Stockhead High Voltage: Nikola’s electric truck battery 15 times bigger than Tesla’s

Nikola’s new electric truck boasts a battery 15 times bigger than that in a standard Tesla Model 3 – a trend which will fuel demand for key materials.

Our High Voltage column wraps all the news driving ASX stocks with exposure to lithium, cobalt, graphite, nickel, rare earths, manganese, magnesium, and vanadium.

Controversial US start-up Nikola (AKA the poor man’s Tesla) has begun production of an electric truck called the Tre, which will have a battery 15 times bigger than that in a standard Tesla Model 3.

It is one of many larger commercial trucks coming into production in the near term, which – with their larger batteries — will demand far higher volumes of raw battery materials.

The Phase 1 Arizona manufacturing facility provides Nikola with a production capacity of 2,500 trucks.

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Construction of the Phase 2 expansion is expected to be completed in 2023 with a production capacity of up to 20,000-trucks per year.

A hydrogen powered version of the Tre is also in the works, Nikola says.

Nikola, which went public in June 2020 by merging with a SPAC, is no stranger to controversy.

In January 2018, Nikola posted a video to YouTube which showed the Nikola One truck moving rapidly along a desert highway.

It turns out Nikola had just towed the truck to the top of a hill and let in roll down, tilting the camera so it looked like the vehicle was moving under its own power.

Dodgy shenanigans like this culminated in $125 million of fines from the Securities and Exchange Commission in December last year for misleading investors. Founder Trevor Milton is also in some strife.

Shares soared to nearly $US100 in 2020 despite Nikola never producing a single vehicle for sale. It is currently worth just under $US7 per share, which seems a bit closer to fair value.

More lithium coming, producers say

$5bn capped Livent (NYSE:LTHM) is the latest global lithium producer to announce big production expansion projects across its operations following a strong quarter.

Its adjusted earnings before tax was $53.3 million; 94% higher than the previous quarter.

LTHM now wants to boost total lithium hydroxide capacity to 55,000 tonnes per year (tpa) (currently 25,000tpa) by the end of 2025 and its lithium carbonate capacity to 100,000tpa (currently 20,000tpa) by the end of 2030.

“Strong lithium demand growth has continued in 2022,” CEO Paul Graves says.

“Published lithium prices in all forms have increased rapidly amid very tight market conditions and Livent continues to achieve higher realised prices across its entire product portfolio.”

LME short squeeze disaster ‘forcing market participants elsewhere’

The LME nickel short squeeze saw prices briefly surpass an insane $US100,000/t before the LME cancelled all trades on the 8 March and backdated prices to $US48,000/tonne.

Benchmark Mineral Intelligence says a reported $US3.9bn of trades were cancelled by the exchange and, as a result, market participants have raised questions over the reliability of the LME as a pricing mechanism.

“This sparked claims that the LME acted intentionally to protect large industry players who were affected by the rally, with some suggesting this was at the behest of the exchange’s owners, Hong Kong Exchanges and Clearing Limited (HKEX),” it says.

“Regardless of whether these accusations can be verified, these claims have done significant damage to the trust market participants have previously placed in the LME, by suggesting the exchange is not an independent and impartial entity.”

Liquidity on the LME has since dropped significantly, with average daily transaction levels in April down by 49% from February volumes, Benchmark says.

“If the LME is unable to restore market confidence in the exchange, it runs the risk of becoming redundant to the battery supply chain, particularly in China, the global hub for battery nickel, as more market participants opt to use alternative pricing methods,” it says.

This content first appeared on stockhead.com.au

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