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Copper Demand for EVs Could Crimp Profitability
Estimated reading time: 5 minutes · Last updated:
US automakers are seeing renewed interest in electric vehicles as pump prices rise to an average $4.47 a gallon, but that demand is colliding with rising metal costs and slow mining timelines. The immediate pinch is copper: prices have climbed as much as 20% this year, and manufacturers now face higher raw-material bills on top of EV price premiums. Surveys from HERE Technologies and SBD Automotive and data from Cox Automotive show growing buyer openness to EVs, but analysts at S&P Global Energy and portfolio managers in mining warn the supply chain for copper will take years to expand to match that demand.
Everyone knew this was coming. It’s kind of like watching a train wreck in slow motion.
Doug Daly, portfolio manager at CoreCommodity Management
Key takeaways
- Copper prices have climbed as much as 20% this year amid supply concerns and talk of potential US import tariffs.
- S&P Global Energy’s Eleonor Kramarz says electric mobility will account for 32% of incremental copper demand and that EVs could create close to 6 million metric tons of copper demand by 2035.
- New electric cars cost more: US buyers paid an average $54,813 for new electric cars in August, a 9.4% premium versus the market average.
Table of contents
Why copper is central to electric vehicles
Copper is a core conductor in electric power systems and in EVs it moves current between batteries, controllers and motors. That role makes copper a material contributor to an EV’s bill of materials and to its engineering: EVs require more wiring and larger conductors than comparable internal-combustion cars.
Eleonor Kramarz, global head of critical minerals and energy transition consulting at S&P Global Energy, estimates electric mobility will be the single largest source of incremental copper demand over the next decade, accounting for 32% of that growth. She adds that, by 2035, EVs and hybrids could require close to 6 million metric tons of copper — a figure the industry would need to absorb alongside demand from grid electrification.
How the current market is changing buyer behaviour
Higher fuel costs are nudging US drivers back toward electrified transport. HERE Technologies and SBD Automotive found more than half of US drivers surveyed were more open to considering EVs than a year earlier, and 57% of respondents said rising gas prices influenced their interest. Cox Automotive’s mid-year review separately reported that 56% of shoppers say higher pump prices make them likelier to consider a hybrid or plug-in hybrid.
Those shifts increase manufacturers’ incentive to ramp production, but the economics are already stretched: Kelley Blue Book data show the average new electric car transaction was $54,813 in August, a 9.4% premium over the broader new-vehicle market. Automakers face the choice of absorbing rising metal costs, raising prices further, or narrowing EV offers — Ford’s prior decision to write down $19.5 billion tied to its EV plans illustrates how costly course corrections can be.
Supply-side constraints and project lead times
Mining new copper — finding deposits, permitting, financing and bringing a mine into production — is a multi‑year process. Doug Daly, portfolio manager at CoreCommodity Management, warns that supply and demand are out of balance and that the lag between project start and first production is long, limiting how quickly additional metal can reach the market.
That structural delay helps explain why copper has risen roughly 20% this year amid heightened demand signals and reports that US policymakers are weighing import measures. The combination of long lead times and potential trade policy moves raises the prospect of sustained price pressure unless existing producers expand output faster than current pipelines imply.
Manufacturers’ technical and material responses
Automakers are exploring ways to reduce copper intensity per vehicle. Kramarz says EVs use about 2.9 times more copper than gas-powered cars, and manufacturers are testing lighter electrical architectures, greater use of aluminum conductors in some applications, and higher-voltage systems that can use smaller copper cross-sections.
Those approaches promise incremental savings rather than a rapid substitution. Aluminum is lighter and cheaper in some contexts but has lower conductivity than copper, and redesigning vehicle electricals requires engineering validation, tooling changes and time — none of which removes the near-term pressure on supply and costs.
| Metric | Value | Source |
|---|---|---|
| Average US gas price | $4.47 per gallon | AAA |
| Increase vs year earlier | ≈40% | AAA |
| Average new EV transaction | $54,813 | Kelley Blue Book |
| EVs’ share of incremental copper demand | 32% | S&P Global Energy (Eleonor Kramarz) |
Two ways the next 18 months could play out
The case for
- If higher gas prices persist and consumer openness converts to purchases, automakers will have stronger revenue justification to invest in EV lines despite elevated metal costs.
- Engineering changes that reduce copper intensity per vehicle — gradual shifts to lighter architectures or partial aluminium use — could moderate material cost growth and preserve margins over several model cycles.
The case against
- Long lead times for new mines and continued talk of tariffs on copper imports could keep prices elevated and force manufacturers to raise retail prices or scale back EV rollouts.
- Automakers that have already trimmed EV programmes — as Ford’s past writedown illustrates — may retreat further if margins compress, slowing the transition and lowering near-term incremental copper demand from vehicle fleets.
What to be careful about
- Persistent or higher copper prices squeeze manufacturers’ margins and push retail EV prices above buyer willingness to pay.
- Policy actions such as US tariffs on copper imports would reduce supply flexibility and could amplify price volatility.
- Delays or cancellations of large mining projects mean new supply may not appear quickly enough to meet the projected rise in EV-related demand.
The bottom line
Rising pump prices have sharpened demand signals for electric vehicles, but the costs of meeting that demand are rising too. Copper is central to EVs’ electrical systems, and price gains plus the long time required to bring new mines online make it unlikely that supply will quickly catch up. Automakers can pursue design and material changes to trim copper use, but those are incremental. For now, the industry faces a trade-off: accept higher vehicle prices, compress margins, or slow EV rollouts until the metal market adjusts.
What to watch
- Watch for any US decision on tariffs or import restrictions for copper; no date has been set.
- Watch for announcements of major copper mine permits or project startups that would alter production forecasts; no date has been set.
Frequently asked questions
How much more copper do EVs use compared with gas cars?
Eleonor Kramarz of S&P Global Energy says EVs use about 2.9 times more copper than gas-powered cars, reflecting heavier wiring and power distribution needs.
How much could EVs add to copper demand by 2035?
S&P Global Energy projects that EVs and hybrids could contribute close to 6 million metric tons of copper demand by 2035, and that electric mobility will supply 32% of incremental copper demand over the next decade.
Are consumers actually more open to buying EVs because of higher fuel prices?
Yes: a HERE Technologies and SBD Automotive survey found more than half of US drivers were more open to considering EVs than a year earlier, and 57% said rising gas prices influenced their interest; Cox Automotive reported 56% of shoppers said higher fuel costs made them likelier to consider hybrids or plug-in hybrids.
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