A Sydney man has pleaded guilty in a Perth court to conspiring to manipulate the price of ASX shares.

Benjamin Heath Cooper of Brighton-Le-Sands made the plea to one charge at the Stirling Gardens Magistrates’ Court in Western Australia.

He now faces up to 10 years’ imprisonment. In 2019 the maximum penalty was increased to 15 years, but Cooper’s offence occurred in 2015.

The conviction was the result of an investigation by the corporate watchdog Australian Securities and Investments Commission.

Cooper, on 16 November 2015, conspired with Quantum Resources Limited director Avrohom Kimelman and one other person to manipulate the company’s shares.

Quantum Resources Limited is now known as Nova Minerals Ltd (ASX: NVA).

Kimelman was convicted last year after pleading guilty.

Cooper’s case was adjourned to a directions hearing at the Supreme Court of Western Australia on 30 August.

The post Sydney man faces 10 years’ jail for manipulating ASX shares appeared first on The Motley Fool Australia.

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More reading

• Can the Altium share price regain its previous highs in 2022?
• Can the Mineral Resources share price crack new, all-time highs in 2022?
• Board for take-off: Brokers rate the Corporate Travel Management share price a buy
• Should you buy these top blue chip ASX 200 shares after the market selloff?
• What’s driving the Immutep share price in June?

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Like many other tech shares, the Altium Limited (ASX: ALU) share price has had a shocker of a run so far in 2022.

After reaching an all-time high of $45.30 on 30 December, the electronic design software company’s shares closed Friday’s session at $27.08. That represents a fall of more than 40% in the space of under six months.

While shares in the former market darling are down for now, let’s take a look at whether a recovery is on the horizon.

Can the Altium share price recover lost ground?

Despite the company reporting a strong performance in its half-year results in February, the Altium share price has tanked. A 35% drop across the S&P/ASX All Technology Index (ASX: XTX) so far this year is taking a major toll.

A perfect storm of rising inflation as well as a global semiconductor chip shortage and general economic slowdown is sending tech investors fleeing.

And with Wall Street officially entering bear market territory overnight Aussie time, this week looks set to deliver more bad news for investors.

A number of economists are forecasting a recession in the United States within the early part of 2023.

The US consumer price index report released on Friday showed that inflation jumped 8.6% last month, more than the 8.3% forecast. This is the highest monthly inflation jump in the US in 41 years.

Inflation is continuing to be a key driver of share markets globally as investors brace for more rate hikes from the US Federal Reserve.

It’s worth noting that Altium’s revenue base is predominately derived from the United States, followed by Europe and then China.

The company does, however, remain debt-free and has a net cash balance of US$195 million (as of 31 December).

What do the brokers think?

A number of brokers weighed in on the Altium share price following the release of the company’s half-year financial scorecard.

According to ANZ Share Investing, Jefferies cut its price target by 4.5% to $42.61 apiece for Altium shares. Based on the current share price, this still implies an upside of approximately of 57%.

In addition, Bell Potter has a ‘buy’ rating and a $41.25 price target. This reflects a potential increase of around 52% from where Altium shares last traded.

Altium share price snapshot

A rollercoaster 2022 has led the Altium share price to register a loss of 40% for the period.

The company’s shares hit a 52-week low of $24.97 last month, and have struggled to regain much ground since.

On valuation grounds, Altium presides a market capitalisation of roughly $3.56 billion.

The post Can the Altium share price regain its previous highs in 2022? appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has positions in Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Altium. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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What a turbulent 2022 it has been for the Mineral Resources Limited (ASX: MIN) share price.

After reaching an all-time high of $66.88 in January, the ASX mining share fell by about 35% to hit $43.72 in February.

In the following months, they climbed again to finish at $56.81 at Friday’s market close.

Overall in 2022, the Mineral Resources share price is up by 1.45%.

What’s the outlook for Mineral Resources?

The Mineral Resources share price has travelled predominately sideways since the second week of April. There’s been no news from the company since early May.

A catalyst for movement in the Mineral Resources share price this year could be rebounding iron ore prices. But the lithium sector is facing bearish sentiment.

Goldman Sachs recently released a report forecasting a severe drop in the price of lithium after it hit record highs.

This led to a number of popular ASX lithium shares erasing their meteoric gains captured in 2022.

Nonetheless, the improvement in iron ore prices but downward pressure on lithium prices has caught the eye of one broker.

