17. March 2021 | 12:50 CET
Rock Tech Lithium, Varta, Volkswagen - The German battery is coming!
If the statements of German board members are to be believed, Tesla is now facing a strong headwind from Europe. Tesla will invest around EUR 6 billion in the Gigafactory near Potsdam. Industry analysts estimate that the German automotive industry will invest around EUR 25 billion in the development of e-mobility in 2021 alone. The industry has woken up, leaving the sleeper car and meeting for a strategy session in the front railcar. It is time to look at stocks that can live up to this trend because they have recognized the signs of the times.
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ISIN: CA77273P2017 , DE000A0TGJ55 , DE0007664039
"[...] 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
Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
Volkswagen - Power Day creates clarity
This put even Tesla's Battery Day in the shade. The world's second-largest automaker announced a complete strategy shift toward e-mobility. Over the last few quarters, restraint could still be felt on this topic, but now the floodgates seem to be open.
2020 also brought a big damper for VW, as the Volkswagen Group's global vehicle deliveries fell 15.2% to 9.3 million units in fiscal 2020 due to the Corona pandemic. After-tax profits dropped to EUR 8.8 billion. But now there is a range of announcements. A total of 6 Gigafactories are to be built in the next 5 years, by which time there will also be 18,000 fast-charging stations in Europe. In 2021, Volkswagen plans to release more e-models, and 1 million electrified vehicles will already be delivered this year.
In 2020, there was more than a threefold increase in VW's EV sales and a 175% increase in plug-in hybrids. Over the next 3 years, these shares will grow explosively. In China, Volkswagen plans to build 17,000 charging stations by 2025; by comparison, Tesla currently operates 20,000 fast-charging stations worldwide.
The VW Group now wants to return to its usual profit strength in the coming years by expanding its platform strategy. While Norway is already banning new internal combustion engines from 2025, Sweden, Denmark, the UK, the Netherlands, Israel and India are not planning to take this step until 2030. VW continues to refuse to comment on a timeframe for the end of the internal combustion engine, but Audi has announced that it would not develop a new generation of internal combustion engines from now on.
If you listen carefully to Herbert Diess' words, it becomes clear: Germany has now mentally arrived in the e-mobility age - and our virtues are reliability and thoroughness. That sounds like full throttle! Whether it will continue to fuel the share will be seen because the value has already risen by 40% in 2021 alone.
Varta - It's faster with the car battery after all
Who would have thought it? A month ago, there were figures from Varta, which were somewhat disappointing in their entirety. The share fell like a stone from EUR 180 to around EUR 100. Overall, the markets found too little information in the communication regarding the automotive battery sector plans. But now it is out, and the planned entry into e-mobility is again boosting the share price. Is the share now set for a quick comeback?
The Swabian Company wants to produce modern battery cells for electric cars and is currently building a production line for this purpose at its headquarters in Ellwangen. According to a report in WirtschaftsWoche, the new 21700 battery cell will initially find its use primarily in high-performance e-cars as a short-term accelerator or in new types of drive concepts. According to the report, negotiations with several car manufacturers are already underway, and more detailed information is expected in the coming weeks.
With this step, Varta is venturing into a still young but fiercely competitive market segment dominated primarily by Asian companies and the US carmaker Tesla. Should Varta succeed in gaining a foothold in this area with appropriate partnerships, the growth potential is enormous.
Yesterday, the reaction on the stock exchange was correspondingly euphoric. By midday, the share price had already reached just under EUR 130, and it was able to hold steady at EUR 129 until the evening. Whether the explosive rise will last remains to be seen. The critical thing for Varta will be how quickly and concretely it comes to a joint development table with the automotive industry.
Rock Tech Lithium - A Canadian Lithium Stock with German Management
In September 2020, Dirk Harbecke (Chairman of Rock Tech Lithium) said, "What is still underestimated in the broad population is really that we are dealing with a revolution here. Batteries will continue to change our whole society further and further!" A statement with foresight, as even then he spoke of the "Golden Decade for lithium-ion batteries." However, his words have taken on a new significance in recent days because the car manufacturers have made up their minds. Registration rates in Germany speak the same language for consumers: in 2020, 2.9 million vehicles were registered, and the number of electric and hybrid cars increased by 200%. In February, electric vehicles already accounted for 9.4% of total registrations, and hybrid vehicles were even stronger at 27.1%.
Rock Tech Lithium wants to support the sustainable mobility turnaround, and it takes that into account in its production processes. Ultimately, it is about lithium's availability, or more precisely, about so-called converters, which represent the necessary technical infrastructure for lithium processing. When production of the coveted lithium begins in 2023, all the necessary precautions will have been taken to supply Germany with this essential raw material. The Company is already talking to major German customers who will later purchase the production volumes.
Following the recent publicity of the entry of several anchor investors, Rock Tech now expects to put financing for the lithium converter in place towards the end of 2021. This includes completing the plant design, the site decision and the conclusion of initial supply contracts. The prerequisite is the start of lithium hydroxide production in the Company's pilot plant from the spring; this creates the so-called "proof of concept" for the subsequent major investment.
Due to the positive outlook, the market capitalization has already increased tenfold compared to the middle of last year. The management's expectations have been fulfilled in the best possible way because now the industry is under power - Volkswagen and Varta are among the main protagonists. Rock Tech Lithium will gain proper momentum as an essential raw material supplier.