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Green hydrogen – the missing piece in Australia’s decarbonisation puzzle

Special Report: The recent IPCC report reminds us that action is needed to help Australia, and the rest of the … Read More
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The recent Intergovernmental Panel of Climate Change (IPCC) report reminds us that action is needed to help Australia, and the rest of the world, pick up the pace in reaching net-zero emissions.

Regardless of where you stand politically, the report – like many before it – tells us the world is getting hotter. And unequivocally, atmospheric carbon dioxide (CO2) concentrations are higher and rising faster than ever before.

With insights going back thousands of years, and the ability to send man to the moon, NASA is a reliable source of data into this matter. The graph below is extracted from the NASA website and shows the stark realities of atmospheric carbon dioxide.

And this is usually where the problem starts. More often than not, conversations about climate are fuelled by rage and regret. We do not focus on the facts or pragmatic and realistic options.

For example, how do we reach net-zero emissions whilst still providing 24/7 reliable power. Does driving an electric car fuelled by fossil fuel generated power really reduce CO2? How can we transition away from fossil fuels and maintain our standard of living? How can we reliably store renewable energy to ensure our grid stability?

 

Letting go of CO2 emissions

Currently, energy generation belches out a third of Australia’s CO2 emissions. With entire countries committing to net-zero emissions, surely, we can start with our grid?

Quite simply, without a net-zero energy infrastructure, a net-zero economy cannot exist.

But this won’t happen overnight.

We need an approach to bring together multiple renewable technologies to create a reliable renewable energy supply chain. One that won’t buckle and strain in peak hours or seasons.

A robust net-zero energy infrastructure is key to delivering lower greenhouse gas emissions without compromising on reliability.

 

Fuelling the transition

Green hydrogen has the potential to address decarbonisation and rising temperatures. It is clean, reliable, and can generate heat and power for everyday commercial, transport, and residential use.

What’s more, the National Hydrogen Strategy states 1kg of clean hydrogen avoids 15kg CO2 emissions.

As a result, it’s thought that hydrogen could supply up to 25% of the world’s energy needs by 2050.

At the same time, it will enable the storage of valuable solar and wind power for it to be distributed at times of peak consumption.

 

Safeguarding our planet, our economy, and our future

 The IPCC report is a call to action. But what it tells us is, we still have options.

What we know for sure is, the foundation of a net-zero economy is a net-zero infrastructure. Fossil fuels will be phased out and replaced with sustainable, renewable alternatives.

The place to start is looking at the systems that can be improved now. For example, as we phase out fossil fuels, we should look for integrated energy solutions. These are projects that combine key elements of green energy production and storage such as renewable baseload energy and hydrogen production.

Such projects will allow us to address our energy needs, while moving closer to the renewables that will support net-zero emissions.

More than 70 countries (representing over half the world’s GDP) are already on this path with net-zero carbon ambitions. Approximately half of these have hydrogen-specific strategies as a beacon for future decarbonisation and energy security.

To make this move successful however, we need dedicated, governmental focus on bringing green hydrogen to scale.

Verdant Earth Technologies firmly believes that renewable hydrogen will change the world, unlocking the net-zero future desperately needed to protect humanity’s collective future.

This article was developed in collaboration with Verdant Earth Technologies, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

The post Green hydrogen – the missing piece in Australia’s decarbonisation puzzle appeared first on Stockhead.

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Energy & Critical Metals

Nio Stock Won’t Be This Inexpensive for Very Much Longer

Electric vehicle manufacturer Nio (NYSE:NIO) has always been in the news for good reasons. The company has consistently delivered impressive delivery numbers…

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Electric vehicle manufacturer Nio (NYSE:NIO) has always been in the news for good reasons. The company has consistently delivered impressive delivery numbers and reported stellar revenue quarter after quarter. I love NIO stock and have recommended a buy with every dip.

Source: Robert Way / Shutterstock.com

The stock is inching closer to $40, and you should make your move before it becomes too expensive. 

NIO hit $53 in June but has been declining since then. However, the past few weeks have seen the stock slowly move upwards. It is trading close to $39 today.

The company recently confirmed that Nio Day 2021 will be held on Dec. 18. It is the fifth Nio day and investors are expecting the company to make some big announcements at the events.

At Nio Day 2020, the company announced ET7, its first sedan, and Power Swap Station 2. Investors are looking forward to more details about the ET7 sedan deliveries.

Further, the company may announce another sedan, ET5 this year, as reported by AutoEvolution.  It has already declared its intention to enter the mass market industry under a different brand name. We might get more updates on it on Nio Day. There is a lot of speculation that Nio will launch the much-awaited Sportscar, EF9. 

