China's leverage: Why Rheinmetall is struggling, European Lithium is benefiting, and BYD remains confident

Rheinmetall – Full order books, but a critical dependency

Rheinmetall is heading for a record year. The Düsseldorf-based defense company reported a strong 24% jump in revenue to EUR 4.7 billion for the first half of the year. Even more impressive is the order backlog, which has reached a historic high of EUR 63 billion. This growth is primarily driven by strong demand for military hardware, from artillery ammunition for NATO partners to complex weapon systems. Capacities are running at full speed.

However, in order to process this enormous order pipeline, Rheinmetall is dependent on a steady supply of rare earths. These metals are indispensable for the manufacture of high-tech products such as precision-guided weapons, sensors, and electronics. The problem is that up to 90% of global demand is currently met by China. This extreme dependence on a single supplier poses a high risk for Rheinmetall. It jeopardizes the entire supply chain and makes reliable production planning almost impossible.

Because geopolitical conflicts are increasing and exports could be restricted at any time, the group is now expanding its raw material supply. The Company is specifically looking for new sources of supply outside China, paying attention to ESG standards. At the same time, it aims to become more independent through partnerships and the acquisition of suppliers. Ultimately, the ability to procure these critical materials in the long term will be decisive in determining whether the group can sustainably convert the current boom into profitable growth rates. This remains a key point of observation for investors. The share is currently available for EUR 1,623.50.

European Lithium – Raw materials player with strategic projects

European Lithium is making headlines with its Tanbreez project in Greenland. Recent drilling has confirmed consistent, high-grade rare earth mineralization with TREO values between 0.48% and 0.55%. Particularly noteworthy is the high proportion of strategically valuable heavy rare earth oxides (HREO) of 25-27%. In addition, significant zirconium contents of up to 1.99%, as well as potentially exploitable gallium values, stand out. The mineralization remains open at depth across all drill holes, which gives hope for further potential.

These results underscore the project's strategic relevance. The high HREO and gallium values are of great importance for high-tech and defense industries, especially against the backdrop of strained supply chains. An extensive drilling program is underway to further evaluate the deposit, with the pending test results expected in the fourth quarter of 2025. At the same time, the engineering firm NIRAS has been engaged as a partner for the definitive feasibility study (DFS) to accelerate the development process.

In addition to Tanbreez, European Lithium is advancing the Wolfsberg project in Austria. This is one of the most promising lithium deposits in the EU and already has all the necessary mining licenses. With a measured and indicated resource of 6.3 million tons at 1.17% lithium oxide, the project aims to supply the European battery value chain with locally produced lithium hydroxide. The strategic partnership with BMW highlights the economic viability and regional significance of the project. The share is currently trading at EUR 0.053, close to its annual high of EUR 0.058.

BYD – Strategically secure in turbulent times

While many electric vehicle manufacturers are struggling with supply bottlenecks and skyrocketing raw material prices, BYD is demonstrating strategic foresight. The Chinese group has based its supply of critical materials, such as lithium and rare earths, on two pillars. On the one hand, through direct investments in its own mining rights, for example, in the lithium-rich Minas Gerais region of Brazil. On the other hand, the Company benefits from its deep roots in China, which dominates the global market for rare earths. This double security provides planning reliability and protects against the geopolitical risks that many competitors are struggling with.

Currently, however, BYD is not only making headlines with its raw material security, but above all with its aggressive international expansion. Despite a tense price war in its home market of China, which recently led to a slight decline in sales, the group is succeeding in breaking into key European markets. With over 70,500 new registrations in the first half of the year, BYD has already catapulted itself into the top 25 brands here. Particularly noteworthy is the planned launch of the premium brand Yangwang, featuring high-tech models, which is designed to fundamentally transform the Company's image from a mass supplier to an innovative technology leader.

This offensive is made possible by unprecedented vertical integration. BYD not only manufactures batteries and semiconductors itself, but also utilizes its expertise as an Apple supplier to develop its own tablets for vehicle integration. This approach creates a closed ecosystem and unlocks new sources of revenue. For investors, this presents the image of a company that is leveraging its operational strength to attack on multiple levels simultaneously in the long term, from raw material sources to premium customers, despite short-term market turbulence. The question is not whether, but how much this lead will be extended. The stock is currently attempting to break out of its sideways phase that began on August 1. A share certificate currently costs EUR 13.06.

China's new export restrictions reveal the West's vulnerable dependence on critical raw materials. Despite record orders, Rheinmetall is struggling with this strategic weakness in its supply chain. European Lithium is benefiting directly as a potential supplier of urgently needed rare earths and lithium. BYD, on the other hand, is acting confidently, as it is well protected against such trade conflicts thanks to vertical integration and its strong roots in China. Competition for key metallic raw materials will determine technological and economic sovereignty in the coming decades.