+= Analysts employed by non-U.S. affiliates are not registered with FINRA, may not be associated persons of the member and may not be subject to FINRA restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account. Morgan Stanley & Co. International plc, Seoul Branch+ Ryan Kim Equity Analyst Ryan.G.Kim@morganstanley.com +82 2 399-4939 S. Korea Technology Asia Pacific Industry View Attractive S. Korea Energy & Materials Asia Pacific Industr ...

Core Viewpoint - Stellantis is considering withdrawing from its US battery partnership with Samsung SDI to conserve cash after significant financial write-downs [1][2]. Group 1: Financial Considerations - Stellantis aims to conserve cash following over €22 billion ($26.20 billion) in write-downs announced last week [1]. - The automaker's CEO is attempting to curb losses linked to EV and battery initiatives, which are projected to be unprofitable due to policy shifts under former President Trump [2]. Group 2: Partnership and Production - Stellantis and Samsung established a joint venture in Indiana in 2021, committing $2.5 billion and promising 1,400 jobs [3]. - The Indiana plant is Samsung's only battery facility in the US and began production in 2024, focusing on energy-storage applications [3]. Group 3: Strategic Changes - Stellantis recently agreed to exit a partnership with LG Energy Solution in Canada, where LG acquired its share for $100, while Stellantis will continue sourcing EV batteries from the site [4]. - The company is also in discussions with unions at its French plant regarding potential temporary unemployment measures due to challenges in ramping up battery production [5]. Group 4: Industry Context - Stellantis, along with General Motors and Ford, is reassessing multibillion-dollar battery commitments made during the Biden administration as electric vehicle demand has not met expectations [6]. - There is a shift in focus towards redirecting battery output for grid and data-center uses, where demand is increasing [6].

Group 1 - LG Energy Solution (LGES) will take full control of NextStar Energy, a joint venture that established Canada's first large-scale EV battery factory in Windsor, Ontario, with Stellantis selling its 49% stake [1] - The ownership transition is a strategic decision made by LGES and Stellantis, aimed at ensuring a seamless transition and enhancing long-term growth prospects for NextStar Energy [2] - NextStar Energy will utilize LGES's technological leadership and operational expertise to better serve a wider customer base, including the Energy Storage System (ESS) industry, and to adapt to market demands [3] Group 2 - The facility has seen over $5 billion CAD invested and currently employs over 1,300 people, with a target of reaching 2,500 employees as production scales up [4] - NextStar Energy is positioned to strengthen North America's battery manufacturing ecosystem by onshoring critical capabilities to meet the needs of the automotive sector and other strategic industries [5] - LGES views the full ownership of NextStar Energy as a means to capitalize on growth opportunities in North America and to secure additional customers in the EV industry [6]

Group 1 - Ford Motor Co. is in discussions with Geely Automobile Holdings for a potential partnership involving the use of Ford's factory space in Europe for vehicle manufacturing [1] - The partnership talks include sharing vehicle technologies, particularly in automated driving, and are more advanced in European manufacturing [1][2] - A delegation from Ford was sent to China to further these discussions, following prior talks in Michigan between senior executives from both companies [2] Group 2 - Ford's 2023 partnership with Chinese battery-maker CATL to produce low-cost LFP EV batteries has faced criticism from U.S. lawmakers due to tariffs and security restrictions affecting Chinese automakers in the U.S. market [3] - The company is also exploring a potential battery partnership with BYD as part of its hybrid strategy, indicating active engagement in the electric vehicle sector [4] - Over the past year, Ford's stock has increased by 38.83%, closing at $13.73 recently [5]