As such, Credit Suisse analysts retained an outperform rating along with a price target of $73 for Mineral Resources shares. This implies an upside of close to 30% based on the last closing price.

The broker clearly believes that the market overreacted to Goldman Sachs’ news and this presents a buying opportunity.

With that in mind, Mineral Resources could be poised to shoot higher in the second half of 2022.

The company has a large exposure to iron ore and lithium assets along with a pipeline of key growth projects.

Mineral Resources share price snapshot

Regardless of the volatile swings, Minerals Resources shares are up 15% since this time last year.

By comparison, the S&P/ASX 300 Metals & Mining (ASX: XMM) index is 3% higher over the same time frame.

Based on valuation grounds, Mineral Resources commands a market capitalisation of roughly $10.75 billion.

The post Can the Mineral Resources share price crack new, all-time highs in 2022? appeared first on The Motley Fool Australia.

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• Which ASX lithium shares are producing and which are not?
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• Mineral Resources share price dips despite new lithium partnership

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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There are many brokers who believe the Corporate Travel Management Ltd (ASX: CTD) share price is attractive, rating the ASX travel share as a buy.

The ASX travel sector has been through a lot of disruption since the onset of the COVID-19 pandemic. However, some of those impacts are starting to lift.

While the share price of Corporate Travel Management has recovered quite a lot of its lost ground over the past two years, some experts believe the company is an opportunity for investors.

When a broker says buy, that doesn’t automatically mean a share is going to do well over the next 12 months. But it’s interesting when so many brokers simultaneously think a particular ASX share is good value.

The latest news from this ASX travel share

Company updates can have a sizeable impact on ASX travel shares, particularly in this COVID-19 era.

Last month, Corporate Travel Management gave an update regarding its recovery. It said that revenue is expected to surpass the 2019 calendar year levels in the fourth quarter of FY22, which is the quarter we’re in now.

The company said it expects to be more than 75% larger at full recovery for the travel sector, partly due to “transformational acquisitions” during the pandemic. The company also said it’s targeting $265 million in earnings before interest, tax, depreciation, and amortisation (EBITDA) when at 100% recovery.

The business boasted that it’s recovering faster than the wider corporate travel sector in its largest regions. It said it’s seeing “strong” market share gains in all regions. It notes that, for clients, a value proposition, global scale, and financial strength are all “highly relevant” in the COVID-19 recovery period.

Corporate Travel Management said that it has been making underlying EBITDA profits since March 2021. It has zero debt and management believes it has sufficient cash to support a full recovery.

In terms of the outlook, Corporate Travel said it’s expecting strong revenue and EBITDA momentum into FY23. It experienced a record in March and was expecting new records in April and May.

Broker ratings on the Corporate Travel Management share price

Multiple brokers think this ASX travel share is a buy. All of them have price targets above the current Corporate Travel Management share price, which finished Friday’s session at $20.68.

A price target is basically where an analyst thinks the share price will be in 12 months.

Macquarie rates it as a buy with a price target of $25.80. That implies a potential upside of about 25%. It’s expecting a quicker recovery for the ASX travel share than others in the sector due to the makeup of its client base.

Ord Minnett is another broker that’s positive on the business with a price target of $25.86, also about a 25% rise.

UBS is expecting a bigger rise in the Corporate Travel Management share price. Its price target is $28.20. That implies a possible uplift of more than 35% over the next year. UBS thinks there could be potential for further acquisitions.

Morgan Stanley is even more positive about the business, with a price target of $30. That suggests a possible rise of about 45%. The broker is optimistic about the impending travel sector recovery and its impact on the business.

Of the above brokers, it’s Macquarie and Morgan Stanley that have the highest expectations for the company’s profitability. They put the current Corporate Travel Management share price at 23x FY23’s estimated earnings.

The post Board for take-off: Brokers rate the Corporate Travel Management share price a buy appeared first on The Motley Fool Australia.

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More reading

• Best ASX shares to buy in June 2022
• Down 15% in a month, is the Corporate Travel share price a bargain?
• Are investors missing out on these ASX share opportunities?

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Corporate Travel Management Limited and Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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If you’re looking to take advantage of the recent market weakness, then you may want to check out the two blue chips listed below.

Here’s why these blue chip ASX 200 shares are highly rated right now:

CSL Limited (ASX: CSL)

The first blue chip ASX 200 share to look at is CSL. It is a leading biotechnology with a portfolio of life-saving and lucrative therapies.

