High Voltage: EU could light the fuse on EV rollout with historic post-pandemic stimulus

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Each fortnight our High Voltage column wraps all the news driving ASX battery metals stocks with exposure to lithium, cobalt, graphite, and vanadium.

The European Commission has unveiled a historic, one off €750bn ($1.3 trillion) package to help aid the EU’s economic recovery.

Called Next Generation EU, this cash injection could fast-track the nascent electric vehicle ramp up in Europe, one of the world’s biggest car markets.

“Our generational challenges — the green and digital transitions — are even more important now than before the crisis started,” writes the European Commission.

“Through the recovery, we will press fast-forward on the twin green and digital transitions.”

This recovery includes a focus on unlocking even more ‘green’ investment in electric vehicles, lithium-ion batteries, clean hydrogen, carbon capture and storage and sustainable energy infrastructure (like charging points).

Roskill’s Jose Lazuen says the pandemic has impacted 2020 EV sales but may create a more supportive EV policy and incentive environment going forward.

It has also shown how vulnerable certain industries are to strategic but outsourced supply chains in Asia.

“While logic dictates that, as a result of the pandemic, cash-starved car makers could temporarily halt the research and production of plug-in EVs, that would undoubtedly send the wrong message to investors,” Lazuen says.

“Would investors put their money into companies that invest into a clean and electrified future, or in maintaining a status quo that will eventually be swept away by regulators?

“The fact that Tesla and Toyota are the most capitalised carmakers in the world is not a coincidence after all.”

The world’s largest OEMs will continue to develop large-scale EV manufacturing in the next two years, Lazuen says.

“From VW’s ‘all-in’ EV strategy targeting the European and Chinese markets, to GM targeting the Chinese and the less emissions-regulated (at a federal level) North American market,” he says.

“Similarly, Hyundai-Kia is increasing its EV manufacturing capacity for the European market this year.

“Even Ford and Toyota, historically lagging behind in the mass manufacture of plug-in EVs, have signed battery supply deals with China’s BYD, while sharing platform development costs with other carmakers.”

These carmakers are together expected to have the manufacturing capacity to produce 2 million plug-in vehicles in 2021 and almost 3 million by 2022, according to Roskill’s analysis of EV manufacturing plants worldwide.

“At this stage, it is simply not possible to back-down from the investment in research and dedicated e-platforms these car companies have committed to,” Lazuen says.

SMALL CAP HIGHLIGHTS

Here’s a table of ASX battery metal stocks with exposure to lithium, cobalt, graphite, and vanadium>>>

Scroll or swipe to reveal table. Click headings to sort. Best viewed on a laptop:

US lithium play Anson (ASX:ASN) jumped +176 per cent on a preliminary economic assessment (PEA) — the equivalent of a scoping study — for its Paradox brine project in Utah.

It was full of some pretty impressive numbers for such an early stage study.

The company has been in a suspension ever since pending “an announcement regarding additional information in relation to its preliminary economic assessment” to the ASX.

European Lithium (ASX:EUR) will partner with Talaxis —  a company that invests and develops battery projects — to complete a definitive feasibility study (DFS) on the Wolfsberg lithium project in Austria.

Talaxis’ job will include establishing/maintaining relationships with financiers, governments, and offtake partners.

“Having followed the Wolfsberg lithium project for a number of years, we believe the asset is uniquely placed to drive growth in the European battery industry given its strategic location, metallurgically friendly lithium ore and expected production timeline,” Talaxis’ Daniel Mamadou-Blanco says.

“Despite a challenging macro-economic environment in light of COVID-19, we believe the industry’s long-term fundamentals remain resilient as the transition towards electric vehicles and renewable energy continues to accelerate.”

Fellow European play Infinity (ASX:INF) collaborated with major lithium-ion battery chain execs on a presentation to the European Commission and European Investment Bank on May 20.

In “an endorsement” of Infinity’s San Jose lithium project in Spain, the European Commission’s Maroš  Šefčovič remarked that “we are making significant progress to become self-sufficient in lithium industry.”

Infinity says that the urgent requirement to address the EU’s essential critical lithium raw materials and lithium chemicals has seen Šefčovič comment that the EU, through the EBA, will “create a dedicated alliance aimed at critical raw materials including lithium. Europe will need 18 times more lithium by 2030 compared to its current supply”.

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