Volkswagen in a tight spot: Why European Lithium and Standard Lithium are now the more valuable players

Volkswagen – Light and shadow in the electric era

Volkswagen's current figures are mixed. From a global perspective, the first three quarters were stable, with a slight increase of 1% in deliveries. However, a regional analysis reveals significant shifts. While Europe and South America grew, the Company lost ground in the key markets of China and North America. But the real momentum is unfolding beneath the surface. Sales of battery electric vehicles (BEVs) shot up by 42% globally. The home region in particular shone with an increase of 78%, underpinning VW's leading position in Europe. This shows where the Company's strengths lie in the transformation process.

Nevertheless, clouds are gathering on the horizon. The tense geopolitical situation with US import tariffs and China's export restrictions on critical battery raw materials, such as lithium, is weighing on the cost structure and planning security. Volkswagen has taken precautions and attempted to secure itself through long-term supply contracts and investments in its own mining projects. However, dependence on volatile supply chains remains a significant risk for the ambitious electrification plans. At the same time, sales of electric vehicles are weakening in China, which has historically been so important for VW, highlighting the Company's vulnerability in this region.

Despite the adverse conditions, the Group is consistently sticking to its strategy. The planned model offensive with new, affordable electric vehicles such as the ID. Polo from 2026 aims to appeal to additional customer segments and support growth in the volume business. To improve margins, the Company is focusing on two strong segments: SUVs and premium models such as the new Audi Q6 e-tron. The big question, however, will be whether it can master the difficult balancing act. On the one hand, it must invest heavily in the future of electric mobility, while on the other hand, it must not lose sight of profitability in the here and now – a real test in an increasingly competitive global electric vehicle market. The share is currently trading at EUR 90.28.

European Lithium – More than just a lithium story

European Lithium is increasingly positioning itself as an investment company for critical raw materials. At its core is a substantial 60% stake in NASDAQ-listed Critical Metals Corp. Recent partial sales of this position have brought fresh capital into the coffers and underscore the market value of this asset. At the same time, the Company has launched a share buyback program, which investors should interpret as a sign of confidence in the fundamental value of the Company. This capital measure aims to reduce the discrepancy between the balance sheet and the current stock market valuation.

Critical Metals stands out as a key value driver in European Lithium's portfolio. Its flagship project, the Wolfsberg lithium mine in Austria, holds the title of Europe's first fully approved lithium deposit. Although production is currently on hold due to market price fluctuations in the lithium sector, the long-term outlook remains intact. An already secure long-term supply agreement with BMW highlights the project's quality and market relevance. The mine is ready to start production as soon as lithium market conditions improve. The second major pillar is the Tanbreez project in Greenland, one of the most promising rare earth deposits outside China. Recent drilling results confirm consistently high grades, including a significant proportion of valuable heavy rare earths. The strategic importance of Tanbreez is underscored by an initiated partnership with Ucore Rare Metals for a potential off-take agreement, which could pave the way for access to the North American defense and tech sector. The upcoming feasibility study is eagerly awaited.

In summary, European Lithium is pursuing a two-pronged strategy. On the one hand, the European lithium market is covered by Wolfsberg, while on the other hand, the global rare earths market is addressed via Tanbreez, over which it now has full control. The recent financing transactions and share buyback indicate that management is convinced that its own assets are undervalued. For investors focused on building independent supply chains for critical minerals, the Company represents an interesting, multidimensional option whose valuation parameters extend beyond pure lithium production. Since the beginning of October, the share price has skyrocketed to its current level of AUD 0.40, which is likely due to its significant undervaluation.

Standard Lithium – America's strategic independence

The US government's recent investments in companies such as Lithium Americas mark a turning point in domestic raw materials policy. This clear commitment to securing critical supply chains draws attention to promising next-generation projects. Standard Lithium could benefit particularly from this strategic environment. With its South West Arkansas Project (SWA), the Company is positioning itself as a potential key player in independent US lithium supply.

The joint venture between Standard Lithium and Equinor has just presented the feasibility study for its SWA project, and the figures are truly impressive. The plan is to produce a whopping 22,500 tons of battery-grade lithium carbonate annually over a period of 20 years. According to the study, a robust pre-tax return of 20.2% is expected, while operating costs are encouragingly low at USD 4,516 per ton. The project, which would make history as the first commercial lithium extraction in the US, is estimated to require a total investment of USD 1.45 billion.

But the true significance of the project cannot be gauged from the bare economic data alone. It is a flagship project in the promising Smackover Formation, which is intended to serve as a springboard for future expansion. If everything goes according to plan, construction will begin in 2026, with initial production starting in 2028. Against the backdrop of the US wanting to make its supply chains more independent, this project is really gaining momentum. For investors, this offers an opportunity to tap into a long-term, government-driven trend. Although lithium prices are likely to continue to fluctuate in the short term, the project is designed for the long term. For those who want to strike now: The stock is currently available for USD 4.93.

Geopolitical tensions surrounding lithium are catapulting independent producers into the spotlight. Despite rising electric vehicle sales, Volkswagen is struggling with supply chain risks and margin pressure in key markets such as China. European Lithium, on the other hand, is pursuing a clever two-pronged strategy with its ready-to-go Wolfsberg lithium project in Europe and promising rare earths in Greenland. As a potential pioneer of US production, Standard Lithium is indirectly benefiting from strategic government support for independent supply chains. In the current phase, promising lithium suppliers are the more strategically valuable players.