The triumph of electric cars continues unabated, with new players constantly entering the market. The era of fossil vehicles seems to be over. What is overlooked is that the significantly increasing demand can hardly be met in the future due to the lack of raw materials. The demand for lithium batteries is enormous. One Company is now planning a major coup and wants to become the first and most important producer in Europe. The signs are good. If the plan succeeds, a new unicorn will be born.
Rock Tech Lithium - The breakthrough!
Little has happened in the lithium market in recent years. Neither investments flowed into the industry, nor did prices rise, although the age of electromobility had long since begun. Only China has been positioning itself for some time to secure its supply of battery-grade lithium. Due to the exploding sales figures of electric car manufacturers, lithium demand will significantly exceed supply by 2022 at the latest. Massive bottlenecks are imminent, and calls for lithium producers ex-China are becoming louder and louder.
The Canadian Company Rock Tech Lithium (TSX.V: RCK), which German Chairman Dirk Harbecke leads, is now planning the big coup and wants to become a pioneer in Europe. With tailwind from a capital increase placed in January, in which among others the prominent serial founder Peter Thiel took 5% from the Company plus an option of another 5%, wants to secure the lithium supply of the German automotive industry in the future.
Rock Tech Lithium could serve the entire value chain. The Company's own lithium sulfate mine in Ontario, Canada, can now be brought into production thanks to the successful capital increase.
The mined raw material is then to be processed into lithium sulfate in Canada. This concentrate will then be further processed into lithium hydroxide in a converter, which will then be the first in Europe. This process will help to minimize transport costs and environmental impact. According to the Company's management, the first converter will produce around 24,000 metric tons of lithium hydroxide per year, which corresponds to a supply of approximately 500,000 cars.
The possible location is said to be Saxony-Anhalt, not far from
Tesla's (NASDAQ: TSLA) Gigafactory in Grünheide and
BASF's (FSE: BAS) new cathode plant in Schwarzheide. If the Company succeeds in producing 24,000 tons of lithium hydroxide per year, sales would be around EUR 250 million. According to management, profit from the value chain, i.e., mining activities plus operation of the converter, would be at least EUR 40 million after taxes.
If these figures come anywhere near, the stock will face a revaluation.
Volkswagen - With pressure to the top
Even if many investors speculate on cooperation with the US carmaker Tesla through the long-standing connection between Elon Musk and Rock Tech shareholder Peter Thiel, a purely German joint venture with the Volkswagen (FSE: VOW3) Group is evident. The German flagship Group is massively pushing its investments in electromobility. VW plans to invest a total of EUR 33 billion in electromobility by 2024. In addition to the costs of converting existing plants and setting up its production of battery cells, considerable funds are flowing into research and development.
Electric cars are expected to account for up to 8% of sales as early as 2021. That would mean sales of just under 750,000 electric vehicles. Along the way, Tesla would have been overtaken as the world market leader on the right. Volkswagen's market capitalization is currently EUR 35.98 billion.
Competitor Tesla weighs in at EUR 546.99 billion, which is more than fifteen times its stock market value.
Xiaomi - Cobbler, stick to your trade!
The sales figures for electric vehicles are also continuing to rise in China. The Han model produced by
BYD (FSE: BY6) performed particularly strongly in January. Sales of a total of 19,871 BYD models are 183% better than in the same period last year.
The majority of BYD plug-in car sales are accounted for by the Han model with 12,103 units, including 9,298 fully electric and 2,805 plug-in hybrid models.
In contrast, there was a denial of building its electric car from electronics manufacturer
Xiaomi (FSE: 3CP). For a long time, there have been speculations that Xiaomi wants to produce its own electric vehicle.
Thus, they tried to compete directly with the US giant Apple. The Company headquarters have now denied this. Xiaomi rose to become the number three best-selling smartphone in the world last year.
ON THE AUTHOR:
Stefan Feulner
The native Franconian has more than 20 years of stock exchange experience and a broadly diversified network.
Before founding his own company, he held various positions as business editor, fund advisor, portfolio manager and finally as CEO of a listed investment company. He also held several positions on the supervisory board.
He is passionate about analyzing a wide variety of business models and investigating new trends, especially in the areas of e-commerce, fintech, blockchain or artificial intelligence.
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