EV sales rebound in China, electric car makers rally on the no significant subsidy decrease in 2020

After a tough H2 2019 it now appears the EV slowdown is over. The US-China trade war Phase 1 deal agreed to in mid December 2019 appears to have been the catalyst for electric vehicle (EV) buyers to have confidence to buy EVs again.

China EV sales in December 2019 were about double November 2019

Chinese New Energy Vehicle (NEV) sales were recently reported to be 163,000 in December 2019, which is sharply up from November 2019 sales of 83,000. In fact, it is a 96% increase month on month.

Given the trade war Phase 1 deal was announced on December 13, 2019, it appears that the renewed confidence has helped December 2019 China NEV sales already.

China suggests no significant subsidy decreases in 2020

On January 11, 2020, Reuters reported: “China will not cut NEV subsidies in July 2020 – Minister of Industry and Information Technology Miao Wei said on Saturday.

A later Bloomberg report confirmed the news stating:

Electric car stocks jump as China signals lull in subsidy cuts….. In order to stabilize market expectations, and ensure the industry’s sustained development, subsidies on new-energy vehicles will stay relatively stable this year, and they won’t be scaled back significantly.”

Electric car makers rally on the no significant subsidy decrease in 2020 news

As a result of these two great pieces of news last weekend, EV related stocks have been rallying sharply. Chinese EV manufacturers rose 10% (limit up) in China yesterday following the news and are mostly rallying again today. BYD Co. (OTC: BYDDY | OTC: BYDDF), China’s number 1 EV seller in 2019 and global number 2, has rallied about 15% the past two trading sessions. Last month BYD Co announced a Netherlands order for 259 pure-electric BYD buses. This was Europe’s largest ever electric bus order. NIO Inc. (NIO) also rose 5.4% on the news.

BYD is leading the EV charge after a record e-bus sale in December 2019

Tesla’s stock passes US$ 500 a share for the first time

Tesla’s (NASDAQ: TSLA) stock price jumped 9.77% yesterday on the news with the stock hitting a new all time high of US$ 524.86, breaking through the US$ 500 mark for the first time. Tesla has just recently begun production and sales of Model 3 from its Shanghai factory. The hype has been so great that one buyer proposed to his girlfriend by giving her a Tesla Model 3. Naturally, she said ‘yes’ to the proposal. I am not sure if that was a yes to the Model 3 or to getting married?

A Tesla employee proposes during the delivery ceremony of their Model 3

EV metal miners also rally on the news

The EV related miners (lithium, cobalt, graphite & nickel) have also rallied strongly on the recent good news. Some such as Galaxy Resources Limited (ASX: GXY) and Syrah Resources Limited (ASX: SYR) are up over 50% in the past month after suffering large falls in 2018 and 2019. Across the board, the lithium miners surged this week on the China news. Lithium leaders such as Albemarle rose 5.2% yesterday, while SQM rose 8.7%. Even nickel giant Norilsk Nickel (OTC: NILSY) rose 3.8% on the news after already rising 94% in the past year helped by the palladium boom.

Closing remarks

A combination of recent events such as the US-China Phase 1 trade war deal, the December 2019 China EV sales rebound, and last weekend’s Chinese news that subsidies ‘will stay relatively stable this year’ have all conspired to restore confidence to the EV related market. This has led to a surge in EV related stock prices. But don’t worry in most cases the 2018 and 2019 EV metals downturn has meant many EV metal miners are still relatively cheap, especially given the EV boom decade has just begun.




Partnered directly into the lithium-ion battery supply chain and simply making batteries better.

Almost every week we hear of a new and so-called better lithium-ion battery; yet the reality is it never arrives. Typically there are still problems to be solved, and hence the battery is still only at the lab testing stage. For investors, it makes more sense right now to go with a company that is improving on the existing lithium-ion batteries and that is partnered directly into the lithium-ion battery supply chain. The top name that meets these criteria would be Canada’s Nano One Materials Corp.

