A Climate Week announcement from Ford on increased electrification efforts was the first of several automotive companies making similar announcements. As a result, our ESG Safeguard platform’s Top Movers rankings featured several key players and picked-up key activities from General Motors, Tesla, Toyota, TVS Motor and Volvo.

Sam Leavitt
October 7, 2021

ESG Spotlight: Auto Industry Goes into Overdrive on EV Activity

ESG Spotlight: Auto Industry Goes into Overdrive on EV Activity

Coming out of Climate Week, the automotive industry had a strong showing across our ESG Safeguard’s Top Movers rankings. Ford’s (F) $50M investment into battery recycling company Redwood Materials during Climate Week kicked-off a flurry of activity in the automotive space.

As discussed in our Climate Week Webinar, the move by Ford comes months after the company vowed to spend $22B on electric vehicles by 2025. The partnership between the two companies will help Ford focus on circular economies in addition to production of electric vehicles. This action was quickly followed by more news in the electric vehicle space within the last seven days.

ESG Safeguard Platform: Environmental Top Movers, 7-Day Comparison from 365-Day Baseline

Volvo Raises the Bar (and Capital)

This week, Volvo (VOLV.B:SE) announced it is issuing new shares to raise $2.9 Billion for electrification efforts. Subsidiary Polestar announced last week it will go public through the Gores Guggenheim Group. The company has stated 2030 as an end date for production of internal combustion engine vehicles, less than a decade away.

Currently, the Swedish company is owned by Chinese Geely Holding Group. Geely will remain a major shareholder of the company after the issuance of new shares. It will be interesting to see how Volvo will use the new capital going forward, and when exactly the new shares will hit the Nasdaq Stockholm exchange.

Moves on Increasing Charging Capabilities

Late last week Tesla (TSLA) secured a contract in Australia to provide 40 batteries for Genex Power, strengthening the nation's renewable energy infrastructure. Tesla is currently the king when it comes to electric vehicles and one way for them to increase the adoption rate is to provide easier access to charging stations and renewable energy infrastructure. This expanded product line into utility scale energy storage not only provides the company with additional revenues, it is complementary to their electric vehicle efforts and expands the market.

Similarly, Indian Motorcycle producer, TVS Motor (532343:IN), signed a strategic partnership on electric charging with Tata Power (500400:IN). TVS is the third largest producer of two-wheelers in India and increasing charging capabilities in the country helps them to expand their addressable market size as well. Tata Power has been busy. We last made note of the company this summer when we covered their collaboration with Tata Motors (TTM) on charging infrastructure.

Securing the Supply Chain

While some companies are focused on infrastructure expansion for charging capabilities, others are looking into their supply chain to secure the raw materials needed for production. On Wednesday, General Motors (GM) reached an agreement with General Electric (GE) to collaborate on supply chains for rare earth metals used in electric vehicle battery production. The collaboration also focuses on supply chains for more traditional components like copper and steel.

GM has made bold statements saying it will double its revenue by 2030 in the pursuit of carving out a niche in the growing electric vehicle market. The company specifically called out Tesla, stating that they plan to dethrone the company as the king of the electric vehicle market in America; a claim we have heard from VW in the past about the European market. Engine No.1, the environmentally focused fund, has given GM’s transition to electric vehicles their seal of approval.

Toyota (7203:JP) secured a similar agreement for batteries with BHP (BHP:GB). The partnership specifically is for BHP to provide Toyota with nickel sulphate for lithium-ion batteries. Currently, Toyota is a significant producer of lithium-ion batteries in Japan for electric vehicles. BHP is developing a new facility in Australia that will make nickel sulphate and when fully operational, it will provide enough material to make 700,000 car batteries annually. BHP is a leading producer of nickel and currently 85% of its production serves the electric vehicle battery market. BHP also has an agreement in place with Tesla that was made official in July.

The Road Ahead

Company efforts this week resulted in three main takeaways for the road ahead when it comes to electric vehicles. Primarily, obstacles to EV adoption stems from infrastructure and how accessible charging is, which is why companies like Tesla are making efforts to increase capacity in that arena. Secondarily, the ability to produce electric cars is tied to securing a supply chain for battery materials which are essentially the engines for the vehicles.

Lastly, it takes vast capital expenditures to switch gears from internal combustion engine production to electric vehicles. Over one hundred years ago the combustion engine had to compete with horses as the accepted mode of transportation, today electric vehicles are catching on and manufacturers are making big bets across the board to make sure they aren’t left behind.

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Watch a Related ESG Webinar: Climate Week 2021 Recap

Watch our follow-up to Climate Week webinar where we put theory into practice leveraging our new Materiality analysis to debrief Climate Week 2021. We addressed who might be greenwashing, reviewed the positive narratives from the last 12 months, and discussed who spoke to noteworthy commitments, investments, or milestones in this year’s event. We were joined again with special guest Jean Rogers, Founder of the Sustainability Accounting Standards Board (SASB) and one of the world’s leading ESG experts.

About Amenity

Amenity Analytics is the industry leader in providing insights from unstructured text by using Natural Language Processing (NLP) assisted by Artificial Intelligence (AI) and Machine Learning (ML). Amenity’s NLP system is a sector-agnostic, language-dependent tool for quantitative text analysis that is deployed across the financial services industry and beyond.

This communication does not represent investment advice. Transcript text provided by FACTSET and S&P Global Market Intelligence.

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