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Aug 5, 2021
[3 min Read]
“That juggernaut needs to be investigated more by me” - Jim Cramer
Today on Mad Money, a caller phoned in asking Cramer what his thoughts were on the vertically integrated battery manufacturing juggernaut Microvast. Shockingly, he had never heard of them or didn’t know enough about them to form an opinion. So, he left the question unanswered. Now, Cramer LOVES fellow EV battery competitor QuantumScape. In fact he’s even had their CEO on his show several times! So just for you Cramer, and anyone else unfamiliar with the company, here's a little comparison of the two companies:
Microvast is a leading global provider of next-generation battery technologies for commercial and specialty electric vehicles. They supply fast charging power systems capable of 0-100% charge in 10-30 minutes, with the highest margin of safety in the industry (have never had a battery fire).
Market Cap - Microvast: $2.6 billion ($800 million being cash) QuantumScape: $9.1 billion
Microvast is currently trading at a 4 times discount to QuantumScape, despite already having actual clients, revenue, and production. I’m not arguing QS should be worth less. I’m just saying if MVST is an already established company, and the market likes QS at 10 billion, shouldn't it love MVST at 2.5 billion?
Revenue - Microvast: 2021 - $230 million 2022 - $448 million 2023 - $751 million 2024 - $1,080 million 2025 - $1,500 million QuantumScape: 2021-2024 …. No revenue 2024 - $14 million..? 2026 - $275 million!
By the time QS makes $275 million, Microvast will be making billions of dollars yearly. Again I'm not saying this makes QS overvalued, I’m just arguing this makes Microvast SEVERELY undervalued.
Production Facilities - Microvast: China - Factory located in Huzhou (operational) Germany - Factory located in Berlin (operational) United States - Factory in Clarksville, Tennessee (being built not yet in production) R&D plant in Orlando Florida (I'll get more into this later as this is where things get interesting) QuantumScape: United States - Plant in San Jose, California
As you can see Microvast is an established multinational corporation with production all over the globe. Coincidentally, the two largest automotive manufacturing countries in the world are China and the United States, Germany being the 4th. All countries Microvast operates out of.
Solid State - This is where I think it gets interesting for Microvast. Everyone already knows that QuantumScape is supposed to change the world with their solid state battery technology that should hopefully be developed by 2024. But QS aren't the only ones working towards this new technology. That brand new research and development plant, opening in Orlando, Florida, I mentioned earlier is being made to develop solid state for Microvast as well. That's right, QS isn’t the only company developing solid state. An already established battery juggernaut going at it against a Silicon Valley startup for a revolutionary technology where the winner will take a large amount of the market. Microvast, who is staffed with Nobel prize winning chemists could be a real dark horse if they develop it first.
USPS NGDV - One of Microvast’s largest customers to date is undoubtedly Oshkosh. Maybe you’ve heard of them if you were a Workhorse investor, because these are the guys who won the bid for the USPS Next Generation Delivery Vehicle contract. They're also one of Microvast’s PIPE investors, and Microvast is their electric vehicle battery supplier. Now this may be a bit speculative, but does it not make sense that Oshkosh would have their EV battery supplier supply the batteries for this new multi billion dollar EV contract? Could this be the reason the US Department of Energy requested Microvast to build a factory in Clarksville, Tennessee to meet the demand of such a large contract? If Microvast is the battery supplier for this contract, say hello to additional billions in contracted revenue.
Full disclosure, I'm heavily invested in Microvast shares and have been adding 10 dollar calls every week for the last 3 weeks. I plan to hold this stock for the next 3-5 years as the world is on the brink of an EV industrial revolution and MVST has positioned itself as the pick and shovel to this goldrush.
TLDR: Microvast should be worth more than Quantumscape and QS is currently worth 4 times Microvast