Nano One Materials Corp. (TSXV: NNO) primary focus is to improve on existing lithium-ion batteries. The key area is the battery cathode where Nano One has been having success using its scalable industrial process for producing low cost, high performance, battery materials. The processes vary and are all patented, but typically rely on Nano One’s expertise in nanotechnology and processing technology.

Nano One is very well partnered into key battery suppliers and some car manufacturers, including several big names – Pulead, Saint-Gobain and Volkswagen. Nano One is working with Pulead to develop better LFP batteries, with Saint-Gobain to improve thermal processing and to develop enhanced high temp cathode processing, and with Volkswagen to develop advanced materials for next-generation batteries.

Nano One also has the support of the Canadian government, and in 2019 had a visit from Canadian Prime Minister Justin Trudeau to check out Nano One’s pilot plant.

Battery cathode sales forecast to take off as Nano One’s patented process makes cathodes cheaper

The Nano One and Pulead partnership is progressing well

In December 2019 Nano One announced that things were moving ahead very well with their Pulead partnership to commercialize lithium-ion phosphate (LFP) batteries. Pulead is one of China’s leading Li-ion battery cathode producers, with a focus on LFP cathodes.

Dr. Xinhe Yang, VP of Research and Development at Pulead stated: “We value the partnership with Nano One and are satisfied that their process can be supported with reliable and sustainable sources of raw materials. Our technical teams are making good progress on commercial viability and we remain committed to the partnership activities.”

This all means Nano One is getting closer to achieving revenues as a result of licensing their IP. This woud be a very significant step forward for Nano One. The LFP market is huge in China, and is the preferred cathode for electric buses, and many types of heavy electric vehicles where battery longevity and price play key roles.

Nano One CEO Dan Blondal stated: “This marks an important achievement in our commercialization efforts and moves us closer to the joint objective of licensing Nano One technology for the production of LFP by Pulead.”

Nano One patents a new durable cobalt-free battery material

Nano One’s new lithium nickel manganese oxide (LNMO) cathode material patent eliminates cobalt from the battery and increases durability. This helps solve two key concerns in the industry thereby creating a strong need for Nano One’s proprietary process.

Nano One’s licensing economic model

Closing comments

The key for any company to succeed is to find a niche need then fill that need with an affordable product. That is exactly what Nano One is doing. There is a massive need right now for cheaper and better lithium-ion batteries to make electric vehicles affordable to the masses. Nano One is already meeting that need by lowering the cost of batteries by improving (shortening etc) the production process (‘one pot process’), as well as improving the cathode’s performance by using better materials and better combinations.

It seems the industry agrees as many of the big names continue to partner strategically with Nano One. It looks to be only a matter of time until Nano One’s licensing economic model begins to make money for Nano One. And when it does it should be very profitable, especially if revenues accelerate sharply as the EV boom takes off post 2022. Once revenues and profits kick in then I would expect a significant stock price re-rating.




Top tech trends for 2020

As we begin a new decade I wanted to look at what will most likely be the biggest tech trends in 2020, and for the next few years. Getting in early on any new big tech trend can pay off big time.

5G

The 5G boom has only just begun in 2019, and is forecast to gain momentum in 2020/21 and soar by 2022. By 2024, it is expected that 1.5 billion people around the world will be connected to 5G networks. 5G growth is forecast to be a massive 96% CAGR from 2019 to 2025, noting this is coming from a very small base in 2019. To get an idea of the rapid growth, just in October 2019, China launched 5G in 40 cities. Apart from China, 5G services are already being rolled out globally led by South Korea, US, UK, and Australia. Canada and Singapore should see significant 5G growth in 2020. Some leading 5G companies include Huawei Technologies (private) (5G infrastructure, 5G smartphones & modems), Samsung Electronics (OTC: SSNLF) (5G infrastructure, 5G smartphones), Nokia (NYSE: NOK) (5G infrastructure), Ericsson (NASDAQ: ERIC) (5G infrastructure), China Tower Corp. (OTC: CHWRF) (the world’s biggest mobile tower company and responsible for much of China’s 5G rollout), Qualcomm (NASDAQ: QCOM) (5G smartphone modems), and Skyworks Solutions (NASDAQ: SWKS) (5G receiver antennas, filters, 5G power amplifier module).

