The low-cost electric vehicle is here! Opportunities at BYD, Albemarle Corporation, and European Lithium

BYD does it for under 20k – Production soon to start in Hungary

The new Dolphin Surf is built on BYD's e-platform 3.0 and features state-of-the-art LFP battery technology. At just under four meters long, it fits perfectly into the small car segment. Until now, electric vehicles in this category have tended to be expensive – both the Fiat 500 and the Renault 5 come with list prices around 50% higher and are considered more of a style statement than a practical long-distance vehicle for robust everyday use. The Dolphin Surf could now make electric vehicles attractive to a whole new group of buyers for the first time. The resulting increase in unit sales should benefit the broader electrification of BYD's model range and put cost pressure on European manufacturers.

BYD is benefiting from its vertically integrated business model, which includes not only car manufacturing but also the production of batteries and chips, in its global expansion. This means BYD also earns money from pre-products and can produce cost-effectively thanks to large volumes of batteries and other pre-products. Although low labor costs in China also play a role, their significance is not that great – after an initial ramp-up phase, the Dolphin Surf will no longer be manufactured in China, but at BYD's plant in Hungary.

European Lithium: In the right place at the right time?

This shift to the European continent shows that Europe is a key sales market for BYD – the Chinese automaker is here to stay, investing in local plants to ensure shorter delivery routes and build redundancy into its supply chain. An important factor in this strategy is the expectation that essential preliminary products for the automotive industry will increasingly be sourced from Europe or neighboring regions in the coming years. The International Council on Clean Transportation (ICCT) predicts that global lithium demand will quadruple by 2030. Even though prices are currently low, the situation surrounding lithium is explosive. Benchmark Minerals Intelligence recently brought forward the onset of a structural lithium deficit from 2029 to 2027 – precisely the time when essential lithium projects could also go into production in Europe. One of these is the Austrian Wolfsberg project by European Lithium. The mine is scheduled to start production in 2026. The planned production of lithium hydroxide in Phase 1 is 22,500 tons per year. Estimates suggest that Wolfsberg alone could account for 4.5% of global lithium production.

The Wolfsberg mine's comprehensive output will likely find eager buyers – in Europe alone, more than thirty gigafactory projects for the production of batteries are planned. European Lithium first intends to have its products refined in Saudi Arabia and has entered into a 50/50 joint venture with the Saudi Arabian Obeikan Group for this purpose. This deal is considered strategically sound because of the low energy costs in the Middle East. The fact that Wolfsberg is coming at the right time for the European automotive industry is also demonstrated by the binding offtake agreement with BMW, which was signed back in 2024: The Munich-based company has paid an advance of EUR 15 million to secure access to lithium products from Wolfsberg.

Even Albemarle is eyeing Europe for lithium production – Will acquisitions follow?

For years, Chile and Argentina were considered the world's lithium hotspot. The US company Albemarle was the leading player in lithium mining there. Albemarle has other production sites in Australia. In the US, Albemarle aims to reactivate the Kings Mountain mine, and the US company also plans to gain a foothold in Europe. The reason for the expansion in North America and Europe is the proximity to production facilities. Albemarle is therefore striving to achieve what will already be a reality in Europe within the next two years: efficient and robust supply chains for the construction of electric vehicles, from raw materials to battery construction to the finished vehicles.

The price war triggered by BYD's new Dolphin Surf is likely to accelerate the development of efficient supply chains and make preliminary products from Europe more attractive than imports from South America. Companies such as European Lithium could even become takeover candidates for Albemarle to gain a foothold in Europe. European Lithium could also be of interest to China's BYD. As early as 2022, the Reuters news agency reported that BYD was in talks to buy stakes in six lithium mines in Africa. BYD's Chinese competitor, Ganfeng, is already active in Europe and is a direct neighbor of European Lithium in Ireland, where it is also developing a lithium property.

Lithium: Europe sets the tone – European Lithium benefits from the spirit of the times

The excitement surrounding the development of European supply chains for electric vehicles is clearly reflected in the stock performances of the companies mentioned above: European Lithium's share price has surged by a whopping 66% in the past six months alone. In contrast, Albemarle's share price has fallen by nearly 52% over the same period, indicating that the star of South American lithium is losing steam. This trend is underpinned by decisions taken by European authorities: In 2024, the Carinthian government ruled that no environmental impact assessment was necessary for the Wolfsberg project. Word of this new "European pace" is spreading and is being well received by international investors. There is also speculation that BYD may expand further in Europe. Successful sales of the new low-cost EV, the Dolphin Surf, could signal the start of this. BYD certainly has the resources – its share price has increased by 63.5% in the past six months.