Times have been tough for graphite, I’m sure we can find...

Times have been tough for graphite, I’m sure we can find examples that contradict that but for anyone who has been focused on the micro economics of this company, here’s my take on the macro economics that seem to have restrained the entire sector and taken the wind from lithium’s sails too.

First of all, a lot of us are blaming our CEOs for the performance of the stocks in this sector, don’t get me wrong, there is a communication deficit here but…

Essentially this is a trade war that China is winning. The tariffs on battery materials didn’t incentivise car manufacturers to finance the upstream end of their battery components like mineral investors had hoped.

America has done a bad job of assisting this industry through grants, atleast in comparison to China, who threw 15 billion at it a decade ago. Europe seems to be making the same mistakes as America.

Along with others, Ford and Volkswagen have slowed down their ambitions on EVs, Tesla has ditched its plans of competing in the low price range.

Meanwhile, BYD and Xiaomi sell record amounts of EVs and the overall EV market steadils grows.

Xiaomi and Rivian are comparable because they kicked off around the same time. Both of them sound like tough start ups, Rivian’s loss was around us32,000 per unit and Xiaomi was losing about us14,000. There’s speculation that rivian won’t survive.

So how exactly can we expect non Chinese EV manufacturers to compete in this market?

And what effect will these tariffs have? I don’t see them helping, not unless we see more western grant money.

The EV market will be worth a trillion dollars within the next four years. Western countries won’t let China price gouge their EV markets into extinction.

Western EV manufacturers are getting their batteries from China. At this stage all these gigafactories being built are going to waste.

In response to tariffs on Chinese battery anode material, China imposed export controls on graphite. It’s no wonder western EV manufacturers are pulling back on EV ambitions, they can’t get graphite, not unless they start financing mines. But why would they go spend millions in the mining sector, more millions in the battery manufacturing without actually knowing how to build a battery whilst also running such a hefty loss on each unit.

It’s a stale mate.

Ford is building a CATL battery plant on American soil, American policy makers are trying there best to add CATL to a restricted business list making fords 3 billion dollar investment another loss. This is unfolding currently.

I can’t see resolution coming before elections are over. Regardless of timing the fact remains, the world will need to double (atleast) its graphite output in the next decade. And if westerners find a way to take a portion of this market then they’re going to need to build a supply chain in the next three years. Either way, graphite will emerge on the other side of this trade war as a good investment.