So many issues have grow to be clearer on the flip of the yr, and from an funding perspective, there may be one overwhelmingly apparent theme: There’s cash to be made at each level alongside the battery provide chain.
There are numerous choices right here, however only a few that fly far sufficient underneath the radar to make for a doubtlessly profitable back-door entryway into this provide chain.
I’ve discovered what may very well be the proper again door.
And to me the bins I’m trying to tick listed here are important ones:
- I needed a again door into the availability chain that’s as massive as (or greater than) lithium however not almost as apparent.
- I needed trade veterans this time; not new entrants throwing their hat within the ring with out a lot of a monitor file.
- I needed an organization that already has engaging margins and is on monitor for distinctive progress.
- I needed a brand new ingredient of progress (not merely growth) that takes under consideration the large wants of the $3-trillion EV trade.
I discovered completely every part on my record in Graphex Group Ltd (OTCQX: GRFXY, 6128.HK).
So what’s the back-door entry right here? Graphite, the battery materials that serves because the unfavourable finish (anode) of the lithium-ion battery and makes up 30% of the whole battery combine. Sure, which means there may be extra graphite in a lithium-ion battery than there may be lithium.
And this yr is when the true provide crunch is predicted. The on-and-off fears of a lithium provide crunch predicted over the previous 5 years is totally nothing in comparison with the anticipated graphite squeeze. Main EV and battery producers are already mentioned to be searching for extra provide safety. They’re unlikely to search out it. As nearly all of it’s in China.
So, graphite is the place I began my search, and Graphex Group is the place I ended it.
Why Graphex Group?
Once more, it ticks each single field on my record…
These are veteran trade gamers, not newcomers
They’ve been producing graphite with proprietary tech since 2013, they usually’re already among the many world’s prime graphite producers and among the many High 5 in China.
Graphex Group’s CEO is Chan Andross, a 34-year veteran of operations and administration who has been with the group since 1991.
President John DeMaio heads up the graphene division and the corporate’s growth plans (which embody shifting into the U.S. and Canada–however extra on that later). DeMaio is likewise a 35-year veteran in operational administration within the vitality and infrastructure sectors. He has served as GM of Siemens Sensible Infrastructure division, VP of MWH International, and GM of SPG Photo voltaic, in addition to being a board member of JouleSmart Options.
Graphex’s Chief Technique Officer is Dan Nye, a former US Naval officer who went on to guide Asyst Applied sciences’ semiconductor robotics manufacturing operations–an organization whose revenues grew from $80 to $300 million. He additionally oversaw a $1-billion fund for CIM Funding Administration.
Professor Luo Liqun, Graphex Group’s head of graphene know-how analysis, has a PhD in engineering and mineral processing from China’s Wuhan College of Know-how, the place he now serves as a professor and senior engineer.
These are international graphite specialists, superior know-how figureheads, and veterans who’ve managed to safe long-term contracts with the Chinese language authorities and main EV and battery producers.
Now, they are saying they’re able to increase and produce all of it dwelling.
Deliberate Enlargement: Quadrupling capability over the following Three years?
So, I appreciated the truth that Graphex (OTCQX: GRFXY, 6128.HK) was already producing 10,000 metric tons of battery-ready spherical graphite. (In the event you aren’t conversant in spherical graphite, it’s one other identify for “battery grade” graphite produced from flake graphite).
And I appreciated that they’ve been doing this since 2013. However given the timing of the EV growth and–amongst many different issues–the 13 battery gigafactories anticipated to be constructed within the U.S. alone, I needed to see some very well-timed growth plans.
That’s the place Graphex ticked one other vital field: Their plan for growth to manufacturing of 40,000 metric tons over the following three years is already underneath approach.
After all, that growth is deliberate to assist actual market fundamentals that merely can’t be ignored. The outlook from my perspective is bullish from each angle:
- The DoE expects the worldwide lithium-ion battery market to develop by an element of 5-10 within the subsequent decade. Meaning the identical 10X progress potential for graphite, which contains nearly half of each battery.
- The $3-trillion EV market is only one massive demand driver… Usually missed is the huge demand that can come from large-scale battery storage for renewable vitality. That vitality storage market alone may prime $426 billion over the following decade. This isn’t nearly vehicles.
- Spherical graphite demand is predicted to rise 30% yearly from now till 2030.
- Already this yr, we’ll seemingly expertise a graphite provide scarcity.
The 10,000 metric tons that Graphex already produces is claimed to signify round 5% of China’s complete spherical graphite manufacturing.
