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January 6th, 2023 | 10:18 CET

Tesla share continues to crash! Volkswagen, BYD, Kodiak Copper, Mercedes - E-mobility in distress?

  • Mining
  • Copper
  • Electromobility
  • Gold
Photo credits: pixabay.com

E-mobiles still account for a single-digit percentage of all vehicles worldwide, but the growth trends speak a clear language: the world will electrify in mobility! Anyone following the price of copper should note one important point - copper is an important industrial metal that is not only used in cars. The biggest consumers are the construction and infrastructure industries. And these sectors are suffering from extreme inflation, high interest rates and the resulting economic decline in demand. For the copper price, of course, this also means no exuberant scarcity at present, and thus falling prices from around USD 5.00 to currently around USD 3.80 per pound. So, as with all commodities, timing in the economic cycle is the key determinant of investment success. Which stocks are in focus now?

time to read: 4 minutes | Author: André Will-Laudien
ISIN: VOLKSWAGEN AG ST O.N. | DE0007664005 , BYD CO. LTD H YC 1 | CNE100000296 , KODIAK COPPER CORP. | CA50012K1066 , MERCEDES-BENZ GROUP AG | DE0007100000

Table of contents:


    Ryan McDermott, CEO, Phoenix Copper
    "[...] If we pursue our goals conscientiously, the market will adjust its valuation accordingly, I am sure. Often, all it takes is a trigger. [...]" Ryan McDermott, CEO, Phoenix Copper

    Full interview

     

    Copper - Very strong undersupply in the long term

    Copper is one of the most important metals in the electrification of our world. Wherever electrical energy has to be generated or transmitted, the red metal plays an important role. In addition to high-tech applications, copper is also used as an industrial metal in construction, infrastructure and medicine. The ever-increasing sales figures of e-mobile manufacturers are leading to a huge, long-term demand for copper. However, the decisive variable is the point in time at which the demand becomes acute and problematic. That is because global production is locally limited and cannot be brought up to the required scale in the next 5 years. But even when there is a shortage, the price is regulated by supply and demand.

    The copper price on the LME is subject to cyclical fluctuations Source: REFINITIV

    As seen in the 25-year chart, the LME copper price has its cycles. The strong upward movement was felt from 2020 to 2022, but the growth prospects are currently dimming. Nevertheless, farsightedness is now required because the demand consists of an immanent undersupply despite the expected economic dip. The current destruction in the war zones alone requires a large number of industrial metals for reconstruction, which will start immediately after the end of the war. The stock market is likely to react ad hoc in the event of Ukrainian peace negotiations.

    Kodiak Copper - One of the next explorers attracts attention

    For Canadian copper and gold explorer Kodiak Copper (KDK), 2022 has gone very well. Just before Christmas, there was an update on the latest results. At the MPD Copper-Gold Porphyry Project (MPD) in southern British Columbia, 26,103m of drilling was completed in 41 holes in the Gate/Prime and Dillard targets. With the results to date, discoveries in the Gate Zone have reached a north-south extension of 1km to a depth of 900m. Furthermore, a 400m long parallel copper porphyry intercept was identified in the nearby Prime Zone to a depth of 550m. In addition, Kodiak has discovered a new high-grade gold-silver discovery called the "Beyer Zone" through trenching an exciting new development as it sits within a multi-kilometre completely untested new gold-in-soil trend and the first time sizable intervals of high-grade gold-silver mineralization have been trenched at the MPD project. Beyer hosts gold mineralization within a 2.2km long and 750m wide corridor that will be further explored in detail during the 2023 program. With only 9 holes released from the 2022 program more news is expected early in 2023 with the next batch of results expected in January.

    During the winter months, the Company is evaluating the available data and creating additional copper-gold porphyry drill targets throughout the MPD concession area in preparation for continuing fieldwork in the new year. Plans for 2023 include additional drilling to further explore several regional porphyry targets as well as the hydrothermal gold discovery and intercept at the Beyer Zone. The 2023 program will also include additional ground geophysics and geochemistry. There is CAD 7 million remaining in the treasury to further cover the cost of the work. Claudia Tornquist (CEO) commented, "We are well funded and look forward to further unlocking the value of the MPD project through exploration and discovery for our shareholders with another major exploration program in 2023."

    KDK shares had a remarkable run in the last quarter compared to the Canadian junior market, nearly tripling from CAD 0.50 to CAD 1.40. The promising stock is currently consolidating a little and offers good entry opportunities around CAD 1.10. With the available data, Kodiak Copper is one of the best-positioned copper newcomers of the last 5 years.

    VW, Mercedes and BYD - What are Tesla's competitors doing?

    At Tesla, the mood is down. The high-profile actions of CEO and company founder Elon Musk have created a lot of uncertainty about the share price. A few months ago, Tesla was worth more than USD 1 trillion, but its capitalization has now slipped to USD 340 million. In China, sales figures are declining, and in Grünheide in Brandenburg, Germany, the Stromer is on the stockpile. While the CEO sells shares, the ARK Fund of Cathie Wood courageously steps in - what a crazy stock market world! The analysts, on the other hand, are undecided. JPMorgan recently lowered its price target from USD 150 to 125, and the vote is "Underweight".

    What increasingly burdens Tesla is the increasing competition from international manufacturers of electric vehicles. In addition to the Chinese market leader BYD, the German manufacturers, in particular, have moved significantly forward and offer more power and range at lower prices than Tesla. European consumers, especially, value the "Made in Germany" label, as Germany has been a guarantor of excellent engineering for decades. Right at the start of the year, VW unveils the new ID.7 with a range of 700km and plans 10 new electric models by 2026. BYD presents the U8 SUV, a perfect adaptation of the successful Range Rover from the UK, under the new high-end car brand Yangwang.

    While Tesla shares have already lost 70% since September 2022, VW and Mercedes are making brisk gains to start the year. BYD stock has turned in at EUR 20.50 and is hanging on to its next resistance upside at EUR 25.50. The positive momentum argues for buying auto stocks, but the clouded economic outlook could weigh on prices again this year.


    High electricity prices and falling fossil fuels mean that e-vehicles are more likely to be sidelined as subsidies fall. Nevertheless, the trend towards electric vehicles will not stop, supporting an increasing copper demand. Kodiak Copper is well-positioned with its projects and could soon impress even gold fans.


    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.

    For this reason, there is a concrete conflict of interest.

    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

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    Apaton Finance GmbH offers editors, agencies and companies the opportunity to publish commentaries, interviews, summaries, news and the like on news.financial. These contents are exclusively for the information of the readers and do not represent any call to action or recommendations, neither explicitly nor implicitly they are to be understood as an assurance of possible price developments. The contents do not replace individual expert investment advice and do not constitute an offer to sell the discussed share(s) or other financial instruments, nor an invitation to buy or sell such.

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    Der Autor

    André Will-Laudien

    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.

    About the author



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