These products are generating billions in sales each year but but management isn’t settling for that. Each year, the company invests in the region of 10% to 11% of its sales back into research and development activities. This ensures that CSL has a pipeline of products under development with the potential to save lives and underpin growing revenue.

CSL is also aiming to acquire Vifor Pharma in the coming months. This will bolster its portfolio and development pipeline with key renal therapies.

Analysts at Citi are confident in the company’s outlook. Particularly given the “continued improvement in plasma collection and strong underlying demand.” Citi has a buy rating and $335.00 price target on CSL’s shares.

Wesfarmers Ltd (ASX: WES)

Another ASX 200 blue chip share that could be a top option for investors after the selloff is Wesfarmers. Even before today’s probable decline, this conglomerate has seen its shares fall 27% in 2022.

That team at Morgans is likely to see this as a buying opportunity. Its analysts recently retained their add rating with a price target of $58.40.

Morgans is a fan of the company’s portfolio of businesses. These include retailers such as Bunnings, Kmart, and Priceline Pharmacy, and a collection of chemicals businesses. Combined with its strong management team and equally strong balance sheet, the broker sees Wesfarmers as a great long term pick.

It commented: “We continue to see WES as a long-term, core portfolio holding with a strong mix of businesses, highly regarded management team and a healthy balance sheet.”

The post Should you buy these top blue chip ASX 200 shares after the market selloff? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL Ltd. The Motley Fool Australia has positions in and has recommended Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Immutep Ltd (ASX: IMM) share price has gyrated in recent months, having slumped from a 52-week high of 71 cents back in November to close Friday’s session at 37 cents.

Investors pushed the stock to 52-week lows by April this year, when it then found buyers at the 30.5 cents mark, and it has been on an upward ascent since.

As seen below, the Immutep share price has gained around 7% in the past month, despite the period of volatility leading up to this point.

What tailwinds are there for the Immutep share price in June?

The Immutep share price came out of May in a healthy position, having strengthened throughout the month. Investors pushed the stock around 24% higher in May following two updates regarding the company’s lead drug candidate, efti.

Study readouts are key in the growth narrative of biotech stocks like Immutep. For the company, news around its etfi compound has been paramount for its share price appreciation.

Most recently, Immutep advised of another phase 2 trial update regarding the use of etfi as a combination therapy with the drug Keytruda (pembrolizumab).

The trial, called TACTI-002, “met its primary objective for 1st line non-small cell lung cancer (NSCLC) patients in a PD-L1 all-comer Phase II clinical trial conducted in collaboration with MSD”, the company said.

[The] “combination of efti plus pembrolizumab shows favourable anti-tumour activity…[dosages] were safe and well tolerated, with a safety profile that is consistent with that observed in previously reported studies,” it added.

Speaking on the results, Immutep CEO Marc Voigt said:

We are delighted that patient outcomes are improved with the combination of efti plus pembrolizumab across different patient groups. The data is encouraging for patients, as there is an unmet medical need particularly for those with NSCLC with no or low PD-L1 expression.

Immutep was also on the radar of Pengana High Conviction portfolio manager James McDonald when he spoke to The Motley Fool’s Tony Yoo last month.

McDonald said there was “very substantial upside” to be had in the Immutep share price should the company be able to successfully tap into its US$50 billion addressable market.

In the last 12 months, the Immutep share price has tumbled by more than 43% and is also down around 24% this year to date.

The post What’s driving the Immutep share price in June? appeared first on The Motley Fool Australia.

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• Why has the Immutep share price rocketed 24% in a month?

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Regis Resources Limited (ASX: RRL) share price has slipped into the red this year and is down around 7% so far in 2022, and around 32% over the last 12 months.

As can be seen in the chart below, the stock has been volatile these past 3 months, trading as high as $2.42 on 19 April but having slipped to just $1.81 as at Friday’s close.

Meanwhile the S&P/ASX 300 Metals and Mining Index has pushed more than 8% higher so far in 2022.

What’s up with the Regis Resources share price?

Investors have pushed the Regis share price lower in recent weeks despite a levelling in the price of gold, and a company update.

Gold now trades at US$1,818 per troy ounce, having bounced off lows in late May. Meanwhile, on 8 June, Regis Resources also released an update to its mineral resources and ore reserve statement.

“The Group mineral resources as at 31 December 2021… are estimated to be 287Mt at 1.1 g/t gold for 9.92Moz gold,” it said.

