Close menu




July 24th, 2023 | 08:20 CEST

BYD, Varta and FREYR - who will build the perfect battery? First Phosphate with a big deal!

  • Mining
  • phosphate
  • Batteries
  • BatteryMetals
  • Electromobility
Photo credits: pixabay.com

E-mobility is still in its infancy globally, with just 25.9 million pure electric vehicles on the road out of around 1.3 billion vehicles worldwide. The share is, therefore, just under 2%. Nevertheless, sales are growing strongly, especially in China, Europe and the US. China is the most important production country for electric cars. It is forecast that around 13 million e-cars will be produced in the Middle Kingdom in 2023, more than in Germany and the US combined. The production costs of e-cars are still significantly higher than those of combustion engines. The main price drivers are the batteries, which use rare metals in their production. China's dominance in the field of battery innovations is currently still very pronounced. Where are the opportunities for investors?

time to read: 4 minutes | Author: André Will-Laudien
ISIN: BYD CO. LTD H YC 1 | CNE100000296 , VARTA AG O.N. | DE000A0TGJ55 , Freyr Battery | LU2360697374 , FIRST PHOSPHATE CORP | CA33611D1033

Table of contents:


    Terry Lynch, CEO, Power Nickel
    "[...] The collaboration with CVMR offers two primary advantages for Power Nickel: We can cover a larger portion of the value chain in the future, and despite the extensive cooperation with all its positive outcomes, we have remained significantly independent. [...]" Terry Lynch, CEO, Power Nickel

    Full interview

     

    BYD - Clearly ahead of Tesla in China

    Elon Musk can currently show little of his winning smile when he thinks of China. The competitors in the e-mobility market there have neatly outstripped him despite multiple price reductions. The top dog BYD is present with its vehicles in more and more countries besides China. This is clearly reflected in the sales figures. In the first half of 2023, more than 1.25 million NEVs were sold worldwide, an increase of 96% compared to the same period in 2022. Tesla, on the other hand, was only able to sell around 900,000 vehicles.

    Because of its closed production chain, BYD is among the global market leaders not only with its vehicles but also with its new battery product, "Blade". The battery, which is manufactured entirely in-house, is considered to be the newest and, at the same time, safest battery technology for electrically driven vehicles that has been launched on the market to date. It results from many years of development work and expresses BYD's enormous expertise in battery technology. In terms of service life, the engineers are talking about around 5,000 charging cycles and more than 1.2 million total kilometers. The manufacturer, therefore, grants a warranty of 8 years or 160,000 km on the high-voltage battery, which is also rare in the industry.

    Just a few days ago, BYD had pre-announced a strong jump in profits for the first half of 2023. Thus, net income was about EUR 1.46 billion, which means a jump of about 200% compared to the same period last year. The Company will not present its detailed half-year report until August 28. The stock is trading at a solid EUR 30.50 and is still in a recovery cycle since bottoming at EUR 20.70 in November 2022.

    First Phosphate - A partnership with Glencore raises eyebrows

    Battery production requires a lot of metals, but those looking to the future are also thinking about alternative technologies outside of the mainstream Li-ion technology. As BYD was quick to recognize, fast charge cycles and long ranges are required for smooth operation. This requires a solid technical design and a much longer service life, as is currently the case. Unfortunately, manufacturers are still thinking far too short-term here because recycling worn-out batteries is complex, expensive and currently not even legally secured. In Europe, so-called "electronic waste" must be taken back free of charge by the dealer network. Tesla has not yet made such a concession.

    Canadian company First Phosphate (PHOS) is focusing on this potential game-changer in the electric mobility revolution and is betting on phosphate. An expected growth in global markets of nearly 20% per annum is luring investors to consider alternative materials and develop better technologies. Phosphate offers the technical possibilities to finally replace highly toxic elements like cobalt.

    First Phosphate signed a non-binding memorandum of understanding (MOU) on July 17 with NorFalco Sales, a division of Glencore Canada Corp., to secure sulfuric acid supplies for its future industrial facilities in Quebec. The acid is needed for phosphoric acid production and other industrial processes. Both companies intend to enter into a substantial supply relationship. With the parent company Glencore, PHOS gains a strong partner for the extraction and purification of phosphate and the production of active cathode material for the lithium iron phosphate (LFP) battery industry. A project with a promising future!

    The PHOS stock currently has a market cap of just CAD 18 million, making it relatively small, but the Company's technological approach argues for a premium. An exciting addition to an international battery portfolio.

    With a 12-month performance of minus 15%, First Phosphate still ranks ahead of BYD and just behind FREYR. Tesla regained positive terrain with a fabulous rally in Q2. Varta is far behind at minus 70%. Source: Refinitiv Eikon as of 07/21/2023

    Varta or FREYR Battery - Where to put the leverage?

    The share of the battery and storage manufacturer Varta has truly brought joy in the last 3 months. This does not necessarily apply to long-term investors, but courageous investors who followed us at just under EUR 17 were rewarded. In the past week, the stock has cleared the EUR 22 hurdle without any significant announcements and is preparing to approach the resistance zone at EUR 25 to 27 with great momentum.

    Fundamentally, the next steps in the restructuring program are already being taken, as the shareholders gave the green light for the Company's future at the Annual General Meeting. Varta launched a rigid savings program in the fall of 2022. Part of the concept results in a worldwide reduction in staff of about 800 full-time positions, but the entire business model is to be examined. This all sounds promising, so we remain invested but put a safety stop at EUR 19.80. The Q2 figures on August 11 should be exciting.

