BYD, Altech Advanced Materials, BMW – The Battle Between China and Europe in the Automotive Industry

BYD – Expanding its lead in development

BYD has established itself as a leading manufacturer of electric vehicles in China in recent years and continues to invest heavily in research and development. The Company plans to build a global development center in Shenzhen spanning 3.3 million square meters. With almost 110,000 engineers and scientists on its team, BYD is the world leader in R&D personnel. While European manufacturers like Volkswagen are trying to counter growing competition through tariffs, BYD is strengthening its position in key markets and continuously expanding its production capacities.

The German carmaker Mercedes-Benz recently sold its 10% stake in the Chinese electric vehicle joint venture Denza to its partner BYD. The step marks the end of a long-standing partnership that was launched in 2010 to promote the development of electric vehicles. As early as 2021, Mercedes-Benz announced that it would focus more on its own brand in China, which led to the reduction of its stake in Denza. BYD, now the sole owner, confirms the takeover and continues its dominance in the Chinese electric vehicle market.

However, the Chinese carmaker wants more, just like the other producers from the Middle Kingdom. At the Frankfurt Automechanika trade fair, the increasing presence of Chinese vehicle companies is evident. The focus is on electric vehicles. In the first four months of the year, 40% of imported electric vehicles in Germany came from China. At the same time, exports from Germany to China are declining as customers in China are tending more towards local producers. While German car stocks are weakening, BYD's shares have risen by around 20% to EUR 27.98 since the beginning of August.

Altech Advanced Materials – Growing demand for CERENERGY®

Altech Advanced Materials develops innovative battery technologies that are revolutionizing the energy sector. Its CERENERGY® energy storage product is based on sodium chloride and nickel, offering high safety, a long service life, and independence from scarce resources. Silumina Anodes™ uses aluminum oxide-coated silicon and delivers ten times the energy capacity of graphite, improving battery life and promoting sustainability. These advanced technologies from Altech create groundbreaking solutions to the challenges of modern energy storage and offer significant advantages in terms of safety, performance, and environmental friendliness.

Altech is making progress in the construction of the CERENERGY® production plant. The Company has already completed the feasibility study for an annual capacity of 120 MWh. The construction is planned in Schwarze Pumpe, Saxony, on a 14-hectare industrial site. Altech is currently in the financing phase and has applied for funding at the state and federal level. The production plant is an important step in scaling up the manufacture of innovative batteries to serve the growing energy storage market. The investment costs are estimated at around EUR 156 million, with an expected net present value of EUR 169 million.

There is already demand for the CERENERGY® energy storage units. A recently signed letter of intent for the purchase of energy storage units between Altech and Zweckverband Industriepark Schwarze Pumpe (ZISP) demonstrates the interest. ZISP plans to purchase 30 MWh of energy storage capacity annually from 2027, distributed across 30 units of 1 MWh GridPacks. This agreement marks an important milestone for Altech, as it not only confirms the market readiness of the CERENERGY® battery but also shows potential for future collaborations. The partnership aims to ultimately convert the Schwarze Pumpe industrial park to renewable energy. After a prolonged period of bottoming out, the stock moved back up last Thursday and is currently trading at EUR 3.38. As soon as the financing is in place, the stock will likely receive a further boost.

BMW – Brakes are slowing the Company down

On September 10, the BMW Group revised its annual forecast for 2024 downward due to challenges in the automotive segment. Weak demand in China, in particular, led to this adjustment. The Company now expects a slight decline in customer deliveries compared to the previous year, instead of the previous forecast slight increase. The EBIT margin has also been reduced to 6% to 7% (down from 8% to 10%), and the return on capital employed is now expected to be between 11% and 13% (originally 15% to 20%). The complete quarterly results and the adjusted forecast report will be published on November 6.

Another reason is the brake issue, which has led to a halt in deliveries. Due to these issues, BMW had to stop production at its largest European plant in Dingolfing. This recall affects around 1.5 million vehicles worldwide that cannot be delivered due to defects in the braking system. According to the supplier, Continental, all affected brakes would have to be checked and replaced if necessary. Although BMW assures that the braking performance continues to meet legal requirements, the brake pedal must be depressed more in the affected models. More than 300,000 vehicles already produced are affected and require retrofitting.

The automotive industry is under pressure not only from technical issues but also from strict EU climate targets. According to an internal industry report, the sector faces billions in fines if it fails to meet the significantly lower CO2 limits that will come into effect in 2025 and 2030. Average CO2 emissions are to be reduced to 49.5 g/km by 2030, which is unattainable for many vehicles, even for some hybrid models. The German Association of the Automotive Industry (VDA) is therefore calling for a review of the requirements and possible postponements** to mitigate the economic impact. The share price fell sharply on the back of the reports and hit a new annual low of EUR 68.58. It is currently trading at EUR 72.96 again.

Competition between Asian, particularly Chinese, and European carmakers is intensifying, especially in the field of electric vehicles. BYD has established itself as a leading Chinese manufacturer and is continuously expanding its production capacities and internationalization, while Altech Advanced Materials is revolutionizing the energy sector with innovative battery technologies such as CERENERGY® and Silumina Anodes™. BMW, on the other hand, is struggling with production issues and weak demand in China, which has led to a reduction in its annual forecast. These dynamics illustrate how much the global automotive market is changing and the challenges and opportunities that arise for the various companies.