5G network wireless systems and internet of things with modern city skyline. Smart city and communication network concept.

Mobile payments and ‘Tap & Go’ payments

The global payments market today is still very new and is said to be worth around US$3 trillion in global revenues. In February 2019 PayPal CEO Dan Schulman told CNBC that the digital payments industry may become a $100 trillion market. China has led the way but the US and much of Asia are catching on fast. The mobile payment leaders are currently by far Tencent (OTC: TCEHY) (WeChat Pay) and Alibaba (NASDAQ: BABA) (AliPay), with Paypal (NASDAQ: PYPL) third. The big smartphone companies follow – think Apple (NASDAQ: AAPL) Pay and Samsung (OTC: SSNLF) Pay. Amazon (NASDAQ: AMZN) Pay, Google (NASDAQ: GOOG) (NASDAQ: GOOGL) (Android Pay), and Facebook (NASDAQ: FB) Pay are also playing catch up. Facebook introduced Facebook Pay on November 12, 2019 but are likely to grow fast given their massive 2.45 billion monthly active users. The credit card companies Visa (NASDAQ: V) and Mastercard (NASDAQ: MA) are still doing well helped by the popular “Tap & Go’ technology using a credit card.

Esports

The booming esports sector driven by millennials (many in China) has been forecast to grow at CAGR of 22.3% to 27.4% over the next few years. In recent years esports competitions have become very popular. Some examples are League of Legends, Dota 2, Player Unknown’s Battlegrounds (PUBG), StarCraft, WarCraft, Hearthstone, Overwatch, and Fortnite. Just last year player prize money grew rapidly with the 2019 Dota 2 champions winning more money than top Wimbledon players. Each player won over US$ 3.1m!

Some key names in the sector include Activision Blizzard (NASDAQ: ATVI) (game maker), Electronic Arts (NASDAQ: EA) (game maker), Take-Two Interactive Software, Inc. (NASDAQ: TTWO) (game maker), Tencent (OTC: TCEHY) (game maker/publisher and streaming), Huya (NYSE: HUYA) (streaming), Amazon (NASDAQ: AMZN) Twitch (streaming), Nvidia (NASDAQ: NVDA) (chips), and Advanced Micro Devices (NASDAQ: AMD) (chips). The VanEck Vectors Video Gaming and eSports ETF (ESPO) (LN: ESPO) gives a nice broad coverage.

ESports players win US$ 3.1 million each at the Dota 2 championships in 2019

Artificial intelligence (AI)

AI basically refers to machines that can learn and hence evolve to become smarter and solve a problem. Some examples include online chatbots, facial and voice recognition, autonomous driving and so on. Many think AI will be the biggest tech trend of the next decade and they could well be right. There are literally thousands of listed companies involved in AI but the big tech companies still dominate. These include Facebook, Alphabet Inc., Amazon, Apple, Samsung Electronics, Baidu (NASDAQ: BIDU), Microsoft (NASDAQ: MSFT), IBM (NASDAQ: IBM), Intel (NASDAQ: INTC), Nvidia (NASDAQ: NVDA), Tesla (NASDAQ: TSLA) and many more.

Conclusion

The advent of 5G will help the 2020s become the decade of data use and greater automation of our world. Established tech trends such as the internet, online shopping, cloud computing (including SaaS) and storage will all grow bigger in the 2020s. Added to this the 2020s will see the evolution of smart cities and smart homes under the umbrella term the ‘Internet of Things’ (IoT). In the 2020’s the use of robots (or connected devices) and automation will become increasingly common. The use of nanotechnology is a broader trend with some tech involvement. For example, using nanoparticle technology embedded in goods (or their QR code) to detect counterfeit goods using your smartphone. Another is the electrification of the transport sector which will be incorporating things such as smart connected cars and autonomous vehicles.

The 2020s will no doubt bring rapid change led by the technology sector.

