Editorial March 2022 Its not over yet
18 May 2022
For a while everyone thought that the Covid19 pandemic is over. However, no one had ever imagined that once the pandemic is over, there will be a world war like situations. The logistics were still being figured out and then comes the inflation, the chances of recession and the war situation in Europe.
The last 4 weeks were brutal for the market and people have lost a lot of money hoping the pandemic is over and its time for the market to be back to normal. However, exact opposite has happened. Social media posts on Twitter highlights that there are some cities which are under lockdown again in China including major industrial hubs like Shenzhen and Shanghai. The case numbers are higher than those that were recorded at the beginning of the outbreak in March 2020.
Due to all these factors and beyond, food, metals and other commodities are getting costlier, which in turn might affect the spending habits of people thus leading to a recession long term. The oil prices have shot up again and this time it isn’t OPEC but the attack on Ukraine and the sanctions on Russia by the west which have shot up oil prices to historic highs in the developed world. In India, Reliance has proposed increase in production in its Jamnagar plant.
The whole world in one way or the other is dependent on oil for moving from one place to another. However, all these are having a positive influence on green energy including solar, wind and hydro. To replace oil/petrol/diesel based vehicle, the Electric Vehicles are well position to make it to the top of the pyramid. Last week, US senators have sent a bipartisan letter to President Joe urging the head of state to invoke the Defense Production Act (DPA) in an effort to increase domestic production of minerals used in electric vehicle (EV) batteries – reported by Yahoo Finance. Many countries have seen adoption of EVs and some of them like Norway, Iceland and Sweden have made it to the top few countries. In Norway, an electric car owner is exempted from paying road tax and sales tax.
The most surprising thing was the negligence of the world leader to acknowledge Tesla as the American car maker and make GM and Ford the leader of EV when they produced merely 26 vehicles and Tesla produced almost a million vehicles in 2021. This has also caused a lot of commotion in the battery industry as they are an integral part of any electric vehicle. The chemicals and the raw materials used for battery manufacturing are the next big thing to see profits in the decade to come. It’s not just the elements like cobalt, aluminum, nickel which will see a huge demand in the times to come. Rusal from Russia which is a major world supplier of Aluminum, tumbles due to sanctions by the west. After China, India comes second in the production of aluminum and then very close is Russia. Due to sanctions, chances are that India and China might see more demand and might see an increase in price.
Reliance Industries have already acquired Faradion, a UK startup for $135 million and also announced yesterday about the acquisition of Lithium Werks, a company which has manufacturing facility in China for $61 million and produces cobalt free Lithium Iron Phosphate (LFP) batteries. These will be the two acquired companies looking to advance the electric vehicle battery manufacturing. However, based on Tesla patented technology about 4680 batteries that are produced by Panasonic, there is going to be good competition with the east and west. Indian popular opinion considers Tata Motors as the leader in EVs in India which also has its own chemical company heavily invested in battery chemicals.
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