April 4th, 2022 | 11:15 CEST
NIO, Power Nickel, BYD - Extreme demand despite rising prices
Due to climate change, something historical is taking place in the transport sector: the transformation of fossil-fueled cars to so-called electric vehicles powered by batteries. The growth figures of electric car manufacturers such as Tesla, BYD and NIO are impressive. The trend is only just beginning and is expected to pick up speed significantly in the next 2-3 years. Due to the high demand for battery-powered cars, the raw materials required, such as lithium, cobalt and nickel, are increasing in parallel. Due to the lack of supply, the winners are precisely those producers and exploration companies that are currently, or in the near future, able to supply the scarce commodities.
time to read: 3 minutes
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Author:
Stefan Feulner
ISIN:
NIO INC.A S.ADR DL-_00025 | US62914V1061 , Power Nickel Inc. | CA7393011092 , BYD CO. LTD H YC 1 | CNE100000296
Table of contents:
"[...] We know exactly what we are doing and are implementing what we consider to be a proven technology in an industrially applicable and scalable way. [...]" Uwe Ahrens, Director, Altech Advanced Materials AG
Author
Stefan Feulner
The native Franconian has more than 20 years of stock exchange experience and a broadly diversified network.
He is passionate about analyzing a wide variety of business models and investigating new trends.
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The growing importance of electromobility
Alongside lithium, nickel is also one of the key raw materials concerning the energy and transport transition. Around 85% of nickel is currently used in the production of stainless steel and alloys. Use in batteries currently accounts for only about 5%. With the expansion of electromobility, batteries will represent the world's second-largest area of application for nickel as early as 2025, with up to 21%, depending on the scenario. "We expect global nickel demand to increase from around 2.4 million tons today to around 3.4 million tons in 2025, depending on the scenario. Overall, the nickel market is facing a turning point in terms of demand in the coming years, which will lead to a significant shift in market shares within the areas of use," explains Dr. Michael Szurlies, nickel expert at the German Federal Institute for Geosciences and Natural Resources.
Electric car manufacturers with further records
The recently published export figures for e-car makers show that nickel demand is likely to be higher than expected. Musk's Company defied global supply chain failures and various semiconductor component shortages to post a new sales record in the first quarter of the current year. From January to March, 310,048 customers took delivery of their new Tesla, even 1,500 more than the final quarter of 2021.
The signs also continue to point to growth among Chinese market participants. With its full-year 2021 figures, electric car and battery developer BYD Company Ltd. confirmed its high growth rate. BYD generated revenues of around EUR 30 billion in 2021, a year-on-year growth of 37.68%.
Delivery figures for the month of March were also 37.6% for competitor NIO, bringing the total number of electric SUVs delivered to 9,985. Cumulatively, the Chinese electric car producer thus sold 25,768 vehicles in the first quarter, increasing 28.5% year-on-year.
Who supplies the raw materials?
Whether the growth figures will continue in the future depends mainly on whether sufficient supply can meet the strong demand. Currently, as a detailed report shows, demand already exceeds supply. The primary beneficiaries are, of course, the producers of the scarce metal and those companies that are already exploring promising properties.
The Canadian Company Power Nickel owns such a promising nickel project and also has two other hot irons in its portfolio, which could significantly lift the value in the near future. However, the main focus is currently on the James Bay high-grade nickel-copper-cobalt-palladium project NISK. The property in Quebec, Canada, comprises a large land position with 20 km of strike length and numerous high-grade intercepts. Power Nickel continues to expand mineralization here and is preparing for a 5,000m fully funded drill program in the second quarter.
Recently, results from the third and final set of drill holes were released and confirmed high-grade nickel mineralization in the eastern and central deep portions of the Nisk Main mineralized lens. In addition to historical and previously released assay results, these new results show good grade and thickness continuity.
In addition to developing and exploring the high-grade NISK nickel project, Power Nickel also has significant assets that should add considerable imagination to its current EUR 0.14 share price with a market capitalization of EUR 14.95 million. The Company plans to spin off Consolidation Gold and Copper to form an independent, listed company. Accordingly, 80% of the shares will be owned by Power Nickel in the future, and 20% will then be distributed to existing shareholders of Power Nickel. The separate company will then include the non-core assets, such as the 100% share in the Golden Ivan project in the Golden Triangle of British Columbia and concession rights in Chile and Canada. Given the future bullish nickel price, interested investors should take a closer look at the Company. For a better understanding, take a look at this interview with Power Nickel's CEO, Terry Lynch.
Enormous amounts of metals such as lithium, cobalt and nickel are needed for the energy transition. Producers, or explorers like Power Nickel, will benefit from the rising prices. The sales figures of e-car manufacturers such as Tesla, NIO and BYD are also on the rise.
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