“This compares with the estimate at 31 December 2020 of 301Mt at 1.1 g/t Au for 10.36Moz of gold as announced 15 June 2021 post the acquisition of 30% of Tropicana.”

Whereas ore Reserves as at 31 December 2021 were estimated to be 117Mt at 1.1 g/t gold for 4.14Moz gold compared to 145Mt at 1.0 g/t Au for 4.83Moz of gold as announced 15 June 2021.

According to mining company MMG, mineral resources are the concentration of material of economic interest in or on the earth’s crust, whereas ore are the parts of a mineral resource that can at present be economically mined.

In the company’s update, Regis CEO Jim Beyer said:

We have a portfolio of long-life assets that are all in the Tier 1 location of Australia. Our Reserves underpin a Reserve life of more than 9 years and provide a strong platform for the company’s ongoing growth. Our Ore Reserves are estimated at one of the lowest gold price assumptions in the industry thereby continuing to position the business to be resilient through the cycles. Duketon underground reserves growth continues to outpace depletion and regional exploration works continue to identify early stage, but exciting intercepts, in close proximity to our existing mills. Overall we are delivering outcomes that position Regis for ongoing value growth.

The Regis Resources share price climbed 2.11% following the update. Meanwhile, however, Citi downgraded the stock to sell shortly before the release, setting its price target to $1.90 per share in the process.

According to Bloomberg data, Citi is the only broker out of 10 others to rate Regis shares a sell.

The post What’s impacting the Regis Resources share price lately? appeared first on The Motley Fool Australia.

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Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

After rallying from their early 2020 pandemic lows to new peaks this winter, the three most popular U.S. stock market indexes have tumbled this year — so much so that people are wondering if this is the beginning of another recession. As of June 9, the S&P 500 was down 16% year to date, the Nasdaq Composite was down 25%, and the Dow Jones Industrial Average was down 11%. 

But as an investor, I’m not losing any sleep.

Stock market corrections and bear markets are inevitable. The S&P 500 began in 1957, the Nasdaq Composite began in 1971, and the Dow began in 1896. They have existed through some of the worst economic conditions the U.S. has seen, yet they’re still standing strong, with each producing returns over the decades that have generated massive wealth for long-term investors.

Stay the course

When it comes to money, it’s hard to prevent your emotions from influencing your decisions, and when they do, it’s often not for the better. This is especially the case with investing, and those feelings — whether fearful or upbeat — can easily lead a trader to try to time the market. But there’s an old saying in investing: “Time in the market is more important than timing the market.” That’s why dollar-cost averaging is one of the best investment strategies you can use.

With dollar-cost averaging, you avoid the temptation to time the market because you’re making regular investments steadily on a schedule. You don’t spend time wondering if a stock is at its lowest or highest level; instead, you stay the course and add shares according to the theory that, on average, matters will work out over the long run. Sometimes you’ll buy when a stock is low and positioned for growth; sometimes, you’ll buy when it’s high and about to drop. What’s most important is that you’re consistent and stick to the investing schedule you set for yourself, whether it’s weekly, bi-weekly, monthly, or whatever you choose.

As a long-term investor in individual stocks, I don’t let myself get too wrapped up in the market’s short-term movements. I realize that if I’m buying great investments while they’re on the decline, I’m likely getting them at a discount. The more you can lower your cost basis (the average per-share price you’ve paid), the higher your profit can be when you sell if they recover. This doesn’t mean all companies will rebound by any means, but great blue chip stocks tend to stand the test of time.

There are great companies in the indexes

For those who invest in stock index funds, they too have always managed to rebound in the long run, which is one of the main reasons to invest in them. Having that diversification in the fund ensures one or a couple of companies dropping doesn’t have as big of a toll on the index as a whole. You just have to believe in your investing strategy and not be shortsighted in any moves. People and markets can be irrational. Movements in stock prices don’t always mean companies are fundamentally different; sometimes, it’s just a by-product of human irrationality. When a lot of people get anxious about market conditions and want to sell their investments, the prices of shares can move lower and cause a cascade effect.

