THE REASON FOR THE INDUSTRIAL UPTICK
In part, silver can thank the high-tech auto industry, which both reflects and drives a global shift toward electrification powered by solar technology. Lithium and cobalt, two key battery metals, are currently in the spotlight, but investors should also understand that silver has a critical role to play in the shift to electric vehicles (EVs) and the growing demand for fossil-free forms of energy generation to support electrification. A new report out [last week] from the International Energy Agency, “Global EV Outlook 2018,” estimated that over 3 million EVs were on global roads at the end of 2017, potentially growing to 125 million by 2030.2 As countries make this transition from internal combustion engines to electric and hybrid vehicles, combined with the desire of many countries to move away from coal-fired and nuclear-generated energy, solar energy will continue to grow in importance. As the technology boom fuels a dramatic shift in the vehicles we drive, the trends could give silver a turbocharge. In fact, last year the auto sector’s demand for silver grew 5%, while silver demand in photovoltaics increased 19%.
A ROAD LINED IN SILVER
To understand how countries are adjusting to electric and self-driving vehicles, look to Asia as an example: A new solar-powered road is being constructed in Jinan, a city in eastern China. What’s unique about this 1,080-meter-long (3,540 feet) road is that it’s paved with solar panels, according to Bloomberg.3 Transparent concrete covers the panels, which will power the highway’s lights and nearby homes.
Solar panels, known as photovoltaics (PV), have become a growing source of demand for silver. These panels use silver paste, which contains about 90% silver powder. As the use of these solar panels increase, the need for more silver should follow. The tonnage of silver paste used within PVs is expected to grow 10% by 2020, according to PV silver paste developer Heraeus Photovoltaics. Looking further out, BMO Capital Markets4 estimates that silver demand for PVs will double by 2025, accounting for 15% of silver consumption and improving industrial demand.
ELECTRIC VEHICLES WILL BECOME THE NORM
The architects of the Jinan road have a grand vision. They have planned the road so that wireless charging technology, once it becomes practical, will charge the batteries of EVs riding along the stretch of highway.
That’s not the only opportunity coming from EVs. While China’s road is unique, other countries are increasing the number of electric charging ports to keep up with stricter carbon-reducing policies. Volkswagen5 has embraced this trend, announcing in April that it would add EV charging stations to over 100 Walmarts across the United States. Porsche (a subsidiary of VW) has committed to building 500 such stations as well. Where will the electricity for these ports come from? Solar panels.
SELF-DRIVING VEHICLES ADD ANOTHER LAYER OF GROWTH
China estimates that self-driving vehicles will account for about 10% of all cars on the road by 2030. No doubt, the solar-paneled road will provide fine-grained geolocation and traffic data, supplying autonomous vehicles with additional information to cruise without a human driver.
Silver also benefits from this trend, because it’s a key component in technology within vehicles. With more technology, the more silver you’ll see in the cars, particularly in the tools that protect riders. For example, silver is a component in operating collision avoidance systems, like cameras and sensors. A sudden mass-market need for these automated features means automakers will likely require more silver.
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