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One of the Swiss group’s many activities is producing charging infrastructure for electric vehicles. With more than 6,500 rapid charging stations installed in 60 countries, ABB is the global leader in this segment.
In 2018, the oil giant acquired Chargemaster, the largest network of charging stations in the United Kingdom, and invested $20 million in StoreDot, the Israeli manufacturer of ultrafast battery chargers. BP is making strategic moves at a time when its main competitors, like Total and Shell, are taking the same approach.
Little known in Europe, BYD is an electric pioneer. In 2018, the company sold 225,000 lowemissions vehicles (electric and rechargeable hybrids). It also produces a significant number of batteries. BYD has attracted the interest of Warren Buffett himself.
It’s a hidden champion, well hidden under the bonnet of vehicles. In 2018, Chinese company Contemporary Amperex Technology Ltd (CATL) became the global leader in car batteries, ahead of rivals from Korea (LG Chem), Japan (Panasonic) and China (BYD). It was a dazzling ascent. Founded only eight years ago, CATL has specialised in electric vehicles from the very beginning, at a time when the market had only a few hundred models sold per year in China. The bet paid off. In 2015, Beijing launched the “Made in China 2025” plan, making electric vehicles a national priority. Buoyed by incentives, sales took off and so did CATL.
In 2018, the company very successfully went public on the Shenzhen exchange: shares immediately shot up 44%, the maximum increase authorised during the first day a company is listed. And CATL isn’t planning to stop there. Thanks to the funds raised during its IPO, the group expects to triple production between 2018 and 2020. To do so, construction is underway on a giant battery factory in Erfurt, Germany, close to major European car manufacturers. After successfully conquering its domestic market with batteries that were cheaper than the competition, CATL is now making waves internationally as a result of its quality products. Volkswagen, PSA, Nissan, Daimler and BMW all purchase their batteries from this new giant. Compared to the competition, CATL also benefits from its position as a battery pure-player, whereas China’s number two, BYD, which also makes vehicles, has generated distrust among other western manufacturers.
Cree is doing quite well. The US semi-conductor expert was chosen in May 2019 to be Volkswagen’s exclusive supplier of silicon carbide chips for all of the group’s future electric vehicles, particularly the ID.3. The American supplier came out ahead of its European competitors, Infineon Technologies from Germany and French-Italian group STMicroelectronics.
In early July, when the French government announced a plan to accelerate the deployment of charging stations for electric vehicles, DBT’s share price jumped 10%. The company is indeed particularly well-positioned to benefit from the rise of this infrastructure. DBT installed its first charging stations in 1995. At that time, the business was just a niche market no one believed in. Everything changed in 2012, when Nissan chose DBT to deploy charging stations for its “Leaf” model.
With the planned explosion of electric vehicle sales, the infrastructure market now seems to have a very promising future. DBT currently sells its stations to electricity producers, such as EDF in France, as well as to retailers such as Auchan, Carrefour, and Ikea for their car parks. The company has installed more than 2,200 rapid charging stations in 37 countries in the past four years. As of early June, DBT had orders for 170 rapid chargers and 440 under negotiation, of which 10% are 150 kW chargers. While Tesla charging stations are reserved for Tesla vehicles, DBT chargers have the advantage of being compatible with all electric vehicles. But the company must compete with ABB, the industry leader, and Ionity (not publicly listed), a joint venture of car manufacturers BMW, Mercedes-Benz, Ford, Audi, Porsche and Volkswagen, which has already installed more than 100 electric charging stations in Europe, 25% of its goal set for 2020.
The French group posted solid results in 2018, with a profit of €701 million, up 17% compared to 2017. Faurecia owes its financial good health to its booming “Clean Mobility” business. The company sells a range of battery packs and battery housing solutions for rechargeable electric and hybrid vehicles. It is also expanding its offer to include battery combustion management, and as a result becoming a competitor of Swiss company Autoneum. In March 2019, Faurecia also created a joint venture with Michelin to invest in the fuel cell industry. Its other business lines (seats and cabin interiors) aren’t expected to slump with the decline of combustion vehicles. Currently, one out of every three cars sold includes Faurecia products. Most analysts recommend purchasing shares.
German semi-conductor manufacturer Infineon announced in 2018 that it was creating a joint venture with SAIC, China’s top automotive group, to produce power modules for electric vehicles. This will certainly ensure its growth in the number one global automotive market.
The boom in the number of “clean” vehicles sold will increase demand for cables and wires. Lucerne-based Komax, whose primary business is producing cable assembly systems, hopes to take full advantage of this phenomenon. To do so, it has created a skills hub dedicated to e-mobility at its location in Budakeszi, Hungary.