And the margins at 10,000 metric tons are spectacular sufficient at 28%, serving to Graphex usher in a reported $51 million in revenues in 2020. They need to solely get greater as graphite costs and demand rise.
Right here we’re, within the midst of an vitality revolution and completely depending on China…
4X manufacturing capability isn’t the one factor that basically caught my consideration with this one.
Graphex Group is planning one thing that we expect hits proper on the coronary heart of the availability chain insecurity: It’s bringing this all dwelling … from China.
To completely perceive this, it’s vital to first perceive that no matter the place batteries are manufactured, many of the graphite for all of it originates in China or is at the least additional processed in China.
There’s mentioned to be completely nowhere outdoors of China to course of graphite.
Sadly, the U.S. doesn’t presently produce or course of any in any respect. And China isn’t solely approach forward of everybody else, however it’s seemingly going to need to hoard that graphite within the battery race. That would go away Western EV and battery producers in a state of affairs the place provide chain safety is extraordinarily weak–at greatest.
We are able to construct all of the battery gigafactories we wish, however that doesn’t imply we’ll have the uncooked supplies to truly produce batteries.
That’s the place Graphex Group (OTCQX: GRFXY, 6128.HK) is planning on doing one thing that I can’t ignore, as an investor.
It intends to deliver its proprietary graphite know-how to the U.S. and Europe. It’s working with downstream corporations to create options for the proposed building of amenities and manufacturing traces for spherical graphite proper at dwelling.
And the corporate says its graphite processing know-how is protected by 23 patents masking every part from manufacturing strategies and gear design to environmental safety and graphene functions.
That would save the trade untold tens of millions.
As a know-how firm centered on manufacturing, processing and enrichment and never only a graphite producer, Graphex proprietary know-how may very well be used to allow miners to improve much less helpful flake graphite into way more helpful uncoated spherical or coated spherical graphite.
That’s a present distinction of about $600 per ton and as much as $12,000 per ton.
And I’m on this one for the lengthy haul, too, as a result of past the deliberate 4X growth and what look to be good international know-how capabilities and income stream potential of nationwide safety worth … I’m additionally interested by Graphex’s long-term plans to companion with auto manufacturing provide chain corporations in superior battery spherical graphite manufacturing at dwelling.
Ultimately, Graphex could think about plans to increase downstream into anode and battery manufacturing itself.
The underside line?
There’s a lot influence right here in one of many fastest-growing segments of the last decade. And whereas a lot of the large cash is being thrown at battery and EV producers, with a nod to lithium miners, we expect it’s exhausting to search out one thing with as a lot potential as graphite, which to this point has managed to remain out of the limelight.
And once you couple this with a possibility with an organization that’s already received a earlier monitor file, with long-term contracts with the Chinese language and arrange proper subsequent to the world’s largest graphite mine whereas exploring partnerships with mines outdoors of China … you is likely to be trying on the type of potential that solely comes up a number of instances in an investor’s profession.
I’m deep into this one as my massive play of the New 12 months, and I’m comfortable to share it with you. Graphite is the off-the-radar battery king-maker, and I’m sure it might be the fabric that finally ends up driving the most important potential investor rewards because the battery provide chain comes into pressing focus.
You will discover out extra about Graphex on the following hyperlinks:
Web site: https://graphexgroup.com/
U.S. Image: https://finance.yahoo.com/quote/GRFXY?p=GRFXY
Hong Kong image: https://finance.yahoo.com/quote/6128.HK/?p=6128.HK
Electrical Car Producers Are Set To Develop In The Coming Years
Normal Motors (NYSE:GM) goes all-in towards an all-electric future, aiming to get rid of all tailpipe emissions from new light-duty automobiles by 2035 as a part of a wider technique to grow to be a carbon-neutral enterprise by 2040.
In a significant announcement final yr, the highest-selling U.S. automaker said it might supply 30 all-electric fashions globally by the center of this decade. A complete of 40 % of the corporate’s U.S. fashions supplied will probably be battery electrical automobiles (BEVs) by the top of 2025.
Just lately, GM dropped one other bomb in the marketplace with the announcement of its new enterprise unit, BrightDrop. The corporate is trying to seize a key share of the burgeoning supply market, with plans to promote electrical vans and companies to industrial supply corporations.
GM isn’t simply betting massive on EVs, both. It’s additionally trying to capitalize on the autonomous automobile increase. Just lately, it introduced that it’s a majority-owned subsidiary, Cruise, has simply obtained approval from the California DMV to check its autonomous automobiles and not using a driver. And whereas they’re not the primary to obtain such an approval, it’s nonetheless enormous information for GM.
