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February 17th, 2022 | 13:21 CET

BYD, Edison Lithium, Rock Tech Lithium: Investing in the Saudi Arabia of electromobility

  • Lithium
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Ever since this year's Super Bowl, it has been clear that the future of mobility will be electric. What does one have to do with the other? Advertising space during mega-sports events is in high demand. This year, seven companies from the sector advertised e-cars and accessories, including BMW with a spot featuring Arnold Schwarzenegger. Other companies that spent up to USD 6.5 million for 30 seconds of advertising included Polestar and Nissan. But e-cars are not yet a foregone conclusion. The technology poses challenges for suppliers and raw material producers. We present three companies that are well placed to score points with their products despite adverse conditions.

time to read: 3 minutes | Author: Nico Popp
ISIN: BYD CO. LTD H YC 1 | CNE100000296 , Edison Lithium Corp | CA28103Q1090 , ROCK TECH LITHIUM | CA77273P2017

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    Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
    "[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG

    Full interview


    BYD fights against prejudices

    Although the Chinese manufacturer BYD was recently punished a little on the stock market, the Company is perfectly positioned. Having started as a battery manufacturer for small electrified vehicles, BYD now covers essential areas of electromobility - from batteries to chips to finished vehicles that are technically convincing. This mixture was recently also reflected in the sales figures, which increased by 300% for pure e-cars. This news has recently stabilized the share.

    Increasing sales figures support the thesis that BYD could gain market share when chips for cars are scarce. Although BYD is a sought-after brand in China, sales outside of China left much to be desired. Resentment was fueled by Elon Musk, among others, who often has nothing but a laugh for BYD-branded cars and refers disparagingly to the build quality. The BYD share is currently trading at an exciting level. If it manages to jump above EUR 28, it could go up more significantly again. However, BYD remains speculative.

    Edison Lithium: Argentina as a place to be

    Edison Lithium must also be considered speculative. The Company operates a lithium deposit in Argentina and a cobalt property in Ontario, Canada. Both projects are located in the middle of proven resource regions. Edison Lithium's neighbors include First Cobalt, Agnico Eagle Mines and Livent, Argentina's largest lithium producer. Edison itself is still at the beginning of its projects - just last summer, it took over the property in Argentina.

    Edison's diversification towards lithium is interpreted favorably within the mining scene: Christopher Ecclestone, the mining strategist at Hallgarten & Company, points out that cobalt is very rare, and the search for the element can push many small companies to the limit. In contrast, he says, lithium is abundant in Argentina. Ecclestone believes Argentina is just outpacing Chile because it is very sympathetic to foreign investors. "Given Argentina's rapid emergence as the 'Saudi of lithium,' who could object to the Company setting up shop and establishing a significant position in the area?" asks Ecclestone rhetorically, referring to Edison Lithium. The Company is certainly in its infancy, but it is valued extremely low at just over EUR 12 million. It could be worthwhile to have had the value on the screen in the long term.

    Rock Tech Lithium: It can happen that fast

    The share price performance of Rock Tech Lithium shows how fast promising lithium companies can go. The German-Canadian lithium company relies on environmentally friendly mining in Canada and processing the raw material in Germany. By 2030, the recycling of lithium is also to play a major role. Last year, Rock Tech Lithium announced plans to build a processing plant in Brandenburg. The region is developing into an e-car mecca, not just because of Tesla's Gigafactory. In the meantime, Rock Tech Lithium is much more than a small junior company. Rock Tech's example shows how quickly things can sometimes move in a growing market. The stock has come back recently but remains attractive over the long term. The initial gold-rush mood surrounding an up-and-coming company, which is still an insider tip, has now evaporated.

    BYD, Rock Tech Lithium and even Edison Lithium - the market conditions are favorable for all three companies. However, when companies become more prominent in a new industry, details such as costs, cooperations or the charisma of a brand become more important. Edison Lithium does not have to deal with such problems yet except for the costs. Currently, it is only a matter of finding raw materials and opening up prospects. If this succeeds, opportunities will automatically arise for shareholders in the early stages. However, if the search for cobalt and lithium fails, investors are not immune to losses even with Edison Lithium.

    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.

    For this reason, there is a concrete conflict of interest.

    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

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    Der Autor

    Nico Popp

    At home in Southern Germany, the passionate stock exchange expert has been accompanying the capital markets for about twenty years. With a soft spot for smaller companies, he is constantly on the lookout for exciting investment stories.

    About the author

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