Further, the company may provide additional details about the Norway launch and its plans for international expansion.

Investors and auto enthusiasts have a lot of hopes and expectations for Nio Day, and the event will certainly take the stock to new highs at the end of the year. Nio day 2020 saw NIO stock go beyond $60. 

A Closer Look at NIO Stock

Nio has increased its production capacity at the Hefei factory which is jointly run with Chinese automaker JAC. This upgrade has boosted the capacity of the company by 20% annually.

The new production capacity of the plant is 120,000. It will double the capacity in the first half of next year which will take it to 240,000. 

It shows the strong market potential and capability of the company. Nio has already delivered more than 10,000 cars in September and it anticipates an increase in demand in the coming months.

The timely expansion of production capacity will allow the manufacturer to meet the demand and ultimately report high revenue and sales numbers. If the company launches a new model on Nio day, the increased production capacity will help meet the demand. 

I am not the only one bullish on NIO stock. There are other Wall Street analysts who consider the stock a great buy with high growth potential.

Citic Securities analyst Jiancong Yuan has a buy rating on the stock with a price target of $45. BofA securities analyst Ming Hsun Lee has a buy rating for the stock with an average price target of $62. The analyst is impressed with the strong delivery momentum of the company. 

Further, Goldman Sachs analyst Fei Fang has upgraded the stock to Buy with a price target of $66. The analyst accounted for the sales of ET7 and believes that it will drive growth in 2022. 

The Bottom Line

The EV industry is showing no signs of slowing down and Nio has an impressive growth story. The company’s delivery numbers are strong and continue to impress investors.

The positive anticipation about Nio day and third-quarter results will take NIO stock to new highs. I believe the stock will continue the upward momentum in the coming months.

The international expansions plans and introduction of new models will drive interest and investment in the company. 

Nio has massive growth potential and it could hit the $50s very soon. Buy the stock before it becomes too expensive. Any dip in NIO stock is a chance to load up. 

On the date of publication, Vandita Jadeja did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Vandita Jadeja is a CPA and a freelance financial copywriter who loves to read and write about stocks. She believes in buying and holding for long-term gains. Her knowledge of words and numbers helps her write clear stock analysis.

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Energy & Critical Metals

Nio Stock Hasn’t Shaken Its China Discount Yet, But It’s a Long-Term Buy

Nio (NYSE:NIO) stock should be having a better month than it is, even if only as the result of the larger market. 
Source: xiaorui / Shutterstock.com
Tesla…

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Nio (NYSE:NIO) stock should be having a better month than it is, even if only as the result of the larger market. 

Source: xiaorui / Shutterstock.com

Tesla (NASDAQ:TSLA) reported a record profit of $1.6 billion on Oct. 21. Unfortunately, the good news shared by the electric vehicle maker failed to carry over to China’s EV players. NIO stock barely budged on the news.

Despite Nio continuing to grow its business methodically, investors appear to have little appetite for its stock at the moment. However, I believe that long-term investors will do very well buying NIO stock under $40. 

Tesla earned $1.6 billion in Q3 2021 on $13.76 billion in sales. It sold 241,391 cars during the third quarter, almost double the amount Nio has cumulatively sold for the ES8, ES6, and EC6 over its brief history.

There’s no question that Tesla is an investor favorite, but when you deliver the goods, that’s to be expected. Tesla said in its quarterly report that it expects to see a 50% increase in annual sales for the foreseeable future. No wonder TSLA stock is testing its all-time high of $903.32.

I’ve been a fan of Elon Musk and Tesla for a long time. While I’m not nearly as familiar with Nio CEO and founder William Li, I do believe he’s done an excellent job guiding the company through its growth spurts.

Whether it be the financing issues it faced in 2020 or the current chip shortages in 2021, he and his management team have confronted them head-on and persevered. 

 At the beginning of October, Nio reported it delivered 24,439 vehicles in the third quarter, 100.2% higher than a year earlier.

A highlight of the quarter was the company’s first deliveries to customers in Norway, its latest growth area. Moving beyond China is an essential part of its development.

Over the trailing 12 months (TTM), Tesla delivered slightly more than 800,000 vehicles, up from just over 700,000 in Q2 2021, a growth rate of approximately 15%. 

Nio’s TTM Deliveries Q3 2021 vs. Q3 2020

Quarter
Deliveries
Quarter 
Deliveries
Q3 2021
24,439
Q3 2020
12,206
Q2 2021
21,896
Q2 2020
10,331
Q1 2021
20,060
Q1 2020
3,838
Q4 2020
17,353
Q4 2019
8,224
TTM
83,748
TTM
34,599

Over the same period, Nio increased its TTM deliveries by 142.1%, about 10x the increase for Tesla. 

