More than 100% with energy storage! Varta and Plug Power curious, BYD and Power Nickel mix up the battery sector!

BYD - Consistently good sales figures give a boost

The Warren Buffet share "Build Your Dreams" is gaining momentum again. While many carmakers are currently looking to the future with great concern, things could hardly be better for the Chinese company. Last month BYD once again set new sales records. There is no need to delve deep into the fundamentals to understand why. It is mainly due to the cost advantages over the competition, which, despite two major rounds of price cuts, are struggling to gain a foothold in the market.

According to press reports, the "Seagull" model became a sales hit shortly after its release. BYD sold over 14,000 units of the relatively new electric car in May. Equally in demand were the Han and Tang models, both of which are in the price range of EUR 26,000 to EUR 39,000. On average, these prices are 25% lower than comparable Tesla models. European competitors had to cope with further declines of 12 to 18% in the Chinese market in May.

BYD continues to benefit from its vertical integration, which significantly lowers production costs and minimizes procurement risks. While delays in new car orders are to be expected for all manufacturers due to the still difficult supply chain situation, BYD is able to meet its demand well. In addition to CATL products, BYD's in-house Blade Battery is one of the best-selling powertrains in the electric mobility sector. The BYD share is showing renewed strength and is technically trending upwards. After breaking above the EUR 28.50 mark, the next resistance level is at EUR 31. The old high from 2022 is around EUR 42 and thus still 40% away.

Power Nickel - Now it is getting really exciting

An important raw material for battery production is nickel because the white metal is an integral part of common batteries. Up to now, nickel has been used predominantly in the steel industry, but the raw material has recently become increasingly scarce. The transition metal is currently indispensable in electromobility. About 5% of global consumption is used there - with a strong upward trend. The share could rise to 21% as early as 2025. Depending on the scenario, we assume that global nickel demand will increase from around 2.4 million tonnes in 2021 to around 3.4 million tonnes in 2025," explains Michael Szurlies, nickel expert at the Federal Institute for Geosciences and Natural Resources (BGR).

A new supplier of the sought-after metal could soon emerge in Canada under the name Power Nickel (PNPN). The Company's concession area comprises the extensive NISK property totalling 20 km in strike length with numerous high-grade mineralized intercepts. Power Nickel is focused on expanding historically high-grade nickel-copper-PGM mineralization with a series of drill programs. The Company also holds other properties in the Canadian province of British Colombia and Chile. At the end of May, Power Nickel announced some drill results. These indicate up to 1.69% nickel, 0.12% copper, 1.59 g/t palladium and minor mineralization in gold. All assay results will be processed into a new NI 43-101 standard resource estimate by Q3.

The PNPN share is great fun because the market is waiting for high-quality nickel from Canada. Western high-tech producers can thus reduce their dependence on Asia. The current price correction is an opportunity to increase holdings in the stock.

Varta and Plug Power - Strong countermovements at low levels

Now, the mood seems to be turning. For months, the daily plunge in Varta and Plug Power shares has been a joy-fest for short sellers. Last week, however, some insider buying did the rounds and the oversold shares jumped nicely.

Recent reports from Varta's board of directors, Markus Hackstein and Rainer Hald, are striking. Whatever the motivation for these buying actions, it helped the 90 % lower Varta share price to get back on its feet. In the course of the week, the bombed-out battery manufacturer rose from EUR 13.95 to EUR 16.45, an increase of 18%. Of course, there is still no news on the ongoing restructuring process. At the end of May, DZ Bank made the rounds with its "sell" recommendation and a target price of EUR 10. Perhaps this was a bit too much pessimism and immediately mobilized anti-cyclical buyers.

The situation looks even more dramatic for Plug Power. According to the Insider Monkey platform, the shares of the US hydrogen expert are one of the world's most short-sold stocks, with over 20%. Therefore, Market experts expect a violent "short squeeze" if rising prices throw the pessimists out of their rhythm. The first initial blow was enough for a juicy recovery from EUR 7.20 to EUR 9.30. But be careful at the edge of the platform. Fundamentally, the share is still far too expensive with a price-to-sales ratio of 4, and the current positive momentum can quickly turn downwards again.

The development of e-mobility continues at a rapid pace. Technologically, there is currently no way around nickel, but market supply is tight. BYD is well positioned, while Varta and Plug Power are trying to turn things around. The "Canadian" Power Nickel is preparing to take on an important role in the large battery metals market.