A Shift in Electric Vehicle Demands Amid Policy Changes

By Melanie Burton and Ernest Scheyder

(Reuters) – U.S. President Donald Trump’s rollback of electric vehicle targets may temporarily slow demand for lithium and other critical minerals, but it is unlikely to hamper the mining industry amid surging global EV demand, analysts and industry leaders said.

Trump on Tuesday revoked predecessor Joe Biden’s 2021 executive order that sought to ensure half of all new vehicles sold in the U.S. by 2030 are electric. Automakers had been positioning for a jump in EV demand due largely to that Biden move.

Trump’s order caused shares of Japanese automakers, South Korean battery makers, and Australian, U.S., and Chinese lithium miners to slip. However, analysts and industry experts expect traction elsewhere to more than compensate for any cooling of EV demand in the world’s second-largest auto market.

Trump has planned other regulatory changes to reduce support for EVs and charging stations while aiming to strengthen measures blocking imports of automobiles and battery materials from China.

> “Every time people take away subsidies or benefits … it’s a dent to the demand scenario,” said analyst Glyn Lawcock at Barrenjoey, an Australian investment bank. “(But) ultimately demand will still grow even if the U.S. is a bit slower under Trump.”

Australian lithium producer Liontown Resources (ASX:LTR) stated that the global transition to EVs was underway, with or without the United States.

> “Longer term, I just don’t think it will be an issue on demand,” Antonino Ottaviano, Liontown’s CEO, said on a Tuesday analyst call.

Much of the EV industry’s growth occurs in China, which accounts for 11 million sales or 65% of the market, compared to North America, which accounts for 10%.

Meanwhile, the rest of the world already accounts for 1.3 million EV sales and is growing at 27% year on year, a trajectory that will make it more significant than the entire North American market in less than two years, the Liontown executives added.

Chinese EV manufacturers are pursuing this growth potential as they face barriers to the U.S. market due to 100% EV tariffs imposed by Biden.

Grid-scale batteries, which store days’ worth of electricity, are increasing in popularity globally. Critical metals are also essential for many consumer electronics and computer servers powering artificial intelligence.

Albemarle (NYSE:ALB), the world’s largest lithium company, declined to comment on Trump’s order.

Arcadium, a lithium producer set to be purchased by Rio Tinto (NYSE:RIO), and the International Lithium Association trade group were not immediately available for comment. Rio Tinto also declined to comment, but its CEO Jakob Stausholm expressed optimism about lithium’s future demand at the World Economic Forum.

> “Lithium demand will probably go up another five times over the next 15 years, so a lot more lithium projects will have to be built,” Stausholm said, adding that he has owned an EV for more than nine years.

> “It’s just a better car” than an internal combustion engine, he noted.

David Klanecky, CEO of privately held battery recycler Cirba Solutions, anticipates that U.S. demand for critical minerals will surge by 2030, driven by the growing needs of various electronics.

Miners believe measures to reduce dependence on Chinese supplies will support demand for their metals.

> “We expect measures taken to build supply chain independence from China … to have a much greater impact than the rollback of a formal target for EV sales,” said Darryl Cuzzubbo, CEO of Australian rare earths developer Arafura.

> “There is a tipping point looming for electric vehicles at which targets and incentives won’t be required to encourage take-up.”