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Shenanigans in the EV industry lead to job losses

13 Aug 2024

Shenanigans in the EV industry

On the weekend, I read an interesting article by John Connolly titled “How The Plug Got Pulled on the Electric Car Dreams” (Connolly, 2024). The article critiques the electric vehicle (EV) market, highlighting the struggles of Western automakers like Ford, Tesla, and GM, whose share prices have recently tanked due to oversupply and less profitability in the EV sector. These companies, influenced by government policies and the push to appear environmentally conscious, are now facing significant market challenges.

Connolly (2024) also examines the dominance of Chinese automakers, who have benefited from long-term government support and are now flooding global markets with affordable EVs. He mentions how the influx of Chinese EVs, combined with strategic moves like Hertz purchasing 100,000 Teslas only to see Elon Musk slash prices afterward, then Hertz in a fire sale sold half of them, driving down EV prices globally. Additionally, the oversupply of EVs in the market has led to a decrease in lithium prices, the key component in EV batteries.

Chinese manufacturers, having invested heavily in the EV supply chain and secured significant lithium resources, can afford to undercut competitors, further driving down prices. This price manipulation, coupled with the introduction of second-hand Japanese EVs in markets like Australia, has significantly impacted the resale value of other EV brands, contributing to market instability.

Connolly (2024) suggests that in this volatile environment, hybrids might be a safer investment until the EV market stabilizes. However, after speaking with a taxi driver (the font of all knowledge) recently, it seems the industry is not buying into EVs due to, limited battery life effecting resale value, along with the above mentioned market challenges.

Lithium prices have been particularly volatile. Alex Gluyas (2024) reported that Citi predicts a 20% dive in lithium prices as inventories climb, driven by oversupply and a dramatic increase in inventory. This has led to a significant impact on ASX-listed lithium stocks. Citi expects lithium prices to eventually rebound next year, although the near term remains bearish. Remembering 12 hours is long term for a share broker.

Additionally, concerns about market manipulation have been raised. For instance, Mineral Resources (MIN) has pointed to manipulation, including “plenty of paper trading,” as a key factor depressing prices (Martin, 2024). This has created significant challenges for the lithium market, with prices falling dramatically since late 2022.

A recent survey conducted by the Australian Financial Review (2024) highlighted that 76% of car buyers would still opt for a hybrid over an electric vehicle due to concerns over battery life, resale value, and market volatility. This further reflects the uncertainty and skepticism surrounding the EV market, even as governments and manufacturers continue to push for electric alternatives.

The article also touches on the economic fallout from the shift to EVs, particularly the impact on jobs. Ford recently announced it would cut 3,800 jobs across Europe in response to slowing demand for EVs and the need to cut costs in a highly competitive market (Reuters, 2024). This follows similar moves by other automakers like General Motors, which has also reduced its workforce in response to declining sales and rising costs associated with the transition to electric vehicles (Bloomberg, 2024).

The ripple effect of these price fluctuations is being felt across the mining industry, where thousands of jobs have already been lost. The downturn in lithium prices and the resulting impact on mining companies have led to substantial workforce reductions, further straining the industry.

With the combination of cheap Indonesian nickel floodingthe market, and the slump in the lithium price several mines have been affected in Australia.

  • Panoramic Resources – Savannah Nickel Project (Kimberley, WA): Approximately 300 jobs lost (140 direct employees, 160 contractor workers) (Martin, 2024).
  • First Quantum Minerals – Ravensthorpe Nickel and Cobalt Mine (Goldfields, WA): Approximately 325 jobs lost (125 direct employees, 200 contractor workers) (Martin, 2024).
  • Wyloo Metals – Cassini, Long, and Durbin Mines (Kambalda, WA): More than 250 jobs lost (including direct employees and contractors) (Martin, 2024).
  • Core Lithium – Finnis Mine (Northern Territory): 120 to 150 jobs lost (40 to 50 percent of 300 staff and contractors) (Martin, 2024).
  • Mineral Resources -Wodgina (WA) estimated over 500 worker relating to lithium out of the 1000s being laid off company wide.
  • BHP will suspend operations at the Kwinana nickel refinery in Perth, the Kalgoorlie smelter and its major mines at Mt Keith and Leinster in the state’s Goldfields from October 2024. (1600 workers to be redeployed or made redundant) (Ethan French 2024)
  • Albemarle – Lithium Facilities: Albemarle has indicated that the current low prices for lithium do not justify new investments in plants for the battery metal. While specific job losses were not detailed, the company’s caution reflects broader industry trends and impacts (Gluyas, 2024).

These closures and reductions highlight the severe impact of the lithium market downturn on employment in the mining sector, with more job losses anticipated if market conditions do not improve.

Finally, as reported by Lee (2024), there is growing concern about the environmental impact of battery production, particularly the mining and processing of lithium, cobalt, and nickel. The environmental costs, combined with the current market turbulence, have led some experts to question whether the rapid shift to EVs is sustainable in the long term.

Find out more about isses that effect WA’s mining industry from our very experienced trainers in our training courses.

Environmental Essentials

Tenement Literacy 101

Practical Tenement Management

Advanced Tenement Management

Understanding Tenement Expenditure

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