    Meanwhile, bombshell news comes from the Norwegian competitor FREYR Battery. The EU Commission has concretized its EUR 3.6 billion Clean-Tech program, and FREYR Battery is among the current funding recipients with e-mobility relevance. The Norwegian company will receive EUR 100 million from the EU pot for the construction of its "Giga Arctic" battery cell factory. Admittedly, the FREYR share is still somewhat ambitiously valued with a capitalization of over EUR 1 billion, as the Company does not plan to reach EBIT breakeven until 2027. The high valuation seems to have prompted many investors to sell all "sell on good news" shares, causing the share price to drop by a good 15% last week. We, too, find the share interesting only from EUR 5, but in the current bull market, it could take a few more months for the price to fall. The next figures will be published on August 9.


    The global battery market is in turmoil. Currently, 95% of the market is focused on Li-ion technology, but the game-changers are already in the pipeline. When investing in the industry, look for good diversification in individual stocks both technologically and geographically. BYD is a standard stock, and Varta and First Phosphate are suitable as speculative admixtures.


    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") currently hold or hold shares or other financial instruments of the aforementioned companies and speculate on their price developments. In this respect, they intend to sell or acquire shares or other financial instruments of the companies (hereinafter each referred to as a "Transaction"). Transactions may thereby influence the respective price of the shares or other financial instruments of the Company.
    In this respect, there is a concrete conflict of interest in the reporting on the companies.

    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 also 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.

    Risk notice

    Apaton Finance GmbH offers editors, agencies and companies the opportunity to publish commentaries, interviews, summaries, news and the like on news.financial. These contents are exclusively for the information of the readers and do not represent any call to action or recommendations, neither explicitly nor implicitly they are to be understood as an assurance of possible price developments. The contents do not replace individual expert investment advice and do not constitute an offer to sell the discussed share(s) or other financial instruments, nor an invitation to buy or sell such.

    The content is expressly not a financial analysis, but a journalistic or advertising text. Readers or users who make investment decisions or carry out transactions on the basis of the information provided here do so entirely at their own risk. No contractual relationship is established between Apaton Finance GmbH and its readers or the users of its offers, as our information only refers to the company and not to the investment decision of the reader or user.

    The acquisition of financial instruments involves high risks, which can lead to the total loss of the invested capital. The information published by Apaton Finance GmbH and its authors is based on careful research. Nevertheless, no liability is assumed for financial losses or a content-related guarantee for the topicality, correctness, appropriateness and completeness of the content provided here. Please also note our Terms of use.


    Der Autor

    André Will-Laudien

    Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.

    About the author



    Related comments:

    Commented by André Will-Laudien on February 29th, 2024 | 08:30 CET

    Uranium with exploding demand! Kraken Energy ideally positioned, hydrogen with Nel ASA and Plug Power in rebound?

    • Mining
    • Uranium
    • Hydrogen
    • climatechange

    Some politicians are feverishly dreaming of making energy generation climate-neutral! Those who take a closer look at the matter realize that the speed of adaptation to more sustainable electricity production must be supported by sizeable public investment budgets. In Germany and the EU, so-called eco-taxes are levied on private transport, which are used to finance alternative energy generation. That is the green theory, as expensive environmental projects should benefit the general public. Because the EU recently gave nuclear energy the "green light" in its taxonomy, this form of energy is now coming back into focus. The protagonists of this view are the nuclear power supporters France, Spain, Poland and the Czech Republic, with Germany notably staying out of this topic. Worldwide, over 50 reactors are expected to come online in the next few years, and what is needed for that is uranium. Which shares should be in focus now?

    Read

    Commented by Juliane Zielonka on February 29th, 2024 | 08:15 CET

    Defense Metals, Coinbase, Volkswagen: Critical metals for pioneering technologies

    • Mining
    • RareEarths
    • crypto
    • AI
    • Electromobility

    The demand for critical metals is increasing rapidly worldwide. From growing digitalization to the increased use of cryptocurrencies and AI, from advances in medical technology to electromobility and defense technology - all these areas rely on these critical raw materials. Defense Metals Corporation is an experienced explorer in British Columbia whose Wicheeda project is designed to provide these critical metals. Forward-thinking companies like the crypto exchange Coinbase serve many users who use rare earth metals to power their hard drives for crypto mining. Volkswagen also requires this raw material because car consumers in China have very different needs when it comes to vehicle software than those in the European market. A new CEO for the subsidiary and software company CARIAD knows exactly what needs to be done...

    Read

    Commented by Fabian Lorenz on February 29th, 2024 | 08:00 CET

    Renk, Hensoldt and Desert Gold: Price gains with armaments and gold

    • Mining
    • Gold
    • armaments

    German defense stocks are currently in high demand. Rheinmetall shares have already gained 40% in the current year, while Hensoldt achieved a performance of 35% in the first two months of 2024. The figures for 2023 only dampened the mood briefly. What do analysts say about Hensoldt's share price potential? Stock market newcomer Renk still has to establish itself. But the IPO is beginning to bear fruit. Gold shares should also benefit from the global uncertainties. However, the performance of Barrick & Co. in recent years has been disappointing. Desert Gold could become the surprise stock of the year. According to experts, the explorer was the talk of the town at the recently concluded Mining INDABA trade fair in Cape Town, South Africa.

    Read