A few names involved in the tech sector that we follow at InvestorIntel include:

  • Exro Technologies Inc. (CSE: XRO | OTCQB: EXROF) – AI technology that works for generators, electric motors, and also for batteries.
  • Izotropic Corporation (CSE: IZO) – 3D imaging (CT) with a 360 degree view to help detect breast cancer.
  • Moovly Media Inc. (TSXV: MVY | OTCQB: MVVYF) – Provides a cloud-based platform that enables users to create and generate multimedia content.
  • Nano One Materials Corp. (TSXV: NNO) – Using nanotechnology and a scalable industrial process for producing low cost, high performance, battery materials.
  • Siyata Mobile Inc. (TSXV: SIM | OTCQX: SYATF) – A leading global developer and provider of cellular communications systems for enterprise customers, specializing in connected vehicle products for fleets.
  • SmartCool Systems Inc. (TSXV: SSC) – A global clean technology company that uses unique retrofit technologies that can reduce the energy consumption of compressors in air conditioning, refrigeration and heat pump systems by up to 40%.



The Prophecy Development of a “massive” historical silver producing mine is attracting investors

Silver gets little attention compared to gold, but silver often follows gold. With gold up significantly in 2019, and silver starting to catch up, investors would be wise to look again at some silver miners. One in particular is set to soar as it has definitely flown under most investors radar, and appears to be very undervalued. This stock has had a great 2019, drawing in the attention of Eric Sprott as a significant investor.

Prophecy Development Corp. (TSX: PCY | OTCQX: PRPCF) specializes in mine permitting, construction, and operations. Prophecy is developing the massive Pulacayo-Paca Silver Project in Bolivia and the Gibellini Vanadium Project in Nevada. The Company is managed by mine builders with a combined 100 years plus of industry experience.

The Pulacayo-Paca Silver Project in Bolivia

Prophecy acquired the project in 2015 at the bottom of the silver cycle when silver was priced at US$14/oz. According to Prophecy: “Based on historical production the mine is the second largest silver mine in the world.” It is very well advanced with over 95,000 meters of drilling, a Feasibility Study, and is fully environmentally compliant.

Executed on October 3, 2019 the Pulacayo-Paca Mining Production Contract between Prophecy and the Bolivian government grants Prophecy the 100% exclusive right to develop and mine at the concessions for up to 30 years. This is comparable to a mining license in Canada or the United States.

John Lee, Executive Chairman of Prophecy Development Corp., stated: “It is only recently that we started the program on this wonderful silver project called Pulacayo in Bolivia.”

Pulacayo in Bolivia is a world premiere silver address

Resource details at Pulacayo-Paca 

The Pulacayo deposit currently has a NI43-101 compliant Resource of 2.08 million tonnes at 455 g/t Ag, 2.18% Pb, 3.19% Zn in the Indicated category. It also has 0.48 million tonnes at 406 g/t Ag, 2.08% Pb, 3.93% Zn in the Inferred category. Company estimates put the contained metal in the Indicated category at 30.4 million ounces of silver, 100 million pounds of lead, and 146.3 million pounds of zinc. Estimates in the Inferred category are 6.3 million ounces of silver, 22.0 million pounds of lead, and 41.6 million pounds of zinc.

The Paca deposit has contained 20.9 million ounces of silver in the Inferred category.

Pulacayo-Paca NI43-101 compliant Resource summary

According to historical underground mining records the current Pulacayo Resource covers 1.4 km in strike and represents only a small portion of the Tajo vein system which is over 3 km in strike length and open to least 1,000 meters at depth.

Phase two drilling has started on a 5,000-meter program that will consist mainly of wide step-out drilling up to 1.5km west (Western Block) of the current Pulacayo Resource.

Joaquin Merino, Prophecy’s VP for South American Operation, states: “Current artisanal mining at the surface serves as strong evidence that the Tajo vein projects to surface at the Western Block (underground mining took place from early 1800 to 1952). Pulacayo is a very large system and with this program we will test the boundaries of mineralization near the surface and its continuity along strike.”

