April 21st, 2023 | 08:20 CEST
Electromobility on the verge of a new era - Freyr Battery, First Phosphate, Nio
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"[...] Nickel, therefore, benefits twice: firstly from its growing importance within batteries and secondly from the generally growing demand for such storage. [...]" Terry Lynch, CEO, Power Nickel
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Freyr Battery - More than 100% upside potential
The Luxembourg-based company specializes in the production of materials for the manufacture of battery cells. It also sells batteries and battery cells in markets that include electromobility, energy storage systems and marine and aerospace applications. A strategic partnership with Siemens was announced on the occasion of the Hanover Fair, which is currently taking place. This will see the DAX-listed company become Freyr's preferred supplier of automation and digitalization technology to scale production and maximize plant and energy efficiency.
Siemens has identified battery technology as one of the key application areas for its "Xcelerator" platform, which combines hardware and software in industrial automation. According to the board member responsible for the Digital Industries division, Cedrik Neike, the platform is used more extensively at Freyr than at any other manufacturer. Siemens is striving to become the "most important partner for battery manufacturers worldwide". Given the increasing demand for energy storage, the industry is booming, he says, and "Of all the industries we see, the production process for batteries is the least mature because the industry is still so young. The opportunities to optimize it are huge".
Investment bank TD Cowen raised its price target for Freyr Battery from USD 14 to USD 16, with a "buy" rating. The share price is currently quoted at USD 7.58.
First Phosphate - Batteries of the future
An obstacle to the successful transformation of the car industry from the internal combustion engine to the electric car could be the lack of raw materials, which are needed, among other things, to develop new types of batteries. First Phosphate, a company that went public in February 2023, focuses on the extraction and purification of phosphate for the production of active cathode material for the lithium-iron-phosphate battery industry. The market volume is gigantic. According to Fortune Business Insights, the global lithium iron phosphate batteries market is expected to grow from USD 10.12 billion in 2021 to USD 49.96 billion in 2028, with an annual growth rate of 25.6%.
Due to the enormous advantages, major EV manufacturers have already announced to switch their battery production from other technologies to lithium iron phosphate. That means that neither nickel, manganese, nor cobalt are needed. In addition, they have a significantly longer lifespan and can be better recycled due to their fire resistance. Tesla was once again the pioneer here. At the US company, almost half of all vehicles already contained an LFP package in the first quarter of 2022. Ford, Rivian and VW are planning the switch, and Mercedes-Benz also wants to bring LFP-powered BEVs to market in 2024.
First Phosphate owns over 1,500 sq km of land rights in the Saguenay-Lac-St-Jean region of Quebec**, which are equipped with world-class infrastructure and are gradually being developed. The properties contain rare anorthosite igneous phosphate rock that yields high-purity phosphate material without high concentrations of harmful elements. From this, purified phosphoric acid of battery quality can be produced in several processing steps.
In terms of news flow, the newcomer to the stock exchange, which has a market capitalization of CAD 31.41 million, is going from strength to strength. The Canadians want to start pilot production in the coming months. A licence agreement was concluded with Integral Power Ltd. from Great Britain, through which First Phosphate secures long-term access to an advanced method for formulating the active LFP cathode material. In addition, the Company intends to raise up to CAD 2 million in the capital markets for further exploration expenditures.
First Phosphate's shares, which are traded in Frankfurt and Toronto, are trading at EUR 0.38 after a sharp pullback. If the demand for lithium iron phosphate batteries continues to rise, the demand for producers, especially from North America, should grow significantly.
Nio - Further decline threatens
The chart-technical situation for the Chinese automaker Nio looks disastrous. Since January 2021, the stock has lost nearly 88% of its market value and is trading at USD 8.56, just above its annual low of USD 8.07. A breakthrough would generate further downside potential into the range of USD 5.65.
Above all, the disappointing results of competitor Tesla continue to weigh on the prices of the peer group. Tesla announced another round of price cuts and said they would sacrifice part of their profit to sell more cars, indicating increased competition for rival electric vehicle manufacturers. Thus, the price war is likely to escalate further, squeezing the margins of the respective producers.
Nio is suffering from the proclaimed price war in China. Freyr Battery, on the other hand, announced a trend-setting cooperation with Siemens. First Phosphate should profit significantly from the rising demand for lithium-iron-phosphate batteries in the future.
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