Cruise CEO Dan Ammann wrote in a Medium put up, “Earlier than the top of the yr, we’ll be sending vehicles out onto the streets of SF — with out gasoline and with out anybody on the wheel. As a result of safely eradicating the motive force is the true benchmark of a self-driving automobile, and since burning fossil fuels isn’t any solution to construct the way forward for transportation.”
Ford (NYSE:F) is one other Detroit veteran making waves within the EV world. Along with brand-new electrical variations of its best-sellers, the F-150 and iconic Mustang, it’s additionally carving out its personal place within the hydrogen race, as properly. Actually, it not too long ago even unveiled the world’s first-ever gas cell hybrid plugin electrical automobile, the Ford Edge HySeries.
Ford grew to become the best-performing auto trade inventory final yr, beating investor favourite Tesla because it doubled down on an all-electric future. 2021 was “really a breakthrough yr for Ford … simply a very powerful yr strategically for the corporate because the monetary disaster,” Morgan Stanley analyst Adam Jonas informed CNBC.
This yr noticed hovering orders for the corporate’s Mustang Mach-Three SUV, together with an order for 184 of the EVs from a number of New York Metropolis authorities businesses. The order is available in at $11.5 million, placing the worth tag for the Mach-Three SUV at $62,500. But persons are shopping for them like scorching truffles based mostly on order numbers.
And it’s not simply the Mach-3, both. Final month, Ford needed to halt reservations for the upcoming F-150 Lightning pickup truck after hitting 200,000.
Tesla Inc. (NASDAQ:TSLA), regardless of some dips and controversy alongside the way in which, remains to be the de facto chief of electrical automobile manufacturing in the US. The corporate accounts for almost all of complete EV gross sales within the nation and simply broke one other manufacturing and supply file final quarter. However legacy carmakers are pouring billions into EVs, and a whole lot of latest fashions are coming to the market.
“It’s no shock that Tesla’s nonetheless dominating electrical automobile gross sales as a result of they’re the one ones that basically have viable merchandise in full swing,” IHS Markit affiliate director Michael Fiske informed CNBC.
“In a progress market, it’s extraordinarily difficult to take care of majority market share, no matter trade. … As we begin to transfer towards a bigger and actually important variety of producers which might be going to be enjoying within the area, Tesla has to lose share.”
Tesla’s largest rival in China, Nio Restricted (NYSE:NIO) is trying to tackle the king in its homeland. The corporate is ramping up gross sales and trimming its financials, and beginning to make headway domestically.
Nio plans to construct 4,000 battery-swapping stations worldwide by 2025, Reuters has reported, citing the corporate’s president Qin Lihong.
Battery swapping is rising as a faster various to EV charging, which frequently nonetheless takes hours, making EVs much less interesting to potential consumers. But swapping a battery may take about as little because it takes to fill a tank of gasoline, which can make this strategy to charging much more standard sooner or later.
Nio plans to begin small, with 700 battery-swapping stations this yr, earlier than including one other three thousand and alter over the following 5 years.
One other up-and-comer in China is Xpeng Motors (NYSE:XPEV). It has developed an all-electric, absolutely autonomous automobile that may be ordered with a number of faucets in your cellphone. It includes a vary of 250 miles and can get you from level A to B in much less time than it might take to hail a cab or drive your self. This game-changing firm is ready to disrupt the world’s automotive trade with unparalleled comfort and affordability for everybody.
Xpeng has additionally been drawing loads of curiosity from Huge Cash, managing to boost almost a billion {dollars} from heavy hitters resembling Alibaba, Abu Dhabi’s sovereign wealth fund Mubadala Qatar Funding Authority, Hillhouse Capital, and Sequoia Capital China.
Whole EV gross sales in China surged by 154 % to three.Three million final yr, ZoZo Go estimates. Carmakers BYD—backed by Warren Buffett—in addition to Wuling and Xpeng achieved record-high gross sales in December.
Furthermore, China accounted for greater than half of all EVs offered globally in 2021, ZoZo Go says.
This yr, strong progress is ready to proceed as a result of subsidies are not an element, mentioned Michael J. Dunne, CEO at ZoZo Go.
“Till 2020, most EV gross sales in China had been induced through subsidies, rebates and quotas. That period is over. NIO, Xpeng and BYD are constructing world-class EVs that Chinese language consumers are embracing on their very own deserves. Subsidies are not an element,” Dunne wrote earlier this month.