Recent drill results at the Paca Silver Project were very good

Phase one diamond drilling results from Prophecy’s 100% controlled Paca Silver Project located 7km north of Pulacayo were reported in October. Borehole PND 110 intersected 89 meters grading 378 g/t Ag-Equivalent (“AgEq;” 279 g/t Ag, 1.28% Zn, 1.17% Pb) starting from 9 meters downhole, including 12 meters grading 1,085 g/t Ag starting at just 16 meters downhole. The Pulacayo-Paca drill program is fully funded with a recent $3.9 million equity financing backed by Mr. Eric Sprott.

Prophecy’s Gibellini Vanadium Project continues to progress

Prophecy Development Corp. (through its wholly owned US subsidiary Nevada Vanadium) has submitted the applications and Engineering Design Reports to the Nevada Division of Environmental Protection for the primary mining permits that govern project construction, operations and closure of its Gibellini Vanadium Project located in Eureka County, Nevada, USA. With the support of federal and state regulators the Prophecy team is actively engaging all stakeholders in order to obtain all the state and federal permits required to begin construction of North America’s first primary vanadium mine and will represent the starting point of a well defined 12 month process.

Prophecy appears very undervalued to peers

Not only is Prophecy very undervalued relative to peers, Prophecy offers investors a very large high grade poly-metallic opportunity (silver, vanadium, and some zinc and lead) with plenty of exploration upside at both the Pulacayo-Paca Silver Project in Bolivia and the Gibellini Vanadium Project in Nevada.

Prophecy Development Corp. is based in Vancouver Canada; and has a market cap of C$ 38 million. The analyst target price is $13.50, representing a massive upside. It seems legendary miner, Eric Sprott, also sees the potential, suggesting investors should also take a long look at Prophecy.

Investors can watch a recent InvestorIntel interview here.




Hello Uranium, Colorado’s Sunday Mine Complex is now in ‘production-ready status’

Uranium is an essential material for the US to be able to run its electricity grid and to run its nuclear powered military. Of course, like rare earths the US does not produce enough uranium to supply its core needs. Nearly half of the US uranium needs are supplied from Russia or other former Soviet Union states, whose state-owned companies have been flooding the global market and driving free-market companies out of business, virtually killing the US uranium market.

The Nimitz class is a class of ten nuclear-powered US aircraft carriers

The Nuclear Fuel Working Group’s findings

Based on a recent Bloomberg report we know that the Nuclear Fuel Working Group’s findings were:

  • President Donald Trump to direct the Federal Government to buy more uranium from domestic producers. This would primarily be purchases of uranium by the U.S. Defense Department.
  • US uranium purchases to boost the national uranium stockpile.

Note: There is no mandated time period for the US President to consider the Working Groups content; and he may, or may not, choose to follow the recommendations.

One of the best-placed US uranium miners to benefit from these findings (if implemented) is Western Uranium & Vanadium Corp. (CSE: WUC | OTCQX: WSTRF).

Western Uranium & Vanadium is a uranium and vanadium ‘production-ready’ miner from their mines in western Colorado and eastern Utah. The Company’s Projects cover both vanadium and uranium. Their flagship project is The Sunday Mine Complex that covers 5 mines located in western San Miguel County, Colorado, USA.

Western Uranium & Vanadium projects summary

In August 2014, the Company acquired uranium and vanadium mineral assets from Energy Fuels Inc., and in September 2015 they acquired additional uranium properties and ablation technology through the acquisition of Black Range Minerals Limited. The Company has a total uranium resource of ~70,000,000 lbs, and a vanadium resource of ~35,000,000 lbs. Grades are solid at the Sunday Mine Complex with U3O8 (~0.25% to 0.36%) and V2O5 (~1.49% to 2.16%).

A uranium-vanadium seam at the Sunday Mine Complex

Western Uranium & Vanadium’s strategy

Western Uranium & Vanadium’s strategy is to focus on previously producing mines for low CapEx projects with existing infrastructure and permitting in place. For lower cost processing of ore, the Company has a proprietary process (Ablation Mining Technology (AMT)) that improves efficiency and reduces costs for sandstone-hosted deposits.

