Car Manufacturers, Batteries and Car Parts Suppliers

Car Manufacturers, Batteries and Car Parts Suppliers

by Pininvest Analysis

Battery Technology & World Markets on

  • constituents
  • 62.3% 1y performance
  • 26.3% volatility
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Because energy – and energy storage – are at the heart of our lives, battery technology is of huge import and as batteries gain in efficiency, energy density and stability, the field of potential applications widens ever more

Much awareness has been built around electrical vehicles, driven by keen environmental sensibility and ambitious regulatory targets, and rightly so. Front runners like Toyota, Renault-Nissan, Tesla, General Motors and BYD Motors of China will be contending by 2020 with full competing line-ups announced by Volkswagen and Mercedes, Fiat Chrysler and Ford to name a few

Beyond the R&D costs of such ambitious projects, the consequences for the current work force and existing manufacturing facilities remain in doubt; while the progressive shift away from fuel powered engines should open a window for sensible restructuring in the automotive industry, public policy announcements could have an adverse ‘crowding-out’ impact on sales

By virtue of anticipation, and because cars are a medium to long term investment, announcements in France and Germany to block access of diesel fueled vehicles in larger cities by 2020-2025 or the shift in tax incentives have an immediate, and brutal, impact on the diesel market today and on all fuel powered cars down-the-road. Projections of electrical vehicle ownership reflect the sharp ramp-up worldwide between 2020 (3 million cars projected, 3% of total) and 2030 (28 million cars, 25% of total)

With uncertainty surrounding the big car brands, investor interest may focus on the car – and battery suppliers, making technological strides to meet regulations and customer expectations, while offering better visibility, solid growth perspectives and usually lower debt ratios.

Upstream, basic materials contained in ion-lithium batteries, lithium and especially cobalt, are additional – though volatile and more risky – options for investors. Quoting Umicore Chief Executive Marc Grynberg, on the critical importance of cobalt  :

“If you increase the nickel proportion, you reduce the stability of the battery and so it has an impact on cycle life, the ability to charge it fast,”
“Cobalt is the element that makes up for the lack of stability of nickel. There isn’t a better element than nickel to increase energy density, and there isn’t a better element than cobalt to make the stuff stable. So (while) you hear about designing out cobalt, this is not going to happen in the next three decades. It simply doesn’t work.”

More information in our theme on Cobalt demand 2020 – 2025