Li Auto (NASDAQ:LI) is one other up-and-comer within the Chinese language electrical automobile area. And whereas it might not be a veteran available in the market like Tesla and even NIO, it’s shortly making waves on Wall Road. Backed by Chinese language giants Meituan and Bytedance, Li has taken a special strategy to the electrical automobile market. As a substitute of choosing pure-electric vehicles, it’s giving shoppers a selection with its trendy crossover hybrid SUV. This standard automobile may be powered with gasoline or electrical energy, taking the sting off drivers who could not have a charging station or a fuel station close by.
Li Auto has already seen its inventory value almost double since its IPO. And although it hasn’t fairly returned to its all-time highs, it stays a reasonably secure inventory. It’s already price greater than $30 billion but it surely’s simply getting began. And because the EV increase accelerates into excessive gear, the sky is the restrict for Li and its rivals.
Demand for electrical automobiles has been ramping up steadily for years. However as we’re approaching the tipping level, there’s an issue that many individuals are nonetheless ignoring And that is the place Chargepoint (NYSE:CHPT) is available in, one of many largest charging station networks within the nation.
This main EV infrastructure participant went earlier this yr by way of one of many market’s hottest developments. That made them the primary EV charging inventory to have gone public through a reverse merger with a particular objective acquisition firm, or SPAC. In terms of the supercharged Degree 2 EV charging stations, ChargePoint is the clear chief within the trade.
Whereas Degree 1 stations can help you cost a Mercedes B Class 250e in round 20 hours…Degree 2 chargers reduce that down to only Three hours to completely cost that very same automobile.
That is a large distinction for individuals apprehensive about having to spend almost a day charging their automobiles earlier than getting again on the highway. And ChargePoint has a whopping 73% of the market share of networked Degree 2 charging stations.
One other charging infrastructure firm, Blink Charging Co. (NASDAQ:BLNK) owns, operates, and offers EV charging gear and networked EV charging companies in the US.
Blink Charging actually is a mature firm, having been round since 1998. Its distinctive proposition is that most of the firm’s charging stations are present in sensible places, resembling airports and resorts, making it handy for drivers to cost up whereas ready on flights or of their rooms.
Blink has additionally been significantly lively inking new offers, together with 26 dual-port Degree 2 IQ 200 EV charging stations at key Burger King places throughout the Northeast; 20 Blink-owned IQ 200 electrical automobile charging companies with Illinois’ Blessing Well being, and an unique seven-year settlement with Lehigh Valley Well being Community for the previous to personal and function charging stations throughout the well being community’s in depth portfolio of places.
GreenPower Motor (TSX:GPV) is an thrilling firm that produces larger-scale electrical transportation. Proper now, it’s primarily centered on the North American market, however the sky is the restrict because the stress to go inexperienced grows. GreenPower has been on the frontlines of the electrical motion, manufacturing inexpensive battery-electric busses and vehicles for over ten years. From faculty busses to long-distance public transit, GreenPower’s influence on the sector can’t be ignored.
NFI Group (TSX:NFI) is one other one among Canada’s most enjoyable electrical mass-transit makers. Although it has not but rebounded from January highs, NFI nonetheless gives traders a promising alternative to capitalize on the electrical automobile increase at a reduction. Along with its more and more constructive monetary studies, additionally it is one of many few within the enterprise that truly pay dividends out to its traders. That is enormous as a result of it offers traders a possibility to achieve publicity to this booming trade whereas the inventory is affordable and maintain regular till the market lastly discovers this gem.
One other solution to achieve publicity to the electrical automobile trade is thru AutoCanada (TSX:ACQ), an organization that operates auto-dealerships by way of Canada. The corporate carries all kinds of latest and used automobiles and has all varieties of monetary choices accessible to suit the wants of any shopper. Whereas gross sales have slumped this yr as a result of COVID-19 pandemic, AutoCanada will seemingly see a rebound as each shopping for energy and the demand for electrical automobiles will increase. As extra new thrilling EVs hit the market, AutoCanada will certainly be capable of experience the wave.
Lithium Americas Corp. (TSX:LAC) is one among America’s most crucial and promising pure-play lithium corporations. With two world-class lithium tasks in Argentina and Nevada, Lithium Americas is well-positioned to experience the wave of rising lithium demand within the years to come back. It’s already raised almost a billion {dollars} in fairness and debt, displaying that traders have a ton of curiosity within the firm’s formidable plans.
