Niche investors look to EVs and green energy metals in era of climate change

Demand for electric vehicles and green-energy assets is growing as governments shift away from fossil fuels

Despite their long-term appeal, an expert says investors should prepare to dig in their heels rather than eye quick profits due to volatility

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Investors are increasingly turning to metals used in electric vehicles and for green-energy generation as governments move away from fossil fuels. Photo: Shutterstock

Published: 12:00pm, 12 Apr 2023

Gold’s charm has endured for centuries, and its traditional appeal as a store of wealth continues to enchant investors as prices hover near record highs this week amid fears of an economic slowdown in the United States following the collapse of two banks.

However, growing climate change risks are spurring a niche group to put their faith in a relatively obscure asset: metals used in electric vehicle batteries and for green-energy generation.

Demand for EV and green-energy assets is growing as governments move away from fossil fuels and push towards an array of metals used in clean energy such as lithium, copper, nickel and cobalt.

Investing in these assets is the equivalent of investing in oil in 1950 … and lithium and copper are the oil

Will McDonough, financial adviser

“I think investing in these assets is the equivalent of investing in oil in 1950 … Now you have this green energy revolution and lithium and copper are the oil,” said Will McDonough, co-founder and CEO of EMG advisers.

The company in December rolled out an exchange-traded fund (ETF) on the New York Stock Exchange weighted with a portfolio of futures contracts in battery-grade metals such as copper, lithium, nickel and cobalt.

Other asset managers such as Sprott have also either launched ETFs or listed vehicles, the composition of which varies, on prominent exchanges.

Modern electric vehicles require mined materials such as lithium. Photo: Shutterstock

Investors typically flock to safe-haven assets like gold and silver during times of volatility, mainly because the precious metals have predictable supply and demand, industry executives say.