BYD, Edison Lithium, Nikola - Electromobility continues to advance

BYD - Doubles share buybacks

The Chinese market leader in electric vehicles believes that the share price level is favorable for buying back its own shares. When looking at the current share chart and the generally positive company news, BYD's management could be right. Since reaching the all-time high in June 2022, the share price has halved and is trading close to the annual lows from 2022 and 2023 at USD 24.50. A drop below the striking support level of USD 21.90 would generate a sharp sell signal, potentially reaching the USD 18 zone.

BYD CEO Wang Chuanfu now wants to take action against the current downward trend and suggested increasing the amount of A-shares to be repurchased as part of a planned buyback to USD 56 million. In addition, local media reported that BYD will announce a target of 4 million units sold for 2024, with a higher sales forecast of 4.2 million given to suppliers, including 2 million all-electric vehicles and 2.2 million plug-in hybrid units.

In the past financial year, the Company, co-financed by Warren Buffett, sold 3,024,417 vehicles. The technology group intends to achieve this increase primarily by boosting sales of models in the lower-price segment. The Glory Edition for the Qin Plus, the Chaser 05 and the Dolphin have already been launched on the market as more affordable vehicles, and updated versions for the Han and the Tang are due to follow at the end of the month.

Edison Lithium - Anti-cyclical pearl collector

In 2023, the number of new battery-powered vehicles exceeded 10 million for the first time, with the global market share climbing to 14%. According to the Statista Research Department, the goal is to have 116 million electric vehicles worldwide by 2030. Compared to 2020, this would mean a tenfold increase. Currently, the automotive supply is dominated by lithium-ion batteries, but interest in sodium-ion battery formulations is increasing significantly among automotive companies and could lead to a shift in the long term. Large companies such as Northvolt, Tesla, and BYD are already experimenting with sodium-ion batteries initially intended for stationary applications.

The exploration company Edison Lithium is ideally positioned to act as a future supplier of raw materials for the battery industry. The Canadian company focuses on the procurement, exploration and development of cobalt, lithium, alkali and other energy metal concessions.

To benefit from the increasing demand for sodium-ion batteries, Edison Lithium already secured several concession areas with potential sodium sulphate deposits in the Canadian province of Saskatchewan last year through an agreement with project generator Globex Mining.

In return, the Company intends to divest most of its lithium activities in Argentina to focus more sharply on North America in the future. Just two years ago, Edison acquired Resource Ventures S.A. for CAD 1.8 million. The subsidiary owns the rights to over 148,000 hectares of lithium brine claims in the renowned South American Lithium Triangle. At the end of 2023, a Letter of Intent was signed with Meteor Energy, which intends to purchase the subsidiary Resource Ventures for USD 5 million, representing a quadrupling of the purchase price. In addition, a subsidiary is to be created before the contract is concluded, into which the Pipanaco claims and one of the LEXI claims, around 20% of the total portfolio, will be incorporated. This ensures that Edison will continue to have lithium deposits in its broadly diversified portfolio. In contrast, the market capitalization of Edison Lithium is just USD 1.58 million.

Nikola - The next attempt

Will the crisis-ridden manufacturer of battery and hydrogen-powered trucks still manage a turnaround, or will the lights go out at its headquarters in Salt Lake City, Utah? At least there is still hope when looking at the figures for the fourth quarter.

Nikola's net loss decreased to USD 153.6 million or USD 0.14 per share, compared to minus USD 222.10 million or USD 0.46 per share in the same period last year.

After adjustment for special effects, the loss per share amounted to USD 0.11, exceeding analysts' average estimates of USD 0.13. Sales climbed by 111.1% to a still low of USD 11.53 million but fell short of the USD 13.2 million forecast by financial experts. Truck production fell from 133 to 42 units, while deliveries rose from 20 to 35 trucks.

The Company also commented on the recall of forklift trucks announced in August 2023 due to problems with the batteries. It remains on track to deliver the first redesigned electric forklifts with new battery packs to customers by the end of the first quarter. CEO Girsky expects all recalled trucks to be back in the end customer fleets by the end of the second quarter or the beginning of the third quarter.

However, market participants interpreted the forecast negatively, causing Nikola's share price to plummet into the red. Analysts were forecasting revenues of USD 21 million for the first quarter of 2024. Nikola, on the other hand, forecast revenue of between USD 12 million and USD 14 million.

BYD sets an example by doubling the buyback program to stop the share's slide. Nikola was able to reduce its net loss in the past financial quarter. Edison Lithium is expanding its portfolio to include sodium deposits, aiming to diversify its supply chain for the battery industry.