Environmental funding is back, now 100% with e-mobility stocks! VW, Mercedes, Prismo Metals, BYD and NIO

BYD and NIO – China conquers Europe

Above all, the slowdown in China is weakening the international automotive business. But what cannot be sold in China itself quickly reaches Europe by ship. That is because Far Eastern producers can enter the market here with significantly higher selling prices, in some model groups, by up to 100%. For German manufacturers, sales of premium vehicles in Asia are increasingly being hit by the weakness of the local economy, but there is no plan B here.

Four out of ten imported electric vehicles most recently came from China. The People's Republic has thus significantly expanded its position as the most important importer, even though the absolute unit numbers have declined slightly due to the weak market since the summer. Nevertheless, China's share of total imports of pure electric vehicles to Germany rose significantly to almost 41%. Last year, this share was still at 29%; in 2020, it was only 12%.

While BYD will start production in Hungary from 2026, thus avoiding the EU punitive tariffs, NIO is apparently interested in taking over the Audi plant in Brussels. Sure, the infrastructure is already in place here; one just has to change the Company signs. According to rumors, a purchase offer has already been prepared. BYD, for its part, is taking over its German sales partner, Hedin Electric Mobility. This is how quickly Asian suppliers can gain a foothold in Europe. In terms of growth, the shares of BYD and NIO are certainly interesting, but BYD remains sufficiently valued, and NIO's cash flow is likely to remain negative until 2027 due to high investments. Very speculative!

Prismo Metals – The copper price lifts explorers' spirits

After months of consolidation, the copper price climbed back above the USD 9,400 mark last week, an important resistance level on the way up. After rallying to USD 10,850 in May, the important industrial metal consolidated to USD 8,600. However, the high momentum in renewable energies and the acceleration in the e-mobility sector are once again making the most important metal for electrification a sought-after commodity. In addition, inventories at the futures exchanges have fallen to a three-year low.

These are good conditions for the Canadian exploration company Prismo Metals. The junior has an attractive copper property called "Hot Breccia" in Arizona. The property consists of 1,420 hectares with a total of 227 contiguous mining claims located in the world-class copper belt between the well-known copper mines Morenci, Pinto Valley, Ray, and Resolution. The extensive historical exploration data of the former Bear Creek Mining Company has now been updated, and work on the project is progressing rapidly.

With a current silver price of USD 31, the second property, Palo Verdes in Mexico, should now also come into focus. The drilling program has been announced for September and will start soon. Financing should not be an issue as Prismo is working closely with the anchor shareholder Vizsla Silver Corp. The two properties border each other directly and can be developed together in a meaningful way. In previous drilling, 102 g/t gold and 3,100 g/t silver were discovered. It is worth bringing more drill rigs into position. After the election, Mexico has now become a sought-after mining location again.

The Company's 54.18 million shares are currently trading at CAD 0.23. This is already at the upper end of the range of the last 12 months, but the capitalization is still manageable at CAD 10.3 million. A further buy argument would be provided by overcoming the CAD 0.26 mark. The soaring copper and silver prices and upcoming news could soon send the title through the roof.

VW and Mercedes – Now we are in for a bumpy ride

Two profit warnings in September took a toll on the prices of Volkswagen and Mercedes. While VW announced plans to cut up to 30,000 jobs and even close some plants, the Stuttgart-based company suddenly saw its margins collapse. The blame for the plight of the German premium carmakers lies with the sharp decline in sales in the Far East, where German premium vehicles were once in demand. Now, however, e-mobility dominates the market, and sales of combustion engines are declining faster than expected.

According to the latest reports, declining sales in China are causing Wolfsburg's management to rethink its investments there. Volkswagen has been working with its Chinese partner, SAIC Motor Corp, in China for almost four decades. By the end of 2023, VW had employed more than 90,000 people in its Chinese factories. Now, as early as next year, the plant in Nanjing may be closed, as anonymous sources report to Bloomberg.

Mercedes-Benz is also concerned about the current fiscal year. Last week, the Stuttgart-based company again lowered its already revised profit forecast. The main reasons for this are the deteriorating economic situation and the decline in business in the Far East. EBIT is expected to be well below the previous year's level, with Mercedes-Benz's passenger car division in particular weighing on the forecast. A margin between 7.5 and 8.5% is now expected for 2024, while the previous outlook was 10 to 11%.

Nevertheless, with share price losses of between 12 and 18% in the last 12 months, some of this has already been priced in. The restructuring costs are not yet reflected in the balance sheet, but the substance of both companies is high. This means that P/E ratios of 3.5 to 4.8 and dividend yields of over 6 to 7% are slowly becoming attractive. If the economics minister reacts quickly, this could soon get prices out of the basement. Buy a few VW shares at EUR 91 and Mercedes at EUR 55, but a horizon of 2 to 3 years is necessary.

The course for e-mobility could now be set anew in Berlin and Brussels, which should help the struggling stocks in the automotive sector to recover. These stocks have underperformed the DAX 40 index by more than 25% in recent months. Prismo Metals is advancing faster than expected, and copper and silver prices are rising simultaneously. This makes the stock a speculative top pick among the smaller explorers.