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Massive volumes of lithium are found amid the salt of Calama, Chile, but a huge shortfall of the metal is still forecast for the 2020s. Photo: Cristobal Olivares/Bloomberg

The Electric: The World of EVs and Batteries Is in Chaos. So Why Are These Analysts So Darn Optimistic?

Photo: Massive volumes of lithium are found amid the salt of Calama, Chile, but a huge shortfall of the metal is still forecast for the 2020s. Photo: Cristobal Olivares/Bloomberg

Welcome back to The Electric! 

For a year, the electric vehicle and battery industries have faced a growing list of troubles, especially over snags in their respective supply chains. But through the industries' ups and downs, one voice has remained bullish—that of BloombergNEF, the renewable energy research firm. This week, we explore the firm's latest outlook and why it's so optimistic.

The last 12 months have been fretful for the battery and electric vehicle industries. Key raw materials for batteries are in short supply, the cost has soared for both battery metals and EVs, and there’s no solution in sight for the rest of the decade. As if to underscore the point, the industry’s relentless optimist, Tesla CEO Elon Musk, announced Friday that he was cutting the company’s salaried workforce by 10% after having a “super-bad feeling” about the economy.

But this grim view isn’t shared by BloombergNEF, a widely followed renewable energy research firm. Instead, it sees reason for cheer: The raw materials situation may look bad, the firm says, but it will clear up and there will be ample supplies for everyone. Battery costs look like they are out of control, but very soon they will moderate. Above all, oodles of EV sales are on the way.

I have been among the voices warning for months about the critical metals shortage, which I have forecast will cause a shortfall of EVs lasting at least through the 2020s. I have predicted industry consolidation, certain that not all of big auto will survive the chaotic decade. And I have suggested that companies get ahead of this by spinning off their EV and battery divisions. But it’s worth hearing out divergent opinions. BNEF, whose annual Electric Vehicle Outlook is probably the most closely read assessment of the industry, has been one of the most bullish voices on EVs for several years, and has also been generally correct. So I dug into the firm’s 2022 edition, published last week. I also hosted BNEF’s Colin McKerracher, who oversees the analysts writing the report, on Live Chat With The Electric last Thursday.

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