The Sunday Mine Complex is now at a production-ready status with first ore shipments expected by February 2020

The Sunday Mine Complex was re-opened in 2019 and successful mine development of the underground workings during 2019 has brought the Sunday Mine Complex into production-ready status. Mined ore is currently being stockpiled underground. Colorado safety requirements are in process of being met, so that ore samples can then be sent to prospective buyers. These steps should be completed in January and February 2020 respectively.

Given the NFWG is reported to recommend the US start ‘to buy more uranium from domestic producers’, the timing should be great for Western Uranium & Vanadium. I assume the US military would pay a uranium premium price that allows US producers to be profitable.

Western Uranium & Vanadium’s head office is located in Nucla, Colorado; and has a market cap of C$ 28 million. Analyst’s target price is $4.80 representing a huge upside.




Dominating global electric car sales – can anyone catch Tesla?

When looking at 2019 electric car sales there can be no doubt that Tesla (NASDAQ: TSLA) is dominating global sales. Tesla is number 1 in global electric car sales, number 1 in US sales, and number 1 in Europe. Model 3 sales are almost triple the next model, and in the US Tesla sales make up a massive 75–85% market share. In this article, I take a look if anyone can catch up with Tesla as we head into the 2020s.

Tesla is number 1 globally with 16% market share, and Tesla Model 3 sales are almost triple the nearest competitor (2019 YTD, as of end of October)

Why is Tesla dominating?

  • Brand, style, performance and quality – Model S won the best car ever, and Tesla is now famous for stunning looking cars with top tier performance.
  • Range and efficiency – Tesla’s cars achieve more range per kWh than any of their competitors. They just won an award for the most efficient global electric car ever.
  • Charging network – Tesla has by far the world’s most expansive charging network.

To summarize the above, Tesla is dominating as they are at least 5 years ahead of their competition. Only the Chinese BYD Co., BAIC, SAIC, Geely pose a challenge. The ICE manufacturers have been asleep at the wheel in past years making compliance cars. Volkswagen, BMW, Renault/Nissan, and Hyundai/Kia are making better progress in recent years, but will still take some years to try and catch up with Tesla.

Tesla Model 3 – Recently rated the most efficient electric car ever

Tesla in 2020

By early 2020 we will see Tesla’s Shanghai China gigafactory start ramping up production of Model 3. Tesla began Model 3 sales in China in October 2019, with some early production models released in November 2019. Production capacity at the Shanghai factory is set to rise to 250,000 initially, with a capacity of 500,000 cars a year.

This has the potential to boost Tesla’s global dominance even further. By the end of 2020, Tesla will also be selling (or soon to start producing) Model Y SUV. Tesla state: “Model Y production is expected to begin in late 2020 for North America, and in early 2021 for Europe and China.”

Tesla in 2021

By the end of 2021, Tesla should be producing the Tesla Cybertruck pickup. Also, Tesla should be starting to produce some small volumes of the Tesla Semi and Roadster 2. The latter two may be delayed into 2022, we will see.

Tesla models to come – Model Y, Roadster 2, Cybertruck, and Semi

Tesla is already leading the pack by a significant margin (5% ahead of BYD co). As we head into 2020 that lead may increase with Model 3 sales starting in China. Once Model Y production starts sales should surge again, then again with the cyber pickup truck, Roadster 2, and Semi.

Add in Tesla’s growing energy storage business with Powerwall, Powerpack, and Megapack and it is hard not to see Tesla continuing to dominate electric vehicles (EVs) and Energy Storage (ES) for the next decade ahead.

Valuation is hard to assess given the accumulating debt, small profit at this stage, and large CapEx ahead. But one thing looks certain – Tesla is set to be the most popular electric vehicle company for the next decade as all its competitors scramble to catch up.

What do you think? Can anyone catch up with Tesla?

Note: The author is long Tesla (TSLA).