The outlook is unchanged: Goldman Sachs predicts ‘long-term secular growth’ for electric vehicles
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The hordes of small cap battery metal bandwagoners which dominated the bourse in 2018/19 has thinned dramatically.
COVID-19 certainly hasn’t helped in 2020, but it’s been enduring negative investor sentiment – caused by falling prices and softer than expected demand – which has prompted many of these explorers to move on to ‘palatable’ metals, like gold.
Or become listless shells, cursed to wander the bowels of the ASX until transformed by a ‘material acquisition’.
Scroll down for our list of battery metals winners and losers >>>
Right now, explorers are the lucky ones. Some of the big players all along the lithium-ion supply chain – like indebted Chinese lithium giant Tianqi – are facing massive headwinds due to COVID-19 shutdowns.
The ultimate impacts of the ongoing pandemic remain a mystery. Still, analysts say that — irrespective of temporary recessions or market downturns — electrification of the global automotive sector remains “inevitable”.
On Tuesday, Goldman Sachs analyst Mark Delaney gave EV spearhead Tesla a $US864 ($1372) price target, compared to its latest price of $US723.
“We are positive on Tesla because we believe that the company has a signiﬁcant product lead in EVs, which is a market where we expect long-term secular growth,” Delaney says.
Meanwhile, China — which is showing early signs of economic recovery — will extend EV subsidy programs to help support the beleaguered auto sector.
“Although the subsidy extension had been expected, we believe the official announcement amid a gloomy market will still trigger a positive stock reaction in the EV value chain, OEMs [original equipment manufacturers] in particular,” Morgan Stanley said in a research note.
“But the real impact on EV sales stays fluid, depending on more interacting forces beyond subsidies.”
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:
Most of our notable winners over the past month are in the lithium space, once again.
However, these lithium producers are yet to make any big predictions around the impacts of COVID-19 on their businesses and the industry going forward. March-quarter results, due over the next few weeks, might shed a little more light on the matter.
Of the small caps, Core Lithium (ASX:CXO) jumped +72 per cent after locking in crucial Northern Territory government approvals for its advanced Finniss lithium project.
“With project approvals now in place and mine-life likely to double or even triple as we update our feasibility study by mid-2020, Core’s Finniss lithium project is positioned at the front of the line of new global lithium supply as EV manufacturing recovers post COVID-19,” managing director Stephen Biggins says.
Northern Territory Minister for Primary Industry and Resources Paul Kirby said the resources sector would play a huge role in recovery from the COVID-19 crisis.
“The first three years of this project are expected to inject over half a billion dollars into the NT economy and create around 200 jobs for Territorians within an hour of Darwin,” he says.
Core has the ambitious target of completing offtake arrangements and having Finniss ‘construction-ready’ later in 2020, ahead of sourcing project debt and equity.