High Voltage: Only the strongest carmakers will sur(thr)ive the EV revolution
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Each week our High Voltage column wraps all the news driving ASX battery metals stocks with exposure to lithium, cobalt, graphite, manganese and vanadium.
The ‘Immortals’ of car-making are scrambling to grab future market share (or survive, at the very least) amidst a period of profound industry transformation.
The world’s #1, Volkswagen, doesn’t want to rely solely on suppliers like Northvolt, LG Chem or Panasonic for batteries – it wants to develop and build its own.
Last week, VW opened a €100 ($162m) million pilot line for small-series battery cell production in Salzgitter, Germany.
About 300 experts will be involved in developing, testing and piloting innovative manufacturing technologies for the production of lithium-ion batteries, it says.
The carmaker is also investing a lazy €900 million ($1.46 billion) into its 50/50 JV with Swedish battery producer Northvolt. Construction of a 16-gigawatt hour battery cell factory and battery recycling plant in Salzgitter is set to start in 2020.
“The car of the future is electric,” says VW boss Herbert Diess.
“That is why, over the next five years, we are also undertaking massive investments to amass know-how in developing and producing battery cells and entering into partnerships, thereby making our contribution to the successful transformation of Germany’s automotive industry.”
It’s all part of the “electric offensive”, says VW, the most ambitious of its peers when it comes to the EV rollout.
If if sounds like war, that’s because it is. Only the strongest survive.
Just ask high profile Chinese EV start-up NIO, which is currently haemorrhaging cash and market cap at an impressive rate. If NIO doesn’t fall over, there will certainly be others that do.
The Tesla rival NIO will lay off just over 20% of its workers after reporting another big loss https://t.co/Cp7XkSesq6
— Business Insider (@businessinsider) September 24, 2019
Tesla seems to be doing ok, though (sucks to be you, short sellers).
Then there’s Honda – #7 in the world – which will drop diesel engines from its European portfolio in favour of EVs as early as 2021, according to Reuters.
Toyota and Subaru – the #2 and #10 biggest carmakers in the world – have a bond that goes back 15 years. That alliance is ramping up as EVs and autonomous driving draw closer to ubiquity.
A new deal announced last week aims to make cars “beyond what either company has been able to achieve thus far”, Toyota says. Exciting times.
Cobalt play Broken Hill Prospecting (ASX:BPL) acquired a rare earths project in Arizona and punters loved it, sending the stock up 45 per cent for the week.
“The 100 per cent acquisition of the La Paz [project] not only establishes our entry into the lucrative US rare-earth market but also secures BPL as the only listed ASX company with exposure to this market,” chief exec Trangie Johnston says.
“A very enviable position to be in, given the US Federal & Pentagon mandates to secure supply of strategic technology metals.”
So, we know a decent purchase can put rockets under a company’s share price. For lithium exploration-battery tech play Hipo Resources (ASX:HIP) a possible acquisition has the same effect.
There had been nothing – literally – for Hipo shareholders to get excited about between a late July quarterly update and last week’s Annual Report.
It was all tumbleweeds and dead air until chairman Maurice Feilich mentioned ‘potential acquisition opportunities’. The micro-cap stock shot up 20 per cent for the week.
“Characteristics of these projects include low upfront capex and acquisition cost, located in favourable mining jurisdictions which now includes Australia, and coming with experienced technical personnel,” he says.
“At this stage, due diligence is ongoing and no decision to progress with these opportunities has been made.”
The Archer Exploration (ASX:AXE) chart was looking pretty healthy even before the ‘quantum computing/health tech/mineral exploration’ play found space in its jam-packed portfolio for a new kaolin clay project.
Kaolin is an aluminous clay used to create high purity alumina (HPA), which is in demand because it helps stop lithium-ion batteries from catching fire.
Last week, Archer received a nice 19 per cent bump after it identified halloysite at its Eyre Peninsula HPA project.
Halloysite is the ‘Holy Grail’ of aluminous clay – the same stuff that makes neighbouring kaolin play Andromeda (ASX:AND) and its Poochera project so popular among investors.
The Eyre Peninsula project is still early stages, but this is definitely one to keep an eye on.
Here’s a table of ASX battery metal stocks with exposure to lithium, cobalt, graphite, manganese and vanadium>>>
Scroll or swipe to reveal table. Click headings to sort. Best viewed on a laptop: