Two of the world's most iconic automakers, Ferrari and BMW, are making a quiet but significant change under the hood: replacing copper wiring with aluminum in some new models. The move, reported by Reuters, is driven by persistently high copper prices and the need to shave weight from electric vehicles (EVs), a shift that investment bank JPMorgan estimates could affect roughly 2% of global copper demand this year.
Why the switch?
Copper has long been the standard for automotive wiring because of its excellent electrical conductivity. But its price has climbed sharply, trading around $15,000 per metric ton recently, according to Reuters. Aluminum, by contrast, costs about $3,100 per ton—roughly one-fifth the price. French cable maker Nexans notes that buyers typically start considering alternatives when copper costs about 3.5 times as much as aluminum, a threshold that has now been crossed.
For automakers, the calculus isn't just about material costs. Weight is a critical factor, especially for EVs, where every kilogram affects range and efficiency. Ferrari says aluminum power cables can reduce the total weight of a car's wiring harness, a meaningful saving in high-performance and electric vehicles. BMW, known for its engineering precision, is also adopting the material in certain applications.
This is not a wholesale replacement—copper remains superior for high-current and high-reliability applications. But for less demanding wiring, such as interior lighting, sensors, and some power distribution, aluminum offers a 'good enough' alternative at a much lower cost and weight.
Broader implications for copper demand
The shift from copper to aluminum in automotive wiring is part of a larger trend. As we've covered in Copper's High Price Drives Carmakers and Utilities to Switch to Aluminum Wiring, the same cost pressures are pushing utilities and other industrial users to explore aluminum alternatives. JPMorgan's estimate that this substitution could affect 2% of global copper demand this year is notable because copper markets are already tight, with demand from renewable energy and EVs growing rapidly.
Copper is essential for electrical grids, motors, and charging infrastructure, so any reduction in demand from the automotive sector could help ease supply constraints. However, the impact is still modest relative to total demand, which exceeds 25 million metric tons annually.
What it means for investors
For everyday investors, this story highlights a key dynamic in commodity markets: price-driven substitution. When a critical material becomes expensive enough, industries invest in redesigning products to use cheaper alternatives. This can cap price gains for the original commodity and create opportunities for producers of the substitute.
Aluminum producers stand to benefit from increased demand from the automotive sector, especially if the trend spreads to other manufacturers. Companies like Alcoa, Rio Tinto, and Norsk Hydro could see a tailwind. On the other hand, copper miners such as Freeport-McMoRan and BHP may face a headwind if substitution accelerates, though strong demand from other sectors—like power grids and data centers—could offset the loss.
Investors should also watch for similar shifts in other industries. As we noted in Aluminum Prices Hit Four-Month Low as Strait of Hormuz Tensions Ease, aluminum prices are sensitive to geopolitical events and supply chain disruptions, which can create volatility. The current move by automakers adds a structural demand driver that could support aluminum prices over the long term.
For those holding shares in automakers like Ferrari and BMW, the switch to aluminum wiring is a positive sign of cost discipline and innovation. It shows management is actively managing input costs and vehicle weight, which can improve margins and EV performance. However, the savings are likely small relative to overall vehicle costs, so investors should not expect a dramatic earnings impact.
What to watch next
The key question is whether other automakers will follow. If copper prices remain elevated, the cost advantage of aluminum becomes more compelling. Watch for announcements from major players like Tesla, Toyota, and Volkswagen, which have large EV programs and could accelerate the shift.
Also keep an eye on copper and aluminum price spreads. If the ratio stays above 3.5, more substitution is likely. Conversely, a sharp drop in copper prices could slow the trend.
Finally, note that this is not a binary shift—copper will remain dominant in high-performance applications. But for everyday investors, it's a reminder that commodity markets are dynamic, and price signals drive real-world changes in manufacturing and materials demand.
