Will electric vehicles be the killer app for Silver?

Industrial demand for silver has been surging in recent years. Solar panel manufacturers were largely behind the 11% jump in demand for 2023 versus the prior year. Forecasters predict another 9% jump this year.

For silver investors, however, the future of demand from manufacturers may be even brighter than the recent past.

The solar industry has been behind much of the growing appetite for silver.

Demand in this sector was relatively stable at around 2,800 metric tons per year for several years. But it began rising sharply in 2022. The expected demand from solar in 2024 is 7,216 metric tons, while total industrial demand is forecast at 22,111 metric tons.

All told, photovoltaic panels will drive nearly one-third of all industrial demand, according to the Silver Institute.

The growth in demand is exciting for silver investors. And it should be worrying for manufacturers who need the white metal as a component in a wide array of applications.

A shortage appears to be developing, and it may already be impacting the market. Prices for silver recently rose past $30/oz for the first time in more than a decade.

While solar panels have been a “killer app” for silver, a different application just emerged with the potential to use even more of the metal.

Last week, Samsung announced that it has developed a solid-state battery with silver as a core component.

It represents a massive leap forward in making electric vehicles more viable.

Samsung’s battery promises to provide a 600-mile range, a reduction in charge time to just 9 minutes, lighter weight, roughly double the life-span, and lower risk of fire.

The improvement in charge time is itself, a game changer. Current batteries can take 7-13 hours to charge fully and will get only about half of that 600-mile range.

It is estimated that each 100kWh capacity battery, which is the size expected for many consumer model electric vehicles, will use a kilogram of silver.

Should electric vehicles incorporate this technology and reach 20% of the total global automobile production, they would require 16,000 metric tons of silver annually.

That level of demand is no pipe dream.

Just one application could increase total industrial demand by 72% versus the current level. And solid-state technology likely has other applications – battery storage for solar power systems and wind farms for example.

One thing is for certain: the current silver ecosystem is not ready.

Given the current deficit in supply versus demand, it isn’t even ready for the growth in solar panel manufacturing. Much higher prices will be needed to make more marginal silver deposits viable for production.