Global leader in electric measuring for industrial applications, Swiss company LEM Holding had a solid 2018 financial year (from 1 April 2018 to 31 March 2019), with revenue up 6.8% over one year, reaching 321.6 million Swiss francs. These good results come primarily from the car industry, which made up 61% of the revenue growth, boosted by the transition to low-emissions vehicles. Battery-powered vehicle manufacturers are fond of the current and voltage transducers developed by LEM. Most analysts recommend keeping shares, as they are already well valued.
Since its sensational arrival on the automotive market in 2003, Tesla has equipped all its vehicles with Panasonic battery cells. But recently, the current seems to be changing between the Japanese firm and Elon Musk’s company. According to Japanese daily Nikkei, Panasonic froze its investments in Tesla’s Gigafactory 1 in Nevada this April. And rumour has it that Elon Musk is planning to stop receiving shipments from its partner. In the event of a divorce, Panasonic could turn to its compatriot Toyota – the two created a joint venture for batteries in January 2019.
The French specialist in energy management products is creating charging stations for homes, which can be installed in garages or outside the house. This is a small business line for the group, but it has high potential.
Essential to the performance of electric vehicles, batteries require keen electrochemical knowledge. Belgian chemist Solvay understands the challenge quite well. The group provides battery manufacturers with many of the ingredients present in battery electrolytes – the liquid between the anode and cathode – such as conductor salts, additives and fluorinated solvents. Solvay also joined Saft, Umicore, Manz and Siemens in a European alliance aiming to create an “Airbus for batteries”.
Sociedad Química y Minera de Chile (SQM), the second-largest lithium producer in the world, is expected to benefit from the spike in demand for the metal. In 2018, Chinese company Tianqi Lithium spent €3.5 billion to acquire a 25% share of SQM.
“Electric vehicles contain more electric parts, notably to manage power to the battery,” said Julien Leegenhoek, tech stock analyst at UBP. “Companies active in this field will likely profit from increased electric vehicle sales.” These include French-Italian group (based in Switzerland) STMicroelectronics, which produces silicon carbide chips. Compared to traditional silicon which is used for most electronic chips, silicon carbide is used to make chips that allow the battery to last longer. As a result, the chips prolong the range of electric and hybrid vehicles.
Currently, STMicro only generates $100 million in revenue with its silicon carbide chips, and 70% of that comes from the car industry.
But the company plans to multiply its revenue from the car industry tenfold by 2025, aiming for $1 billion. To do so, the company can count on a key client: Tesla – it supplies chips for the Model 3. STMicro, which in total generated one-quarter of its revenue from the car industry via other technologies, also works with other manufacturers, such as South Korean brand Hyundai and the Renault-Nissan-Mitsubishi alliance. In the promising silicon carbide segment, the company is facing competition from US-based Cree, Japanese firm Rohm and German company Infineon. Most analysts recommend purchasing shares.
There are few companies as divisive as Tesla for analysts. For some, Tesla is just a bubble on the verge of bursting. For others, Elon Musk is developing products that will change the world, like Apple with its iPhone. It’s therefore difficult for investors to form an informed opinion. On the one hand, the Palo Alto manufacturer sold more than 245,000 vehicles in 2018, including nearly 150,000 Model 3s, which is double the amount sold the previous year. “To put our growth into perspective, we sold almost as many cars in 2018 as we did in all other previous years combined,” said Tesla in a press release. “I never had a lot of faith in Tesla, but it seems like the company has crossed the valley of death,” said Nicolas Meilhan, car specialist at France Stratégie. “With production reaching 90,000 vehicles per quarter, the company could become profitable.”
On the other hand, Tesla’s profits are not so appealing. After recording a loss of $702 million in Q1 2019, and $408 million in Q2, Tesla, which has almost never had a profitable quarter, still has $5 billion in the bank. The group still plans to spend $2.5 billion this year to develop new models – starting with a lorry and the Model Y, an SUV. To boost its capital, Tesla raised $2.7 billion in early May. This is because the troublemaker of the car industry can’t halt its R&D efforts: as a long-time pioneer of high-end electric vehicles, Tesla is now faced with competition, particularly German companies, which are preparing for war. The company will soon be up against prestigious rivals such as Porsche, Jaguar and BMW. This could be concerning for investors. Traded at around 350 Swiss francs in January 2019, Tesla’s share price is now worth about 240 francs. “Tesla is losing its advantage as a first mover,” said Nevine Pollini, analyst at UBP. “Faced with competition from industry heavyweights, like Volkswagen, the brand could suffer.”
In 2018, the supplier unveiled the e-City, a small electric car priced far below the competition: €7,000. Valeo is also active in autonomous vehicles. It has already raked in over 500 million orders for its Lidar autonomous vehicle sensors.