Electric mobility is booming, lithium prices are rising again – An assessment of BYD, Power Metallic Mines, and Volkswagen

BYD – An arms company?

According to a Bloomberg report, the US Department of Defense has recommended that Congress add Chinese automaker and battery manufacturer BYD to a list of companies believed to have ties to the Chinese military leadership. Inclusion on this so-called "1260H list" would act as a clear warning signal for US investors. However, no final decision has yet been made on whether BYD will actually be included in this list. Such steps underscore the ongoing geopolitical tensions, which may also pose a significant risk for investors in Chinese technology stocks.

Regardless of these political clouds, BYD's success is based on a fundamental strength: deep vertical integration. The Company controls not only the final assembly of vehicles, but also critical upstream stages in the supply chain. These include lithium processing and battery cell manufacturing. This approach, built up over more than a decade, creates a high barrier to entry for competitors. While BYD is often viewed as an electric vehicle manufacturer, its true unique selling point lies in this technologically sophisticated vertical integration, which gives it remarkable resilience.

This integration directly contributes to two key aspects: cost and safety. By controlling its own supply chain, BYD is less vulnerable to commodity price shocks. At the same time, with its blade battery, the Company has established a safety technology that is becoming an important selling point in an increasingly saturated market in China. As regulators pay closer attention to battery safety, BYD's focus on proven, robust hardware could prove to be a sustainable competitive advantage that sets it apart from the rest of the field. The stock is currently trading at EUR 10.805.

Power Metallic Mines – Interesting developments

For investors looking for substantial exploration stories, Power Metallic Mines offers a remarkable opportunity. The Company is advancing its flagship NISK project in the mining-friendly province of Québec at an impressive pace. What makes NISK special is not only a well-established nickel body, but also the significant discovery of high-grade copper and precious metal mineralization. Experts compare the deposit to a rare category responsible for some of the most profitable mines worldwide. Resource estimates to date indicate a substantial volume with notable metal grades, laying the foundation for a highly promising future.

Recent drill results further underline the potential. Intervals grading above 12% copper have been intersected, highlighting the exceptional quality of the mineralization. However, the Company is not relying on blind luck, but is pursuing a methodical approach. The use of borehole electromagnetics (BHEM), a geophysical method for precisely locating sulfide ore bodies, plays a central role in this. The high success rate of this technique provides valuable data for the placement of further drill holes and systematically increases the probability of success.

A strategically astute move was the massive expansion of exploration licenses. The land package was increased from an initial 46 km² to over 300 km². This expansion is based on the realization that successful discoveries of this type often form entire deposit districts. The team has analyzed the geological success pattern and is now controlling 7 of the 8 most promising targets in the region. This opens up a real opportunity to develop not just a single mine, but potentially an entire mining district, thereby fundamentally increasing the Company's value.

Those interested to learn more can watch the Company's online presentation for free at the upcoming International Investment Forum on December 3. The stock is currently trading at CAD 0.97.

Volkswagen – Between construction sites and glimmers of hope

The latest figures are mixed for the Wolfsburg-based group. Operating profit slumped in the third quarter and ended up in the red. This is mainly due to massive one-off charges, such as billions in write-downs at Porsche, the realignment of the sports car division and, last but not least, the oppressive US tariffs. This tariff burden is becoming a permanent liability and is having a noticeable impact on margins. Global competitive pressure, especially in China, is also weighing on the group. The balance sheet clearly shows that the road to sustainable profitability is rocky and that costs must be further reduced.

Nevertheless, there are rays of hope that justify cautious optimism. The operating margin before special items is 4.5%. This is a starting point that can be built upon. Above all, the electric offensive is gaining noticeable momentum. BEV orders in Western Europe jumped by 64%. In addition, stricter working capital management is having an effect, driving free cash flow up to EUR 3 billion in the quarter. Management is also signaling discipline in its investments and focusing on cash flow management.

The outlook through 2026 also points to a recovery. Planned restructuring measures promise cost savings in the billions. The upcoming flood of new products will be decisive, including the important NextGen BEV models, which will be launched in 2026 and are expected to improve margin dynamics. Combined with a solid dividend policy, this offers a certain degree of downside protection. For investors who are prepared to sit out the current turbulence, patience could pay off in the long term, even if competition from China does not create an easy environment. The share is currently trading at EUR 98.52.

The electrification of mobility is creating winners beyond pure car manufacturers. BYD impresses with its deep vertical integration, which ensures cost advantages and independence in the supply chain. However, dark clouds may be gathering in the US. Power Metallic Mines scores with the exceptional NISK copper and nickel deposit, which holds great potential for the entire mining district in Québec. Meanwhile, Volkswagen is struggling with special charges, but is showing the first signs of hope in its difficult transformation with rising BEV orders and positive free cash flow. Access to critical metals and in-house vertical integration will be crucial.