Battery Companies : “Selling picks and shovels to gold prospectors” is an economic saying that hints at who actually gained of the 1840s California Gold Rush, namely the many merchants who aided miners by trading in supplies and equipment. The phrase could be revised to reflect a new generation of companies looking to reap the benefits of helping high-profile electric vehicle (EV) companies such as Tesla as well as upstarts like Lordstown Motors.
Within the U.S., the Biden administration is strongly in favor of policies that encourage the transition to EVs. In the vast Chinese market, the demand for electric vehicles is increasing. Around the globe the biggest automakers are joining the electric-powered game. All of this adds up to an abundance of positive energy.
It’s true that the EV sector is young enough to be certain which players will be the most dominant in it, however these three companies seem to be in good shape of being among the businesses that are supporting EV players, as well as those that stand to gain the most from EV production begins to take off.
Microvast Holdings
Manufacturer of batteries Microvast Holdings (MVST 1.23%) has been flirting with meme stock status during the month, with the company with a 28% price rise following the announcement by The president Joe Biden announced his goal for half of new vehicles sold within the U.S. to be electric models in 2030. However, beyond the reddit-fueled hype Microvast Holdings is a company with positively pointing out. The stock market pendulum then changed direction as traders sold it after the company released unsatisfactory results from the second quarter.
The Chinese lithium-ion battery maker’s revenues rose 53.8 percent year-over-year up to $33.4 million, however its net loss increased by $27 million in comparison to $7.9 million losses in the second quarter of 2020. Management blamed the rising amount of red ink to the shortage of semiconductors in the world and the rising cost of raw materials in addition to other things.
Although the company’s bottom line woes can’t be overlooked, Microvast can draw on the $700 million net profits it earned from the special-purpose acquisition corporation (SPAC) merger that brought it public, as in its increasing stream of income. The company’s management has set a target for 2021 revenues to grow in the 34.9 percent to 44.2 percent range. The company’s capital budget is mostly devoted to building new factories as well as investing in research and development. Both could significantly improve its top and bottom line. in the press announcement the CFO Shane Smith said that the company was close to bringing an additional four gigawatts of high-volume production capacity into their Clarksville, Tennessee, and Huzhou, China, facilities in the early 2023 timeframe.
Microvast currently holds over $1.5 billion of contracts until 2027, as per an investor presentation it gave recently. The estimated revenues for 2025 are $2.3 billion. The list of clients includes a number of large European electric transport firms as well as U.S. commercial and military vehicle maker Oshkosh (OSK 2.94 percent) that won the U.S. Postal Service’s Next Generation Delivery Vehicle contract.
Novonix
While it’s listed on an exchange for foreign stocks the Australian-based Novonix (NVNX.F -2.31 percent) has on the 10th of May filed an unofficial registration document to the SEC seeking inclusion on Nasdaq. The maker of synthetic graphite is a supplier to companies that make anodes (and in the future, cathodes and electrolytes) for battery manufacturers who make EV batteries. The company already has a manufacturing facility within Chattanooga, Tennessee.
Novonix announced a major alliance on August. 9 as Phillips 66 (PSX 2.47%) announced it had made a decision to purchase 16% of the company. In addition, having Phillips 66 involved in its operations will allow Novonix more access to the specialty coke and other components that the company produces for battery manufacturers of electric cars.
“Phillips 66’s investment will provide us with the capital needed to support growth and ongoing R&D as we continue to scale our synthetic graphite production and develop new technologies for higher-performance energy storage applications,” said Novonix CEO Chris Burns in a press announcement.
By acquiring the company, Novonix gained both a substantial amount of cash as well as the direct link to a supplier of the company with its most essential components. This effectively guarantees Novonix will receive the special coke it requires initially (as as long as it is readily available) It will also yield savings on the material as well as any other produced from Phillips 66.
Novonix is a standout in its non-Chinese synthetic graphite producer, which means it is invulnerable to disruptions caused by the country’s internal political system or international trade dispute. Novonix is planning to produce twenty million tonnes of graphite anodes by 2025. It also projects that its annual production to increase up to 100 million tonneswhich will generate around $1 billion in revenuesin 2030. While the company isn’t anywhere near its size however, it seems to be able with the contacts and skills to become a major market player in its particular niche.
FREYR Battery
With the name of FREYR, the Norse god of prosperity and happiness, FREYR Battery (FREY 4.41 percent) is currently sitting on around $850 million of net profits of the SPAC merger that brought the company to the market. The share price is highly volatile, with times of low activity fueled mostly by rumors, however this Norwegian manufacturer of batteries has significant advantages.
FREYR is planning to build 43 gigawatts of battery manufacturing capacity by 2025 . It is planning to expand that capacity to the 83 GWh mark in 2028. Its decision to locate its majority of its facilities located in Norway (though it may build an U.S. facility) gives the company access to a large amount of renewable energy sources, which could help the company achieve its goal of having a carbon-free footprint. Although U.S. and European EV battery makers already have less emission levels as Asian makers, FREYR aims to raise the bar even more.
It also has a collaboration that it has with 24M Technologies, a lithium-ion cell manufacturer with its headquarters within Cambridge, Massachusetts. The company is a semi-solid design for batteries that FREYR might employ, and also significant advancements and patents in material technology and battery cell design that can be used to build large battery. This alliance is a complement to FREYR’s list of potential suppliers.
In essence, FREYR says, it is “leveraging Norway’s highly skilled workforce and abundant, low-cost renewable energy sources from hydro and wind in a crisp, clear and energized environment” as part of the partnership. It will provide an exclusive manufacturing environment for 24M’s semi-solid battery. Morgan Stanley analyst Adam Jonas has given FREYR its stock an overweight rating the beginning of August. He wrote in an analysis note on the company’s “decision to outsource the semi-solid cell technology from 24M is meant to lower execution risk and accelerate time to production in the unique Norwegian industrial ecosystem.”
