Benefiting from the security and energy transition with high-performance batteries: BYD, NEO Battery Materials, and DroneShield

BYD – Battery strategy: More than just a car manufacturer

Anyone who sees BYD as just a vehicle manufacturer is fundamentally underestimating the company. The Chinese group's real asset lies under the hood. High-performance batteries are the backbone of the business strategy. They enable vertical integration, which allows BYD to produce more cheaply than most of its competitors without compromising on margins. The in-house blade battery is more than just a technical feature. Its cell-to-pack design not only makes it safer but also more efficient in terms of installation space. This directly addresses the two main concerns of customers: range and safety. This independence from suppliers gives BYD control over the value chain. Investments in solid-state batteries also show that the company wants to be at the forefront of technology.

The current sales figures from China are a shock, but no reason to panic. The fact that sales slumped by almost a third in January is primarily the result of a political turning point. Expired purchase subsidies and the reintroduction of VAT artificially inflated demand in December. In addition, the market for new energy vehicles (NEVs) is slowly entering a phase of saturation. This is a normal phenomenon after years of rapid growth. Nevertheless, it would be negligent to ignore the growing competition. Geely has mercilessly exploited BYD's weakness in the lower price segment. The price war in China remains brutal, and differentiation based on pure costs is becoming more difficult. The upcoming quarterly figures will show whether BYD can counter this with new models.

While the domestic market is weakening, foreign business is running like clockwork. With over 100,000 vehicles exported in January, BYD has not only set a new record, but has also almost compensated for the decline in China. The focus is on Europe. In Germany and the UK, new registrations increased by triple digits. The new plant in Hungary is a clear step toward avoiding trade policy risks. This two-pronged approach is crucial for investors. BYD is transforming itself from a subsidy-driven domestic market champion to a global player. This entails risks, but above all opportunities. Due to the different price structure, higher margins can often be achieved abroad than in the highly competitive Chinese market. The stock is currently trading at EUR 10.49.

NEO Battery Materials – The leap into commercialization

The first weeks of 2026 mark the transition to a new phase for NEO Battery Materials. The Canadian company, which specializes in silicon anodes for high-performance batteries, has set several operational milestones. A decisive factor was its inclusion in the supplier list of an Asian Fortune 500 automobile manufacturer. This official status confirms that the technology meets the strict requirements of series production. In order to take advantage of the opportunities that arise, NEO strengthened its financial base in mid-January with a placement of over CAD 7 million. The money will be used specifically to expand production in South Korea and fund a program for defense batteries.

At the end of January, the company provided technological proof of its strategy. Newly developed drone cells outperformed commercially available Chinese models of the same size by over 50% in capacity and 40% in energy density. For drone manufacturers, this means longer flight times without design changes. This was followed in early February by a partnership with the smelting company Korea Zinc and the plant specialist Taesung. Together, they want to promote lighter composite copper foils that harmonize perfectly with NEO's silicon anodes. The goal is to present market-ready prototypes for drones and micromobility this year.

NEO's business model follows the foundry principle of the semiconductor industry. Customers from the automotive, drone, or defense sectors specify their specific requirements, and NEO takes care of development and manufacturing without the customer having to invest in expensive equipment themselves. This positioning in a value-adding niche is paying off. The company currently has an order backlog of around CAD 10 million for the coming years. Enquiries are coming increasingly from the USA, Ukraine and Israel, wherever there is a specific search for high-performance alternatives to Chinese cells. The share is currently trading at CAD 0.61, which is above the price of the private placement and can be seen as a good sign.

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DroneShield – Defense industry on the verge of a boom

High-performance drones are no longer a marginal phenomenon; they are increasingly becoming an integral part of airspace. And that has consequences. Thanks to modern batteries, unmanned aircraft can now cover distances that would have been unthinkable a few years ago, making them a real security risk. Airports, military installations, and critical infrastructure all have to prepare for a growing threat from the air. Demand for defense systems is rising rapidly as a result. Analysts now estimate this market to be worth over USD 60 billion. Particularly in demand are so-called soft-kill solutions, which neutralize drones electronically without causing damage in populated areas.

DroneShield from Sydney has established itself as a serious player in this field. The latest figures speak for themselves. Revenue skyrocketed by 277% to AUD 216.5 million in 2025. From an investor's perspective, the recurring revenue from software subscriptions, which nearly quadrupled to AUD 12 million, is particularly encouraging. Europe is emerging as a new growth engine, while the US civilian market is still lagging behind expectations. The company is responding by building up its own manufacturing capacities in Europe and the US in order to benefit from the rising demand there.

The group's order pipeline is full to bursting at over AUD 2 billion, even though management recently scaled back its expectations for the US civilian business somewhat. Almost AUD 100 million is already firmly booked for 2026, a multiple of the previous year's level. However, management decisions are clouding the picture. When board members sold shares worth AUD 70 million after reaching sales targets, the share price temporarily plummeted by 75%. Added to this is technological pressure. Fiber optic-controlled drones are immune to classic radio interference and pose a challenge for engineers. The key question remains whether the company can translate its strong market position into sustainable profitability in the long term. The share price is currently trading at AUD 3.16.

The turning point brought about by security constraints and the energy transition is opening up a strategic window of opportunity for specialized technology leaders. BYD is mastering the balancing act between domestic price competition and global expansion, with vertically integrated blade batteries remaining the foundation. NEO Battery Materials is becoming a sought-after supplier for Western defense applications and electromobility with its superior silicon anodes. DroneShield is benefiting from the boom in drone defense, but must respond technologically to new threats after price distortions.