The electric vehicle revolution is here – here are three stocks James Dunn is watching
Given Australia’s long history as a resources-based economy, for many Australian investors, it’s natural when thinking about how to invest in the growing electric vehicle (EV) revolution, to think of resources inputs – the metals that electronic vehicles need. And that is a logical way to approach it, as Switzer Report did last June – all of those battery metals stories remain relevant.
But there is also a small group of ASX listed companies that are more closely involved with EV batteries than supplying metals.
Here are 3 of the most intriguing.
1. Magnis Energy Technologies (MNS:ASX)
Market capitalisation: $128 million
FY20 revenue: $851,880
FY20 EPS: –1.1 cents
Analysts’ consensus valuation: n/a
Sydney-based Magnis Energy Technologies is making impressive strides in batteries with its proprietary graphite-silicon anode technology, which it is combining with the technology of its US partner C4V (of which Magnis owns 10%) to develop lithium-ion batteries (LIBs) capable of a higher voltage and very fast charging times for electric vehicles.
C4V has developed a bio-mineralised lithium manganese phosphate (BMLMP) cathode, and the batteries made with the combined technologies have shown excellent results in testing with EVs – last July, tests showed that EV batteries developed by C4V could achieve 85% charging in six minutes, using unoptimised cells. This testing continues, using battery cells optimised for very fast charging, with several unnamed EV makers involved. Aside from being very fast-charging, the C4V batteries can be a cheaper alternative than current EV batteries, as well as having a less-volatile supply chain, because they don’t use nickel or cobalt.
British company Maritime Tactical Systems (Martac) has been using C4V batteries in its unmanned surface vessel USV) products since May 2019, and is an important test-bed for the products. Late last year, Magnis kicked-off a demonstration program in New York using an extra-fast charging (EFC) system from C4V in New York City buses. Earlier this month, C4V was chosen to provide a lithium-ion battery for a US Department of Energy project to test a solar plant control and stability framework that includes battery storage.
Magnis and C4V propose to make their EFC batteries firstly at Endicott in New York state, through IM3NY (of which Magnis owns 57.9%) and then in Townsville, Queensland. The company says production could begin in Endicott, at gigawatt scale, later this year, in what will be one of the largest batter plants in the US. It says the fully permitted Townsville plant could be operational by 2024.
Magnis also has its own potential supply of natural flake graphite, which is used in the LIB anode – it is where the lithium metal is oxidised – through its wholly owned Nachu graphite project in Tanzania. This world-class graphite deposit is fully permitted and Magnis says it is “shovel-ready,” pending financing. The graphite material from Nachu, which is up to 99.95% purity, can go into Magnis/C4V batteries as well as to other battery makers.
Magnis boasts some impressive battery intellectual firepower: the company’s board features Professor Stanley Whittingham, of Binghamton University, State University of New York, who was a joint recipient of the 2019 Nobel Prize in Chemistry for his pioneering contribution to the development of the LIB.
2. Rectifier Technologies (RFT:ASX)
Market capitalisation: $51 million
FY20 revenue: $15.86 million
FY20 EPS: 0.1 cents
Analysts’ consensus valuation: n/a
Listed in 1994, Melbourne-based Rectifier Technologies (RFT) started out designing and making “rectifiers” – electrical devices that convert alternating current (AC), which periodically reverses direction, to direct current (DC), which flows in only one direction – mainly for the global telecom markets. Rectifier was successful in globally licensing its technology throughout the 90s, and also produced specialised electronic and magnetic components.
In the early 2000s, Rectifier became a listed company by merging into ICE Corporation (later renamed to Rectifier Technologies Ltd) and Protran Technologies, a leading Australian manufacturer of magnetic components for AC-DC converters.
Rectifier makes a range of products that are suitable for EV charging, energy-hungry applications, such as Internet Data Centre Power Systems, and anywhere that a DC uninterruptible power supply (UPS) is required, in areas such as telecoms, utilities, defence and the oil and gas industry.
The company’s expertise in the design and manufacture of switched-mode power converters flowed seamlessly into high-efficiency battery chargers, and charging EVs is quickly becoming the main game. Rectifier now has a number of global customers, including the impressive Brisbane-based EV fast-charger maker Tritium, which supplies DC fast chargers to major EV charging networks, such as Europe’s Ionity. Rectifier is a preferred supplier to Tritium, which is launching the world’s first “pay-as-you-go” scaleable charging platform.
