Stellantis is full of lithium thanks to the agreement with Vulcan Energy, but in Piazza Affari a certain caution emerges on the title whose graphic layout raises some concern.
The stock, fresh from the drop of almost 7% on Friday, marks + 0.5% in the 15.65 euro area at mid-session, underperforming the + 1.3% of the Ftse Mib. Unconvinced recovery despite the positive opinion of Citigroup who restarted coverage on Stellantis with rating buy and target price 23 euros (potential upside of approximately 45%), underlining as containment of fixed costs and exposure to strong recovery of margins in North America are among the key elements that allow the group led by Carlos Tavares to generate top-of-the-range returns.
EV strategy, the agreement with Vulcan Energy for lithium supply arrives
The group born from the merger between PSA and FCA signed a binding agreement with Vulcan Energy for the supply in Europe of lithium hydroxide for batteries, to be used in the electrified vehicles of the Stellantis Group. The five-year agreement foresees the start of shipments in 2026.
Vulcan will provide Stellantis with a minimum of 81,000 tons and a maximum of 99,000 tons of lithium hydroxide in the five-year term of the agreement. The supply agreement is subject to the successful launch of the commercial activity of the Vulcan plant and the complete qualification of the product.
The supply agreement with Vulcan is part of the Stellantis electrification strategy, illustrated on the occasion ofEV Day held in July 2021, to ensure adequate availability of essential raw materials for electrified vehicle batteries. Stellantis plans to invest over 30 billion euros by 2025 in electrification and software development, aiming to maintain 30% more efficiency than the industry average in the ratio of total R&D and capital expenditure to revenues. .
“Stellantis is pursuing its electrification strategy energetically and quickly. This agreement is further proof that we have the competitive spirit to deliver on our commitments, ”said Michelle Wen, Stellantis Chief Purchasing and Supply Chain Officer. “The freedom to move with safe, clean and affordable means is a strong expectation of our societies and our commitment is to provide answers that match these demands.”
Stellantis’ goal is that more than 70% of its vehicles sold in Europe and more than 40% of those sold in the United States are Low Emission Vehicles (LEV) by 2030. Each of the company’s 14 brands will offer fully electrified solutions at the top of the category.
The Zero Carbon Lithium project initiated by Vulcan in Germany, in the upper Rhine valley, uses geothermal energy to produce lithium hydroxide for batteries obtained from brine, without the use of fossil fuels and with minimal water consumption, thus reducing the production of carbon in the metal supply chain for batteries.
Graphic painting of Stellantis
The graphic picture of Stellantis begins to give the first signs of failure. The title has indeed recently completed a graphic reversal figure, a “bearish head and shoulder”, breaking the neckline (yellow line on the chart) and also the 200 period moving average on Friday. In this scenario, the possible downward targets are placed first in the 15 euro area, where the uptrend line also passes (lows in March and September 2020), and then 13.75 euro. The first target of this graphic figure is deeper in the 12.5 euro zone. On the upside, however, a possible retest of the neckline in the 17 euro area cannot be ruled out. Finally, it should be noted that RSI went oversold by 30, indicating that the bearish pressures are very strong in this market phase on the stock.