August 26th, 2024 | 07:30 CEST
BYD, Altech Advanced Materials, Xiaomi - Battle for the gold of the energy transition
The energy transition is underway, and demand for electric vehicles is increasing, albeit more slowly than expected. Lithium has so far been fundamental to the electrification of transportation. To minimize dependence on China, which controls a large part of the mining and processing of the rare metal, the European Union is turning to Serbia, where considerable deposits for battery production lie dormant. However, in addition to lithium-ion batteries, there are alternatives "Made in Germany" that could set the future standard.
time to read: 3 minutes
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Author:
Stefan Feulner
ISIN:
BYD CO. LTD H YC 1 | CNE100000296 , ALTECH ADV.MAT. NA O.N. | DE000A31C3Y4 , XIAOMI CORP. CL.B | KYG9830T1067
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Author
Stefan Feulner
The native Franconian has more than 20 years of stock exchange experience and a broadly diversified network.
He is passionate about analyzing a wide variety of business models and investigating new trends.
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BYD - Still on the advance
With the introduction of punitive tariffs on Chinese electric vehicles, the European Union significantly slowed down business for Asian producers in July. According to Dataforce analyses, around 45% fewer Chinese vehicles went to European buyers. Nevertheless, overseas sales are growing strongly. At the end of June, car manufacturer BYD accounted for 105,000 units, around 4% of China's total of 2.79 million vehicle exports. This may not seem like much, but the total figure means that BYD has almost tripled the number of vehicles exported compared to the previous year.
According to the Nikkei, there are plenty of alternatives outside Europe for what is now the world's seventh-largest automotive company. The brand is currently looking at property in Mexico for a new production facility and is planning expansion into Canada. An investment in Pakistan, the fifth largest country in the world by population, is also planned. A plant is to be built in Karachi by 2026 at the latest, which will also serve as a strategic hub for exports to other South Asian countries.
From a technical perspective, BYD shares could generate a striking buy signal by breaking above the downward trend at USD 29.23 that has been in place since June 2022. The next short-term hurdle would then be the high for the year at USD 32.00.
Altech Advanced Materials - Alternative without lithium
The battle for the extraction of lithium in Europe is in full swing. But if the Heidelberg-based company Altech Advanced Materials, with a market capitalization of just EUR 21.57 million, has its way, the rare metal will become much less important for the battery of the future.
The reason is CERENERGY®, a technology that has the potential to revolutionize the market for stationary grid storage systems for large-scale installations such as wind and solar parks. In cooperation with the Fraunhofer Institute for Ceramic Technologies and Systems, Altech Advanced Materials is developing a battery that has significant advantages over conventional products.
CERENERGY® batteries are fire and explosion-proof, have a service life of more than 15 years and work in extremely cold and hot climates. The battery technology uses common salt and small amounts of nickel. In contrast, neither lithium, cobalt, graphite nor copper are used. According to Fraunhofer, the manufacturing costs of CERENERGY® batteries should also be around 40% lower than those of comparable lithium-ion batteries.
The first batteries should leave the new plant at the Schwarze Pumpe Chemical Park in around 2 years. The results of the economic feasibility study already demonstrate the potential. In addition to investments of around EUR 156 million, which have to flow into the CERENERGY® project, revenues of around EUR 106 million and an EBITDA of almost EUR 50 million are expected in 2028/2029.
Xiaomi - Successful market entry
While growth in electric vehicles is suffering in Europe and the US due to the imposition of punitive tariffs on Chinese products, the ramp-up continued in the home country of the second-largest economy. What is more, a clear exclamation mark was set in July. For the first time, more electric vehicles were sold domestically than vehicles with combustion engines.
In addition to the top dog BYD, the technology company Xiaomi, actually known as one of the largest smartphone manufacturers in the world, was also able to shine with the launch of its SU7 electric car. According to the Company, 27,307 vehicles left the factory in the second quarter, accounting for EUR 780 million of total revenue.
In the second quarter, Xiaomi reported revenue of over EUR 11.2 billion, exceeding analyst forecasts by more than 4%. The net profit also significantly surpassed estimates, with actual earnings of EUR 780 million compared to the anticipated EUR 600 million.
The positive price reaction of almost 9% pushed Xiaomi shares close to the striking resistance, the annual high of USD 2.64 reached on May 20. Overcoming this hurdle would open the door to at least the USD 3 mark.
Despite the introduction of punitive tariffs in Europe, Chinese electric vehicle manufacturers are performing well, especially in China. BYD is also planning to expand into several countries. Xiaomi exceeded analysts' estimates with its figures for the second quarter. Altech Advanced Materials is working on an innovative battery technology that makes the use of lithium obsolete.
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