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April 19th, 2022 | 13:24 CEST

Turn of the times: Varta, Altech Advanced Materials, BYD, NIO - Batteries over oil and gas!

  • Electromobility
  • Technology
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The Ukraine crisis reveals a dangerous dependency. Central Europe is on Russia's energy drip. It is not easy to threaten Russia with sanctions when the oil and gas giant is also the leading supplier. For the primary supply of our population, any change in German-Russian relations is dramatic as long as we do not manage to build up alternatives. Of course, this cannot be done in just a few months but involves an investment cycle of the next 5 to 10 years. It will therefore be critical for the coming winter. The automotive industry has long recognized what threatens heating and district heating today. Move away from fossil fuels - towards batteries! Only who can build them?

time to read: 4 minutes | Author: André Will-Laudien
ISIN: VARTA AG O.N. | DE000A0TGJ55 , ALTECH ADV.MAT. NA O.N. | DE000A2LQUJ6 , BYD CO. LTD H YC 1 | CNE100000296 , NIO INC.A S.ADR DL-_00025 | US62914V1061

Table of contents:

    Terry Lynch, CEO, Power Nickel
    "[...] Nickel, therefore, benefits twice: firstly from its growing importance within batteries and secondly from the generally growing demand for such storage. [...]" Terry Lynch, CEO, Power Nickel

    Full interview


    Varta - High expectations of the automotive industry

    No German company in the battery sector is currently in the spotlight as much as Varta AG from Ellwangen. In addition to several disappointments due to exaggerated growth expectations, the Varta share price has been dragged down in the last 6 months. The statements about the new super battery for e-mobility, which are still too vague, also pushed the value.

    Most recently, Varta announced that it intended to extend the V4Drive technology to the overall battery electric vehicles market, i.e. to produce larger formats. Varta saw the new power cell used primarily in electric sports cars and other premium vehicles. For example, the so-called 21700 cell was to be charged within just 6 minutes and still be powerful even at extremely low temperatures. Porsche was rumored to be the first customer. The markets have still internalized the 2023/24 delivery vision here, which is still quite far in the future from today's perspective.

    However, Varta is now stepping up the pace again in its e-offensive. In order to finance the expansion of lithium-ion production capacities, the battery manufacturer has secured a loan of EUR 250 million under very favorable conditions. Investors nevertheless reacted relatively unimpressed; it was probably assumed that Varta would be able to finance its research program from its own cash flow. The Varta share had recently failed several times to regain the EUR 100 mark and has now corrected to EUR 86 in recent days. A bottom formation could nevertheless succeed in the range of EUR 82 to 85, but the indices would also have to remain above this. Continue to observe only!

    Altech Advanced Materials - Pilot plant for coating materials under construction

    In Heidelberg, the German company Altech Advanced Materials AG (AAM) is preparing to develop a new type of battery. The management of AAM assumes that e-vehicles will soon be cheaper than conventional combustion engines due to technological progress. That is good news for the tight mobility market because the long-term substitution of fossil fuels now seems to be accelerating on the industry side.

    If the statements of the AAM management are to be followed, there is huge potential to achieve a significant increase in the performance of energy storage systems in the next few years. The linchpin for the success of e-cars will be charging time and infrastructure, range and durability. AAM's research efforts aim to improve cathode properties with the desired increase in power density, operational reliability, and extended lifetime.

    AAM has signed an engineering contract with Küttner GmbH of Saxony, Germany, for its battery coating materials pilot plant. Küttner will start with the detailed planning, but the tight supply market for the necessary components could be a sticking point in procurement. Especially in the high-tech sector, the current supply chain problem becomes extremely apparent. Once completed, the plant is designed to produce 120 kg of coated battery anode material per day, which can then be made available to battery manufacturers for testing purposes. The feasibility study for the overall project is being implemented in parallel. There should be some news here in the current year.

    Currently, maximum e-ranges of 500 km can be purchased from current manufacturers, so the entire segment needs disruptive leaps in technology. As with Varta, investors in the AAM share are also waiting until groundbreaking news is forthcoming. However, the share is still interesting from a speculative point of view because shares below EUR 1 are rare.

    BYD versus NIO - Who is ahead?

    The e-mobility market is set to take off in 2022. The sales figures for the month of March prove this, in which the Chinese manufacturer BYD sold more than 100,000 e-vehicles, including plug-in hybrids, for the first time, four times as many as in the previous year. In order to be able to deliver the demanded quantities, the fifth factory of the Chinese electric car manufacturer was officially opened on April 15 in the industrial park of Fuzhou. The new factory is designed for an annual production of around 200,000 vehicles with alternative drives and has swallowed up a total investment of almost EUR 2.2 billion. In addition, BYD also announced the construction of a new battery factory on site to remain independent of international suppliers.

    NIO remains well ahead of German luxury brands in China's premium battery electric vehicle (BEV) market. In high-priced, high-end BEV vehicles with retail prices above USD 47,000, top dog Tesla sold 39,353 units in March, remaining dominant. However, NIO followed right behind in second place with sales of 9,829 units. This figure is double the total sales of BMW, Mercedes-Benz and Audi, which only managed 4,438 vehicles. NIO continues to rank between Mercedes-Benz and BMW in terms of average selling prices. Now, the key to continuing to grab market share may lie in a completely new product portfolio that will be launched in the current year.

    In a direct comparison, the BYD share is ahead, having gained a full 48% over the past 12 months. The NIO share is a different story because, after the rapid tenfold increase at the end of 2020, it then went down constantly, and the value has currently lost 39% in 12 months. BYD is already making billions in profits, but NIO will not break even until 2024. From a chart perspective, BYD is still working on an upward trend, and NIO is attempting to form a sustainable bottom. Thus, both stocks are interesting; the speculative NIO certainly has the higher leverage. Our conclusion: Hold BYD, watch NIO!

    The raw material shortage and supply chain issues are impacting the automotive sector. Regardless of energy production, e-mobility producers at least offer a medium-term exit from the combustion segment. But this requires high-performance energy storage systems. Varta and Altech Advanced Materials can make a difference here, which will undoubtedly boost the shares.

    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.

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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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