Truflation Launches Electric Vehicle Commodity Index | Truflation

Truflation Launches Electric Vehicle Commodity Index

Published 27 Feb, 2024

The global electric vehicle market is projected to reach $623.3bn in revenue this year. EVs are becoming a key sector of the modern economy, and one that will only continue growing as governments across the globe introduce incentives aimed at reducing carbon emissions. To quantify the impact of this market segment on global financial markets, it’s essential to have a reliable benchmark for measuring the costs of production. 

Explore the Electric Vehicle Index Here

Truflation Stream Network’s new Electric Vehicle Commodity Index is designed to be that benchmark. By tracking the futures of five metals essential to the production requirements of EVs – cobalt, copper, nickel, palladium, and platinum – the EV Commodity Index offers vital insights into the production and supply dynamics as well as the commodity costs faced by EV manufacturers, reflecting the evolving landscape of the EV market.

The EV Index Methodology

Tracking the prices of metals used in EV production is only part of the picture. The methodology also recognizes the varying needs of different types of electric vehicles and divides the market into four segments:

  • Battery Electric Vehicles (BEVs) 
  • Hybrid Electric Vehicles (HEVs) 
  • Plug-in Hybrid Electric Vehicles (PHEVs) 
  • Fuel Cell Electric Vehicles (FCEVs) 

Anchored to a base date of January 1, 2018, Truflation’s new EV Index multiplies the types of EVs produced by the underlying commodities needed to produce the required batteries. Crucially, the weighting of the metals is different for each market segment. Each day, the reported prices of metals from all sources are averaged to produce a singular price point representing that day's index value. 

A key feature of this methodology is the quarterly recalibration of the weight assigned to each metal. This recalibration considers the metal intensity per vehicle, the market share of each EV type based on production data, and the metal prices on the rebalancing date. This dynamic weighting scheme allows the index to remain aligned with the latest trends and developments in the EV market.

Priced in Bitcoin for the Modern World

The Truflation Stream Network aims to be relevant and applicable in today’s world, where cryptocurrencies are gaining increasing importance. As such, the EV Commodity Index is priced both in US dollars and Bitcoin. 

This feature allows users to understand the purchasing power of 1 bitcoin in terms of the electric vehicle basket index. The introduction of Bitcoin pricing is aimed at providing a modernized view of the index's value, catering to the evolving financial landscape.

Diverse Range of Data Sources

As with any other TSN Index, the Truflation Electric Vehicle Commodity Index is based on a diverse and growing list of metal usage data sources, aiming to reflect the actual consumption of materials in electric vehicle production.

READ MORE — Welcome to Truflation Stream Network (TSN): Limitless Real-Time Data On-Chain

These sources include automotive industry players like LMC Automotive, which provides insights into vehicle production volumes; metal institutes like the Nickel Institute and Copper Institute for targeted data on the usage of these metals in EV components; as well as market analysis firms like GlobalData and commodities and energy data providers like the LBMA and the US Department of Energy. 

The EV index methodology is also in the process of adhering to international standards for financial benchmarks. This includes compliance with the principles set forth by the International Organization of Securities Commissions (IOSCO), which cover aspects such as data sufficiency, transparency, accountability, and auditability.

The EV Commodity Index operates under the oversight of Truflation governance token holders. In the future, Truflation aims to ensure an Oversight Body composed of industry experts and independent members, which will convene for regular meetings and produce oversight reports to ensure continuous monitoring and governance.

Truflation’s institutional-grade index for EV commodities, available via the Truflation Stream Network, represents a meticulous and comprehensive approach, designed to provide stakeholders with a reliable and insightful tool for understanding and navigating the complex dynamics of the EV commodity market. These insights can play a vital role in major investment and policy decisions.

For further information, please head to our website to download the methodology document, which provides details of the calculation and analysis process, as well as a presentation on the EV market, which offers in-depth insight into market trends.

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