Summary of Key Points from the Conference Call Industry Overview - **Industry**: Electric Vehicle (EV) and Battery Sector in China - **Current Trends**: - Domestic EV insurance registrations increased by 3% YoY and 9% MoM, reaching 1.3 million units in December, resulting in a retail EV penetration of 58.6%, up 6.5 percentage points YoY [2][25] - Wholesale EV penetration decreased to 56%, down 0.9 percentage points MoM but up 6.8 percentage points YoY [25] - Battery sales reached a record high of 143.8 GWh in December, up 49% YoY and 7% MoM [39] Core Insights - **Sales Performance**: - January 2026 retail EV sales volume was reported at 312,000 units, down 16% YoY and 52% MoM, indicating a weakening demand outlook for 2026 [3] - Wholesale EV volume also declined to 348,000 units, down 23% YoY and 46% MoM [3] - **Battery Market**: - ESS battery sales surged to 55.6 GWh, up 1.8 times YoY and 22% MoM [39] - Battery production totaled 201.7 GWh in December, marking a 62% increase YoY and 14% MoM [39] - **Market Share Dynamics**: - BEV models lost 1.2 percentage points YoY market share, while PHEV and EREV gained 0.9 and 0.4 percentage points, respectively [2] Challenges and Risks - **Sector Challenges**: - The sector faces multiple challenges including retreating stimulus, higher taxation, and commodity inflation in 2026 [5] - Slowing domestic demand growth and a rising comparison base may not be offset by new model launches [5] - **Regulatory Changes**: - New regulations in China will require EV makers to monitor vehicle safety, effective from 2027 [8] - Canada has agreed to reduce tariffs on 49,000 Chinese EVs to 6.1% as part of a trade agreement [9] - The EU has set conditions for Chinese EVs to avoid tariffs, which could impact market dynamics [10] Pricing and Cost Trends - **Battery Costs**: - The spot price for battery-grade Li2CO3 increased to RMB 158,000 per ton, up 13% WoW, 67% MoM, and 103% YoY [58] - LFP battery costs rose by 32% YoY, while NCM523 battery costs increased by 47% YoY [55][59] Strategic Developments - **Investment Activities**: - Leapmotor announced a share subscription agreement with Jinyi Hi-Tech, indicating confidence in its new energy vehicle business [13] - **Government Support**: - The Trade-in Vehicle Subsidy Program has been extended into 2026, providing incentives for consumers to switch to new EVs [14][15] Conclusion - The EV and battery sector in China is experiencing significant growth in sales and production, but faces challenges from regulatory changes, market dynamics, and rising costs. The outlook for 2026 remains cautious due to potential demand weakening and external pressures.

DAVOS, Schweiz, 25. Januar 2026 /PRNewswire/ -- Leading The Charge - Turning risk into reward with a circular economy for EV batteries and critical minerals, (Vorreiterrolle – Risiken in Chancen verwandeln mit einer Kreislaufwirtschaft für EV-Batterien und kritische Mineralien), ein Whitepaper, das von der Ellen MacArthur Foundation während des Weltwirtschaftsforums 2026 veröffentlicht wurde, ist die erste integrierte, umsetzbare Roadmap für eine Kreislauf-Wertschöpfungskette für EV-Batterien, die auf der r ...

Summary of Conference Call on China Battery Materials Industry Overview - The focus of the conference call is on the **China Battery Materials** industry, particularly the production pipeline of major battery manufacturers for January 2026. Key Points Production Pipeline Estimates - **ZE Consulting** estimates that the production pipeline of the top five battery makers may decline by **7% month-over-month (MoM)** in January 2026, with **CATL's production** expected to decrease by **10%** [1][2] - This decline is more significant than the market's expectation of a low single-digit decline for January, indicating a weaker production plan than anticipated [1] Factors Influencing Production Decline - The reduction in production is attributed to ongoing negotiations between battery manufacturers and upstream suppliers rather than a significant drop in actual demand [1] - Maintenance plans announced by cathode manufacturers are likely a response to rising lithium carbonate futures prices, as noted by **Tianqi Lithium**, which has adjusted its spot prices to align with futures [1] Cathode Production Insights - Major LFP cathode manufacturers, including **Hunan Yuneng**, **Shenzhen Dynanonic**, and **Jiangsu Lopal**, have announced offline maintenance plans for January 2026 due to rising raw material costs and low processing fees [2] - The cathode production pipeline is projected to decrease by **10% MoM**, with LFP cathodes expected to drop by **13% MoM** and NCM cathodes by **1% MoM** [2] Company Valuation and Risks - **CATL** is valued at **HK$621/share** based on a target multiple of **17.3x 2025E EV/EBITDA**, which is **0.15 standard deviations above** its historical average [5] - The target price implies a **36.5x 2025E P/E** and **27.7x 2026E P/E** [5] - Risks to achieving the target price include lower-than-expected EV demand, increased competition in the EV battery market, and higher raw material costs [6][7] Conclusion - The overall sentiment remains defensive regarding the battery supply chain due to uncertainties in production and tepid demand for electric vehicles (EVs) [1] - CATL is identified as a top pick within the industry, despite the challenges ahead [1]

