Recently, battery stocks have become a hot target for investors. In the last week of January alone, two companies announced a merger with SPAC (special purpose acquisition companies, special purpose companies) to achieve the purpose of backdoor listing. On January 29, European battery manufacturer FREYR announced that it would seek a backdoor listing worth US$1.4 billion. Microvast is a Houston-based startup company owned by Micromacro Dynamics in Huzhou, Zhejiang. The company also announced plans to conduct a backdoor IPO on February 1, with a valuation of up to $3 billion.

Although the total valuation of the two companies is 4.4 billion U.S. dollars, their annual revenue is only slightly more than 100 million U.S. dollars (FREYR does not even produce batteries). If the demand for batteries is not so great, then such a high valuation would be absurd.

Electric vehicles are increasing

Established automakers such as General Motors and Ford have spent billions of dollars to switch to electric vehicles. Last year, General Motors stated that it would spend $27 billion in electric vehicle development and automation technology over the next five years.

Ford Motor 2021 ad: “30 new electric vehicles will be launched by 2025.”

At the same time, many new entrants are preparing to start mass production or expand production. For example, Rivian, known as one of the “troikas” of new American-made cars, will deliver a new electric delivery truck this summer. Amazon, which led Rivian’s investment, also ordered thousands of electric delivery trucks.

Even the US government is also helping. Last week, Biden announced that the U.S. government would replace cars, trucks and SUVs in the federal fleet with electric vehicles made in the U.S. More than 640,000 vehicles. This means General Motors and Ford, as well as other American companies entering the market, such as Rivian, Tesla…

At the same time, many megacities in the world are planning their own electrification plans. According to a research report by the Royal Bank of Canada, Shanghai’s goal is to buy electric vehicles for half of all new cars by 2025, as well as zero-emission buses, taxis, vans and government vehicles.

China’s gold rush

China is one of the world’s largest electric vehicle markets, and its policies are far ahead of the rest of the world.

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Perhaps one of the reasons why Weihaohan has received such a huge capital injection is its huge profit potential in the Chinese electric vehicle market. They include OshkoshCorp. BlackRock is a listed investment management group with a market capitalization of US$867 billion; the Koch Strategic Platform Company (kochstrategic platform) and the private equity fund management company InterPrivate.

The confidence of these new investors may come from the cornerstone investors of Weibo-CDH Capital and CITIC Securities. Both companies are private equity and financial services companies with Chinese resources.

This is why the company focuses on commercial and industrial vehicles. Microvast believes that the commercial electric vehicle market will soon reach $30 billion. Currently, sales of commercial electric vehicles account for only 1.5% of the market, but the company believes that by 2025, its penetration rate will climb to 9%.

Microvast President Yang Wu said: “In 2008, we started with disruptive battery technology and helped revolutionize the mobile field.” This technology enables electric vehicles to compete with internal combustion engines. Since then, we have transformed three generations of battery technology. Over the years, our battery performance has been far superior to our competitors, successfully meeting the stringent requirements of our commercial vehicle customers for batteries. “

Explore the European market

If Chinese investors intend to make a fortune from the listing of Weiju, a series of American investors and a Japanese giant are eagerly awaiting the listing of FREYR. Northbridge Venture Partners (Northbridge Venture Partners), CRV, Itochu Corporation (Itochu Corp.), International Finance Corporation (International Finance Corp.). Both companies will benefit, even though they are not direct investors in FREYR.

These four companies are all shareholders of 24M, a developer of semi-solid technology. FREYR uses battery manufacturing technology authorized by 24M, a company headquartered in Boston.

However, Jiang Ming, a Chinese American and professor who has continuously started a business, will also benefit from the listing of FREYR. He wrote a history of development and innovation in the fields of battery and materials science.

For the past 20 years, this MIT professor has been studying sustainable development technologies, first at A123, a once brilliant lithium battery company, then 3D printing company DesktopMetal, and a semi-solid lithium battery technology development company 24M. , FormEnergy, an energy storage system design company, and BaseloadRenewables, another energy storage startup.

Last year, DesktopMetal went public through SPAC. Now, with the influx of funds into 24M’s European partner FREYR, 24M’s potential remains to be developed.

FREYR, a company from Norway, plans to build five battery plants in the country and provide 430 GW of clean battery capacity in the next four years.

For Tom Jensen, the president of FREYR, the 24m technology has two main advantages. “One is the production process itself,” Jensen said. The 24M process is to mix the electrolyte with active materials to increase the thickness of the electrolyte and reduce the inactive materials in the battery. “The other thing is that compared with traditional lithium batteries, you can reduce the traditional manufacturing steps from 15 to 5.”

The combination of such a high production efficiency and the increase in battery capacity has brought another subversive optimization of the process of lithium battery manufacturers.

The company needs 2.5 billion U.S. dollars to fully realize its plan, but the wave of electric vehicles may help FREYR, Jensen said. The company is preparing to merge with Alussa Energy in the form of SPAC, which is supported by the management and research departments of Koch, Glencore and Fidelity.

Kumaliza

In December 2020, Royal Bank of Canada released a research report on the electric vehicle industry. The report said that by 2020, we expect pure electric vehicles to account for 3% of the market, and plug-in hybrid vehicles to account for 1.3%. These numbers don’t seem to be many, but we will see them grow rapidly.

By 2025, if the electric vehicle policy is maintained well, the global penetration rate of pure electric vehicles will reach 11% (compound annual growth rate: 40%), and the global penetration rate of plug-in hybrid vehicles will reach 5% (compound annual growth rate) Rate: 35%).

By 2025, the penetration rate of electric vehicles in Western Europe will reach 20%, 17.5% in China and 7% in the United States. In contrast, the compound annual growth rate of traditional diesel locomotives is only 2%; based on a single vehicle, the number of diesel locomotives will reach its peak in 2024.