Lithium America isn’t trying over the rising stress from traders for accountable and sustainable mining, both. Actually, one among its major targets is to create a constructive influence on society and the atmosphere by way of its tasks. This contains cleaner mining tech, robust office security practices, a variety of alternatives for workers, and robust relationships with native governments to make sure that not solely are its workers being taken care of however native communities, as properly.
Celestica (TSX:CLS) is a key firm within the useful resource increase because of is function as one of many prime producers of electronics in North America. Celestica’s big selection of merchandise contains however isn’t restricted to communications options, enterprise and cloud companies, aerospace and protection merchandise, renewable vitality, and even healthcare tech.
Because of its publicity to the renewable vitality market, Celestica’s future is tied hand-in-hand with the inexperienced vitality increase that’s sweeping the world for the time being. It helps construct sensible and environment friendly merchandise that combine the most recent in energy era, conversion and administration know-how to ship smarter, extra environment friendly grid and off-grid functions for the world’s main vitality gear producers and producers.
Teck Sources (TSX:TECK) may very well be one of many best-diversified miners on the market, with a broad portfolio of Copper, Zinc, Power, Gold, Silver and Molybdenum belongings. It’s even concerned within the oil scene! With its free money movement and a decrease volatility outlook for base metals together with a rising push for copper and zinc to create batteries, Teck may emerge as one of many yr’s most enjoyable miners.
Although Teck has not fairly returned to its January highs, it has seen a promising rebound since April lows. Along with its constructive trajectory, the corporate has seen a good quantity of insider shopping for, which tells shareholders that the administration staff is critical about persevering with so as to add shareholder worth. Along with insider shopping for, Teck has been added to quite a few hedge fund portfolios as properly, suggesting that not solely do insiders imagine within the firm, but in addition the sensible cash that’s actually driving the markets.
By. James Stafford
**IMPORTANT! BY READING OUR CONTENT YOU EXPLICITLY AGREE TO THE FOLLOWING. PLEASE READ
CAREFULLY**
Ahead-Wanting Statements
This publication accommodates forward-looking data which is topic to a wide range of dangers and uncertainties and different elements that would trigger precise occasions or outcomes to vary from these projected within the forward-looking statements. Ahead trying statements on this publication embody that the worldwide vitality transition will proceed as anticipated and that electrical automobiles will proceed to develop in market share and acceptance; that demand for electrical automobile batteries and the element supplies and minerals used to supply electrical automobile batteries will proceed to develop considerably; that the marketplace for graphite and associated merchandise will proceed to increase and obtain double digit progress within the subsequent a number of years ;that there will probably be shortages in China, U.S. and globally of the graphite essential to supply electrical automobile batteries; that Graphex Group Restricted (the “Firm”) can leverage its present operations and fame in China to seize market share of worldwide graphite demand; that the Firm can increase its enterprise operations to the U.S. and European markets and achieve important market share for the availability of graphite for electrical automobile batteries; that the Firm can leverage its proximity to graphite mines to increase its operations and seize market share for international graphite demand; that the Firm can obtain its enterprise plans and targets as anticipated. These forward-looking statements are topic to a wide range of dangers and uncertainties and different elements that would trigger precise occasions or outcomes to vary materially from these projected within the forward-looking data. Dangers that would change or stop these statements from coming to fruition embody that the worldwide vitality transition could not proceed as anticipated and that different varieties of various vitality automobiles could also be developed and achieve market share over present varieties of electrical automobiles; that demand for electrical automobile batteries as presently produced and the element supplies and minerals used to presently produce electrical automobile batteries could also be lower than anticipated for numerous causes together with the event of other supplies and applied sciences; that the marketplace for graphite and associated merchandise could not increase and obtain progress as anticipated; that for numerous causes, together with manufacturing of graphite or various applied sciences by different rivals of the Firm, there might not be shortages of or will increase in demand for graphite in China, U.S. and/or globally as anticipated or in any respect; that the Firm could also be unable to leverage its present operations and fame in China to seize substantial market share of worldwide graphite demand; that the Firm could also be unsuccessful within the growth of its enterprise operations to the U.S. and European markets and fail to achieve important market share for the availability of graphite for electrical automobile batteries in China and/or globally; that the Firm could also be unable to leverage its proximity to graphite mines to increase its operations and seize market share for home and international graphite demand; that the enterprise of the Firm could also be unsuccessful for numerous causes. The forward-looking data contained herein is given as of the date hereof and we assume no duty to replace or revise such data to replicate new occasions or circumstances, besides as required by regulation.
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