Group 1 - Meta is acquiring AI startup Mattis for $2 billion, marking its entry into the AI agent market [1][2] - The acquisition positions Meta to compete with Microsoft's co-pilot and Salesforce's Agent Force, indicating a growing urgency in the AI sector [2][8] - Meta has approximately $45 billion in cash, suggesting it has the financial capacity to pursue such acquisitions [3] Group 2 - The S&P 500 has historically averaged gains of 1.3% during the holiday season, with positive returns occurring about 78% of the time [4] - There is a notable trend of cash accumulation among S&P companies, with a total of about $7 trillion in cash available [7] - The market is experiencing a rotation and profit-taking, particularly in AI-related stocks, as concerns about an AI bubble persist [27][28] Group 3 - The acquisition of Mattis is seen as a strategic move for Meta to enhance its AI capabilities, which currently lack foundational applications [10][11] - Analysts suggest that the deal reflects a broader trend of companies opting for mergers and acquisitions to expedite technology development rather than building in-house [8][9] - The startup's advanced AI capabilities, which include sophisticated functions beyond simple chatbots, are expected to significantly enhance Meta's offerings [13][14] Group 4 - Mining companies are highlighted as strong investment opportunities due to rising metal prices and increased demand driven by geopolitical factors [21][23] - The U.S. has placed silver on its critical minerals list, indicating a strategic focus on securing resources amid global competition [22] - Analysts predict that the days of cheap silver are over, with significant price increases expected in the metals market [21][25]

Summary of the Conference Call on China Battery Materials Industry Overview - The report focuses on the **China Battery Supply Chain**, particularly the **battery materials industry** and **electric vehicle (EV) battery production** [1][3]. Key Insights - **Production Trends**: The production pipeline of the top five battery makers is expected to remain flat month-over-month (MoM) and show a 48% year-over-year (YoY) increase, reaching approximately **148 GWh** in December 2025 [1][3]. - **EV Battery Demand**: There is a noted decline in EV battery production due to: 1. The approach of a traditional slack season. 2. The consumption of front-loading demand as China plans to halve the purchase tax exemption for EVs starting January 1, 2026 [1]. - **Energy Storage Systems (ESS)**: Demand for ESS batteries remains strong, which is helping to offset the downturn in EV battery demand [1]. - **CATL's Production**: CATL, a leading battery manufacturer, is projected to increase its production pipeline by **4% MoM** in December 2025, indicating robust operational capacity [1]. Financial Valuation - **CATL Valuation**: - The target price for CATL's Hong Kong shares is set at **HK$621/share**, based on a **17.3x 2025E EV/EBITDA** multiple, which is 0.15 standard deviations above its historical average [8]. - For CATL's A-shares, the target price is **Rmb571/share**, also based on a **17.3x 2026E EV/EBITDA** multiple [10]. Risks Identified - The report highlights several risks that could impact CATL's stock performance: 1. Lower-than-expected demand for EVs. 2. Increased competition in the EV battery market, potentially reducing CATL's market share. 3. Higher-than-expected raw material costs [9][10]. Production Forecasts - **Cathode Production**: Expected to increase by **1% MoM** [4]. - **Anode Production**: Anticipated to remain flat MoM [5]. Conclusion - The China battery materials industry is currently experiencing a mixed landscape with strong ESS demand counterbalancing the seasonal decline in EV battery production. CATL remains a key player with positive production forecasts and a solid valuation outlook, although it faces significant risks that could affect its market position and stock performance [1][9][10].

Core Insights - The COP30 climate talks in Belém, Brazil, have highlighted the "social and environmental risks" associated with the minerals necessary for the green transition, indicating a desire for electrification without the extensive mining typically required [1][2] - The political implications of mineral supply chains for electric vehicles (EVs), solar farms, and grid batteries have become more pronounced, signaling a shift in investor sentiment [2][6] Industry Implications - Indigenous groups from Argentina have raised concerns about the environmental impact of lithium extraction, which is critical for EV batteries, stressing the need for sustainable practices [3][4] - U.S.-listed mining companies such as Albemarle Corp, Lithium Americas Corp, and Sociedad Quimica y Minr de Chile SA are now viewed as part of a supply chain that requires reform, rather than mere expansion, due to the COP30 discussions [4][5] - The demand for minerals like lithium, nickel, and graphite is essential for companies like Tesla, while others in the solar sector, such as First Solar Inc and Enphase Energy Inc, depend on metals like copper and silver [5] Financial Considerations - If the discussions at COP30 lead to new policies or procurement guidelines, the cost structures and permitting processes for clean-tech minerals may undergo significant changes, impacting the financial outlook for companies reliant on these resources [6] - The political sensitivity surrounding lithium producers has increased, placing them on par with oil producers in terms of scrutiny, which could affect stock valuations and growth assumptions tied to mineral availability [7]