I like the article, brings back good memories to the ones from many years ago. The funny thing is that more and more articles and interviews are following this theme of late. In particular, if you find anything related to Tesla, battery day and projections we find that a huge deficit is coming.
If I had to take a guess I think battery day is going to be the catalyst for the sector. The more I find out about it and the new battery making facility under construction the more I believe this will be the game changer. It will show what the battery is capable of and reinforce EV dominance going forward. It will be the moment everyone sits up and takes notice. Auto will realise the ICE legacy is over and start scrambling.
If it was not for COVID the sectors prices would already be higher because all timelines have now shifted. But that is ok as it has allowed a few more companies to get their house in order and pushed back lithium projects. Even BM believes just based on current knowledge that spod should return to around US$600ish soon. As I keep being reminded in multiple interviews this is based on current knowledge. This does not include the possible ramp up available with a battery day announcement or any other announcement by other companies that realise they need to catch up. They are well aware that their forecasts will need possible upgrading.
Holders have a look at the data below to remind yourself of how things can change:
We are currently sitting in a pricing environment similar to 2015, but look at the dynamics of what the company owned and how it is positioned cash wise and for the future. Keep comparing Dec 2015 and Jun 2020. What is same and what is different? Take a look at a price of $600 a year latter and see how quickly things can change. Look at the numbers carefully and see how valuations stack up against various possible future scenarios.
Across the sector shorts have been reducing their positions. COVID helped them alot and I think the quick run up in January before COVID made many realise it is the best time to book profits. My opinion is that we are at rock bottom and we will be probably for the next 6 months (SP may still go lower). But, even at rock bottom the company has been able to move forward.
Unless COVID destroys the worlds economy even more than I expect we should see a massive increase in EV battery needs in 2021. Tesla will have a new battery facility in the US plus in Germany, Rivian will start producing, VW will be full steam ahead with the ID3 and start limited production of the ID4, unless China does something stupid the EV market there looks like returning back to strength, in Europe sales are going way better than forecast and with the latest subsidies this should only increase. If Trump does lose the election I see EV policies changing for the positive really quickly. Then we have everyone realising the scramble is on for high quality resources with low impurities. I have been reminded recently across a number of interviews on the importance of impurities. If the SDV pilot comes back with great results here (confirms expectations) it will be interesting.
If the variables of China and COVID don't go super crazy I would really take a strong guess that the share price pressures come Dec20 - Feb21 will be a thing of the past.
My sentiment changes from hold back to buy with a return to slow accumulation. I am looking forward to 2022 and beyond.
