March 24th, 2022 | 11:02 CET
Is this the end for e-car stocks like Tesla? Rock Tech Lithium, Edison Lithium, Volkswagen
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"[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
At home in Southern Germany, the passionate stock exchange expert has been accompanying the capital markets for about twenty years. With a soft spot for smaller companies, he is constantly on the lookout for exciting investment stories.
Rock Tech Lithium: Well positioned as Tesla's neighbor
In addition to the rising prices for battery metals, it is becoming increasingly important to more and more customers that e-cars are also sustainable along the supply chains - nickel from Russia has a bad hand in this regard anyway. Therefore, the sanctions are increasingly affecting those customers who in the past were already not so concerned about the origin of their raw materials. The German-Canadian Company Rock Tech Lithium has positioned itself as a partner of companies that attach great importance to sustainability. When the first Tesla manufactured in Germany came off the production line in Brandenburg, Rock Tech Chairman Dirk Harbecke was on the guest list and presumably used the event for networking. In addition to German Chancellor Olaf Scholz, German Economy Minister Robert Habeck was also on hand. That the somewhat bizarre staging in the Brandenburg province was more than just a networking event for Rock Tech Lithium was shown the following evening on ZDF's heute-journal: Rock Tech Chairman Harbecke had his say in a short clip and emphasized the region's development into an e-car location.
And what did the share do? On Tuesday, a considerable part of the Tesla fantasy had already jumped over to the shares of Rock Tech Lithium, which is planning a factory in the vicinity of the Tesla plant. The day after the brief TV appearance, the value continued to climb - the TV appearance made waves. Rock Tech Lithium needs to step up operationally for the short-term hype to turn into long-term enthusiasm. Some time ago, the Company announced a second factory in Romania and repeatedly emphasized the importance of sustainable supply chains and recycling. With the Fraunhofer Institute, the Company launched an initiative to control supply chains.
Edison Lithium: Early-stage for risk takers
With its work, Rock Tech Lithium is also likely to show the way for many younger companies in the industry. Canadian company Edison Lithium focuses on the battery metals lithium and cobalt, with projects in Canada (cobalt) and Argentina (lithium). Most recently, Argentina has gained favor with investors after Chile became increasingly restrictive in its dealings with mining companies. The lithium property in Argentina covers 148,000 hectares and is located about 20 km from a mining site operated by Livent, Argentina's largest lithium company. Because the deposit is considered promising, but Edison only paid USD 1.85 million for it, the upside potential for the share could also occur if exploration results are positive.
The cobalt project in Canada, located in Ontario near the Town of Cobalt, also has historical exploration data showing gold, copper and nickel in addition to cobalt (up to 4% in grab samples). Edison Lithium's stock is clearly at the beginning, which is also underlined by its market capitalization of about EUR 13.6 million. While the prices for battery elements, such as cobalt and lithium, continue to rise, companies specializing in making related projects economically viable can profit. Any investment in such companies is highly speculative, but history shows that even trendsetters like Rock Tech Lithium started small.
Volkswagen delivers what the market wants
While companies like Rock Tech Lithium and Edison Lithium must be considered dynamic from an investor's point of view, it is not easy to make a comparable judgment when looking at Volkswagen. For many years, the giant car company was preoccupied with itself and stuck to combustion engines for too long. However, VW has been rethinking for some time now - in retrospect, the diesel scandal at the time is often seen as a wake-up call. Today, VW has some promising e-car models on offer and is increasingly securing upstream products with sustainable origins. That also pleases analysts. Most recently, both Deutsche Bank and Credit Suisse gave the thumbs up. According to media reports, the supply situation for cables and chips has also eased somewhat recently.
In times when industry giants, such as VW, are celebrated by analysts for their electric strategy and ESG is the order of the day, smaller companies are also likely to benefit. Those who can offer sought-after commodities sustainably hold all the trump cards. Rock Tech Lithium is already advanced both operationally and in valuation. Edison Lithium offers deposits, a clear commitment to their development, but not much else. Reflected in a valuation of just over EUR 13 million, this can be a great opportunity for those who have mastered the keyboard of speculative investing. The end of electromobility will not be ushered in by rising commodity prices, but issues such as innovation and ESG are becoming increasingly important.
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