Now, I realize that Tesla was starting from a much bigger base, so I’ve gone back to 2017 when it finished the year with 80,060 deliveries, approximately the same amount as Nio’s TTM deliveries. In 2018, Tesla delivered 245,240 vehicles, 206.3% higher than a year earlier. 

So, if Nio wants to match Tesla’s relative growth, it will have to increase its deliveries by more than 100% over the next four quarters. It’s doable, but with the chip shortage, it’ll be challenging to get to 245,000 by Q3 2022. 

I guess we’ll see.

Is There Anything to the China Discount?

As I write this, Tesla is trading up almost $17, at 24.3x sales. Meanwhile, Nio is trading just below $40 at 14.6x sales. You would think that Nio, being at approximately the same stage as Tesla was in early 2019, would get a higher multiple for its sales. 

In 2018, Tesla had $21.46 billion in revenues or sales per share of $125.85 [$21.46 billion divided by 170.5 million shares outstanding). It finished the calendar year at $66.77. 

However, Tesla split five-for-one in August 2020. That changes its sales per share in 2018 to $25.17 [$125.85 divided by five) and 2.7x sales. 

So, no, I don’t believe there’s anything to a China discount. Instead, it has more to do with Nio’s TTM operating loss through Q2 2021 was almost $3 billion, while Tesla’s TTM operating profit of $4.5 billion was 250% higher. 

At present, there is no comparison financially between the two companies. Tesla is a blue-chip and Nio is a wannabe. 

The Bottom Line

The last time I wrote about Nio in mid-September, I said that NIO stock was a good buy under $40. Nothing’s changed about that sentiment. 

I remarked in that article that earlier in September, Nio had lowered its expectation for Q3 2021 deliveries by 1,000 to 23,000. But, of course, it didn’t have to do that, coming in 439 vehicles above the company’s original guidance of 24,000 for the quarter.

While Nio has some work to do before it gains a Tesla-like valuation, I don’t see anything that screams stay away. 

Nio remains a long-term buy.

On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. 

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Energy & Critical Metals

Millions Of Jobs At Risk As Europe Faces Magnesium Shortage

Millions Of Jobs At Risk As Europe Faces Magnesium Shortage

Europe purchases 95% of its magnesium from China, will run out of the industrial…

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Millions Of Jobs At Risk As Europe Faces Magnesium Shortage

Europe purchases 95% of its magnesium from China, will run out of the industrial metal used to strengthen aluminum by the end of November that could threaten millions of jobs in sectors from automobiles to aerospace to defense and much more, according to Bloomberg

Three trade groups, including European Aluminium, Eurometaux, and industriAll, warn shipments from China are dwindling quick due to power cuts to energy-intensive magnesium smelters. They said if reserves of the industrial metal aren’t increased in the near term, it may result in trade production shortages, factory closures, and job losses. 

“Supply of magnesium originating from China has either been halted or reduced drastically since September 2021, resulting in an international supply crisis of unprecedented magnitude,” the trade groups said. They urged Brussels “to urgently work toward immediate actions with their Chinese counterparties to mitigate the short-term, critical shortage issue, as well as the longer-term supply effects on European industries.”

Magnesium, which is used extensively in the aerospace industry, is a metal for producing aluminum alloys in the automotive industry and could compound issues for European carmakers already dealing with crippling chip shortages

Morgan Stanley’s Amy Sergeant and Ioannis Masvoulas told clients last week that Europe stands out as the most exposed region to magnesium shortfalls from China. They said Europe shuttered its last magnesium smelter in 2001. This means that there’s no way for Europe to domestically increase magnesium supplies and hinges all on China’s output. 

Days ago, Barclays analyst Amos Fletcher warned clients, “there are no substitutes for magnesium in aluminum sheet and billet production.” He said if “magnesium supply stops,” the entire auto industry will grind to a halt. 

European Aluminium, whose members include Norsk Hydro, Rio Tinto, and Alcoa, said, “the current magnesium supply shortage is a clear example of the risk the EU is taking by making its domestic economy dependent on Chinese imports. The EU’s industrial metals strategy must be strengthened.” 

Morgan Stanley warns: “Should magnesium shortages persist through to 2022, there is a growing risk of downstream demand destruction as smelters may be unable to produce specific aluminum alloys for the automotive, building, and packaging sectors. In that scenario, we could see a shift towards commodity-grade standard ingot.” 

The unintended consequences of European officials deciding decades ago to rely entirely on China for magnesium could spell disaster for millions of jobs if reserves aren’t replenished soon. 

Tyler Durden
Mon, 10/25/2021 – 02:45

Author: Tyler Durden

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