January 25th, 2022 | 13:27 CET
Volkswagen, Yorkton Ventures, BYD, NIO: E-Mobility 2022 - The Tesla hunters are coming!
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"[...] 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 - The number one among electric vehicles
The Volkswagen Group is investing heavily in the mobility of the future: by the end of 2025, almost EUR 73 billion is to be invested in electromobility, digitalization and hybridization, EUR 35 billion of which will be spent on pure electromobility. In addition, the joint ventures in China will invest a further EUR 15 billion over the coming years.
Volkswagen wants to put attractive e-models on the road at affordable prices and help the e-car achieve a global breakthrough. The basis of the e-strategy is the modular e-drive system (MEB), a technology platform created specifically for the e-car. As the world's first production vehicle based on MEB, the ID.3 has been built in Zwickau since the end of 2019. Further models such as the ID.4 and the ID.6, available in China, are expected to convince customers worldwide of the benefits of electric mobility.
From an analytical point of view, VW shares are only valued at a price-to-sales ratio of 0.5, given a share price of EUR 178 and estimated sales revenues of EUR 247 billion in 2021. The competitor Tesla from California only turns over USD 53 billion and is currently valued with a sales factor of 16.5. In our eyes, it is time for the stock market to finally wake up and bring about a convergence of these valuations. In just four weeks, Tesla has already lost 28% from its high, while VW shares are still in the plus zone in 2022.
Yorkton Ventures - Very well positioned with gold and lithium
Growth in electromobility hinges on one issue: the development and availability of powerful electricity storage units. Thousands of development offices worldwide are on the lookout for the super battery, as energy storage needs are putting high-tech producers worldwide in a bind. In addition to copper, nickel and graphite, the availability of battery-grade lithium is essential given the current state of technology. Besides Standard Lithium from Arkansas, very few new lithium projects can deliver quickly.
Canadian explorer Yorkton Ventures holds 100% interest in 4 gold and lithium projects, 2 in Newfoundland and 2 in Québec. Now it is adding an important lithium property, having recently acquired 12 mineral claims in 5 blocks totaling 656 hectares, collectively known as the Sirmac East project in the James Bay area of Québec. The lithium project is located approximately 170 kilometers northwest of Chibougamau and is very accessible via a network of highways and forest roads. Another infrastructure advantage is a 700-Kilovolt power line, which runs directly through the area. The project area is considered highly prospective for lithium as it occurs in spodumene-bearing pegmatites. Geologists attest that the property has excellent potential for further discoveries.
Yorkton Ventures has also been listed in Frankfurt and Stuttgart since January 2022, and its market capitalization of CAD 10.6 million is still quite manageable. Nevertheless: the capital market will keep a constant eye on the lithium successor because of the lithium undersupply and evaluate each progress gradually higher.
BYD and NIO - The shortage of semiconductors is causing trouble
Chinese electric car manufacturers benefited from the boom in New Energy Vehicles (NEVs) in 2021, but that could change drastically in 2022, as numerous production lines cannot currently be supplied with sufficient semiconductor components. Market observers even fear that the electric car industry in China could be severely slowed down.
According to the industry association China Passenger Car Association (CPCA), demand for NEVs could rise to over 5 million units this year. Due to this demand development, the government does not want to accept a growth slowdown because of the bottlenecks and is looking for solutions. In addition to the industry leader BYD, startups such as Li Auto, NIO and XPeng could be hit particularly hard. These companies do not yet generate profits and have to refinance on the capital market.
Global demand for semiconductors has continued to grow strongly due to the increasing application of intelligent functions such as driver assistance systems, satellite navigation, voice control and the Internet of Things (IoT), as well as autonomous driving in new vehicle models. Those companies that have already established their own chip production or, like BMW, have secured long-term contracts with foundries have an advantage. Electric cars require significantly more chips than conventional combustion models.
BYD shares were one of the stock market stars in 2021 but have corrected a good 30% since November. The dynamic startup NIO also dares to tackle the ambitious autonomous driving project with its still young model range. In a direct comparison of the share prices, NIO has recently suffered more severely, and the 12-month return remains strongly negative at minus 56%. The ongoing price correction is likely to continue for some time for both stocks due to the strong sell-off. Note the technical support areas at BYD are EUR 23 to 25 and NIO EUR 17 to 20. In a crash-like slump, we prefer the standard value BYD. Currently, however, it feels safest on the sidelines. Not all stock market phases are investor-friendly.
The high-tech sectors are under considerable pressure due to an extensive NASDAQ correction. With the threat of rising US Federal Reserve rates and persistently high inflation, refinancing could pose problems, especially for startups. That puts a significant damper on future growth. VW and BYD are well-known standard stocks, with NIO and Yorkton Ventures, the focus is on evaluating future project successes.
Conflict of interest
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