not hard to see why. According to the Global EV Outlook 2022 from the International Energy Agency, electric car sales doubled in 2021 to a record 6.6 million units, with “more now sold each week than in the whole of 2012”.

Governments are getting behind the push. China wants 20 per cent of all new cars sold to be electric by 2025. In the US the target is 50 per cent by 2030. That’s big change in a small amount of time.

Industry is responding in kind. Rental giant Hertz just committed to a large electric car order. Rideshare behemoth Uber is waving goodbye to the internal combustion engine by 2030. It hopes.

Green

This is important work. The transportation sector contributes 14 per cent of all carbon emissions, according to the Environmental Protection Agency.

ANZ has played a key role in financing customers in the electric vehicle space and has recently completed a number of significant deals.

In September, ANZ helped Chinese car manufacturer Geely Auto secure its first sustainability Club loan. The $US400 million facility will be used by Geely for research and production in new energy technologies, accelerating both the development and implementation of such tech.

In the same month, ANZ announced it was helping finance HLI Green Power’s new electric-vehicle battery manufacturing facility in Indonesia. The plant – the first of its kind in south-east Asia – will benefit from Indonesia’s status as holding the world’s largest reserve of nickel, a critical component of EV tech.

HLI is a joint venture between South Korea’s Hyundai Motor Group and lithium-ion battery manufacturer LG Energy Solution. The $US711 million loan facility will drive the project which, in its initial phase, aims to enter mass production by 2024.

That news came after ANZ helped another Hyundai subsidiary, Hyundai Motor Group Innovation Centre, obtain its first green loan.

ANZ acted as joint lead arranger and sustainability adviser on the $S230 million deal for the Singapore-based group, which will use the funds on eligible green assets.

ANZ will continue to support these customers in their transition to net zero and we expect such activity to continue across the industry.

Momentum

The impact of EV development in the region is widespread. In China, the EV sector looms as a crucial plank for the country’s pledge to achieve carbon neutrality by 2060.

According to ANZ Research, EV charging stations loom as a significant opportunity, with EV sales hitting 3.5 million in 2021 and expected to exceed 5 million in calendar 2022. This growth is seen as particularly important for China as increasing EV sales support the country’s macroeconomic recovery.

Australia is in an enviable position as one of the few countries in the world producing some of the key raw materials required for EV batteries. Australia is already the world’s largest exporter of lithium and an October report from the government suggested exports could rise by more than 180 per cent in fiscal 2023.

Along with ample nickel, cobalt, manganese, vanadium, zinc and copper, the country has been labelled in some quarters a potential “battery superpower”.

Elsewhere in the region, policymakers in smaller economies are making moves that will also drive opportunity in the EV space.

In Thailand, the 3030 EV Production Policy aims to ensure the electric component of domestic vehicle production reaches 30 per cent by 2030. In Indonesia, sales of combustion engine motorcycles will be banned by 2040 and cars by 2050.

It’s clear the market for EVs is at a tipping point. As demand rises, it’s a market poised for growth.

This article was originally published on ANZ Institutional Insights page.

Jenny Fan is Director, Sustainable Finance at ANZ Institutional