In August last year, Rectifier launched its first two-way electric vehicle (EV) charger, that will allow homes and businesses to not only charge an EV, but also sell excess power back to the grid. Known as “vehicle-to-grid” (V2G), this technology allows owners of EVs with bi-directional charging capabilities, such as the Nissan Leaf, to sell power back to the grid during times of peak demand, helping to cut their own power bills.
Rectifier has branded the product Highbury, and expects to have its wall-mounted Highbury DC slim-line bidirectional charger – designed with carports and tight car parking spaces in mind – on the market later this year, pending certification. The unit is a high-efficiency electric vehicle charger, delivering up to 7kW of DC power. While the Highbury DC unit will initially be certified for V2G operations, Rectifer expects that in time, consumers can expect to see vehicle-to-home (V2H) capability – which would allow an EV to charge a home battery – become available. In effect, this allows vehicles to become a distributed energy resource, helping the grid and rewarding vehicle owners: when there is high electricity demand, the Highbury will be able to export energy and earn a return that offsets the cost of the electricity consumed.
After the initial Highbury DC product hits the market, Rectifier plans to launch an 11kW, three-phase Highbury for faster charging and greater energy export capability, for commercial vehicle owners.
Rectifier has manufacturing operations in Australia and Malaysia and a distribution hub in Singapore. At present, about 90% of sales are made to five key customers in Australia, Singapore and North America.
Rectifier is profitable, and paid a 0.1 cent per share fully franked final dividend for FY20.
3. NOVONIX (NVX:ASX)
Market capitalisation: $662 million
FY20 revenue: $4.25 million
FY20 EPS: –14.7 cents
Analysts’ consensus valuation: $1.33
Brisbane-based NOVONIX is an integrated developer and supplier of high-performance materials – in particular, graphene-based anodes – and equipment and services for the global lithium-ion battery (LIB) industry, with operations in the USA and Canada, and sales in 14 countries. The company is listed on the ASX, the OTC market in North America and the Deutsche Borse.
Formerly known as GraphiteCorp, in 2017 the company struck transformational deals with two North American groups, NOVONIX and Coulometrics, which turned it into a supplier of advanced battery materials, equipment and services to the global LIB market. NOVONIX develops, manufactures and sells high-precision battery cell testing equipment used by leading battery makers, equipment manufacturers and research organisations including Apple, Microsoft, TESLA, Panasonic, Honda, Samsung, Bosch and GM; the company’s exclusive joint venture with Tennessee-based Coulometrics, called PUREgraphite, develops, manufactures and sells high-performance anode materials.
NOVONIX focuses on improving batteries not only for electric vehicles and renewable energy storage, but phones, laptops and cordless equipment. its customer base includes global car makers, battery manufacturers, consumer electronics companies, medical device makers and battery laboratories. NOVONIX says its anode material processing technology is one example of delivering lower-cost, high-performance graphite to support long-cycle-life battery applications, while its dry particle micro-granulation (DPMG) process is another, through its ability to eliminate wastewater and use simpler metal inputs to reduce cathode manufacturing cost, or improve yield in anode manufacturing. For example, TESLA said at its Battery Day presentation in November that the existing manufacturing cost of EV battery cathode is “far too expensive and wasteful” – NOVONIX believes its technology can help in this regard.
NOVONIX’s PUREgraphite anode material plant in Chattanooga, Tennessee is ramping up capacity to 2,000 tonnes a year of synthetic graphite, which includes supply of an initial 500 tonnes to Samsung SDI, one of the world’s largest LIB makers, for EV batteries. NOVONIX recently struck a strategic alliance with US-based Harper International Corporation to develop specialised furnace technology that will enhance its synthetic graphite manufacturing process. The company also has a non-binding agreement with Sanyo (a wholly-owned subsidiary of Panasonic Corporation), another leading battery producer, to assess production materials from this plant. Working with Samsung and Sanyo, NOVONIX has agreements with the two largest global LIB makers, representing between them 40% of the global market.
NOVONIX says annual passenger EV sales are on track to rise to 10 million per year in 2025, 28 million in 2028 and 56 million by 2040, To fill this demand for EV growth, it says there are 99 LIB mega-factories in the pipeline with over 2,000 gigawatt hours (GWh) of capacity for 2028: as a result, demand for high-performance battery materials is expected to grow by seven times, by 2030.