April 14th, 2021 | 08:18 CEST
BYD, Rock Tech Lithium, Varta: The mobility revolution starts now
Nowadays, when major automakers run commercials, they are almost always exclusively ads for electric cars. Even if e-cars were a fig leaf for automakers until recently, they are now getting serious. Volkswagen announced an electrification offensive weeks ago and emphasized its intention to invest massively in its supply chains, referring to battery metals and batteries. This commitment is also urgently needed - competitors from the Far East have already come a long way.
time to read: 3 minutes
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Author:
Nico Popp
ISIN:
CNE100000296 , CA77273P2017 , DE000A0TGJ55
Table of contents:
"[...] 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
Author
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.
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BYD: China feels the breath of the German automotive industry
One example of this is BYD. Just ten years ago, the Company was known only to those in the know. However, the former battery manufacturer is now also a carmaker and has various models on offer that are also quite well received by customers. BYD's significant advantage is that the Chinese continue to build their batteries and have an excellent connection to China's raw material sources. China has been strategic for decades when it comes to raw materials. Sometimes contracts are concluded with entire countries, massive investments are made in the infrastructure there and billions are made available. As a result, lithium, rare earths and other critical metals are less scarce for Chinese companies than those from the US or Europe.
But is that enough to be successful? BYD put on a brilliant rally last year - the stock climbed 285%. However, BYD lost more than 30% over three months. One reason for this could be that the market valued BYD and NIO together with Tesla as pioneers of the mobility revolution. In the meantime, it has become clear that the Europeans and Americans can also build e-cars - and secure access to raw materials. Coupled with the know-how and strong brands, companies like BYD remain challengers. The valuation is sometimes too high for that.
Rock Tech Lithium: Sustainable mining, innovative processing
The situation is quite different for the German-Canadian lithium Company Rock Tech Lithium. Here, the market does not seem to have realized how great the Vancouver-based Company's potential with German Executive Chairman Dirk Harbecke is (also read the interview). Rock Tech has a promising property in Canada, where the Company plans to mine lithium by 2023. Compared to South American deposits, lithium can be easily removed from the surface thanks to high grades. The lithium, which is mined according to Western environmental standards, is then to be further processed. Rock Tech Lithium has applied for patents for this and expects to gain competitive advantages from its technology.
Since the production of basic materials for battery production also generates by-products, Rock Tech Lithium is already making every effort to either reduce these products or make them usable in other ways. To this end, Rock Tech Lithium has already concluded an agreement with GP Papenburg. The associated cost advantages are not even considered in the current calculations. Rock Tech estimates to be profitable already at a lithium price of USD 7,500 - currently, lithium trades beyond USD 10,000, with a tendency to increase further. Rock Tech Lithium's stock combines Canadian mining and German engineering. Since the Company wants to implement the final refining steps of lithium in Germany and is already considering locations, Rock Tech Lithium is also closely linked to the success of the German mobility offensive. This investment story hits the spirit of the times, the Company is solid and the share is thus worth an investment.
Varta: Lots of speculation with little concrete information
Also closely linked to the German mobility turnaround is the Varta share. The battery specialist is known for its high-performance button cells. For months, there have been rumors that the Company might also be involved in the production of batteries for electric cars. In the meantime, solid plans have emerged. But it is not yet certain what will become of these plans. As it currently stands, Varta only represents the last part of the value chain and produces batteries. The extent to which the Company can score in this area and be competitive is still up in the air.
The share has also already gained around 460% over three years. Until the stock develops further potential, Varta should put more facts around its battery plans on the table. Indeed, the Rock Tech Lithium share has also risen sharply, but from a lower valuation level. In addition, the Company wants to send product samples to potential customers in April. If the product is right and the first customers bite, the Rock Tech Lithium share should outpace the competition from Varta and BYD on the stock market.
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