There’s a reason for legendary investor Warren Buffett’s aphorism, “Be fearful when others are greedy and greedy when others are fearful.” He understands that stock market drops caused largely due to panic selling present opportunities to investors who are focused on the long run. If a company is a good buy at $200, it should be a great buy at $150, if you believe in it long term.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post 2022 Has Been Rough for Major Indexes. Here’s Why I’m Not Worried. appeared first on The Motley Fool Australia.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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There are some ASX dividend shares I believe are well-suited to investment portfolios focused on income. And businesses that aim to pay investors an attractive dividend could be useful during this period of volatility and uncertainty.

While I wouldn’t buy a business only for the dividend yield, I think that dividends can form a handy portion of the total returns.

On that note, here are two ASX dividend shares I believe could be good options to consider for income-seekers:

Charter Hall Long WALE REIT (ASX: CLW)

This is one of my preferred picks in the real estate investment trust (REIT) space because of its diversification, long-term contracts and revenue growth potential.

In terms of the portfolio, at 31 December 2021, it had around 550 properties that were worth a combined $7 billion. It had a 99.9% occupancy rate, so that means this ASX dividend share is essentially not letting any properties go to waste by being empty.

The aim of this REIT is to own high-quality real estate on long-term leases with strong tenant covenants. Its weighted average lease expiry (WALE) at December 2021 was 12.2 years. This gives the business long-term rental visibility and stability, in my opinion, particularly when combined with the occupancy rate.

This ASX dividend share’s portfolio is spread across a number of different defensive tenant industries including pubs and bottle shops, government, telecommunications, grocery and distribution, fuel and convenience, food manufacturing, waste and recycling management and ‘other’.

Rental income growth is driven by annual increases in all leases, with 46% of leases linked to CPI and 54% of leases set up with an average fixed increase of 3.1%.

In FY22, the Charter Hall Long WALE REIT is aiming to achieve operating earnings per security (EPS) of at least 30.5 cents, reflecting year-on-year growth of around 4.5%. The distribution translates to a distribution yield of at least 6.8% in FY22 with a payout ratio of 100%.

Pacific Current Group Ltd (ASX: PAC)

This is a business that takes investment stakes in asset managers globally and helps them grow. It’s invested in a number of different fund managers including GQG Partners Inc (ASX: GQG), Banner Oak, Victory Park, Proterra and Carlisle.

The business is seeing ongoing growth of its portfolio’s funds under management (FUM), which is helping grow revenue and profitability. In the FY22 first half, FUM rose 16% to $165 billion, or 11% excluding the US$35 million new investment in Banner Oak. Underlying revenue rose 21% and underlying net profit after tax (NPAT) grew by 26% to $14.6 million.

The profit growth enabled a 50% increase of the interim dividend to 15 cents per share.

At 31 March 2022, this ASX dividend share reported that while its portfolio FUM decreased by $1.4 billion to $164 billion, in native currencies, US dollar-denominated fund managers saw FUM increase by 2.1% and Australian dollar-denominated fund managers saw a 3% rise in FUM.

FY23 earnings could be assisted by a full 12 months of earnings from GQG and Banner Oak. Fundraising progress in the FY22 second half from key private capital boutiques is expected to have a “significant” impact on FY23.

The last 12 months of dividends from Pacific translates into a grossed-up dividend yield of 8.2%.

The post Why I think these 2 ASX dividend shares are ideal for income investors appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Supply chains are already stressed for automakers across the world. Given demand for electric vehicles (EVs) is expected to grow by leaps and bounds, that is likely to get worse, with EV batteries widely believed to become the bottleneck. 

Tesla (NASDAQ: TSLA) has been leading the sector in all areas so far, and it plans to continue that role if a raw material supply crunch develops. Tesla builds its own cells at its Gigafactories, recently introducing its 4680 battery in cooperation with Panasonic. But this week it seems to have taken another step to ensure its battery supply with plans to source from an EV competitor. 

A lesser-known leader

While Tesla led the world with sales of more than 900,000 electric cars last year, China-based BYD sold over 600,000 electric vehicles of its own, including both plug-in hybrid and battery electric. Now it seems Tesla will be using BYD as a battery supplier, too. The tie-up would link two EV leaders that combined to sell more than one-third of all battery electric vehicles worldwide last year. 

Aiming to continue domination

Many observers think it will be hard for Tesla to remain the world’s dominant EV seller with automotive giants General Motors, Ford, Volkswagen, and Toyota quickly ramping up EV production. The crowded field will be fighting to keep its battery supply chains full. Rivian Automotive CEO R.J. Scaringe recently said in his annual letter to shareholders that over the next decade, global battery production capacity will need to increase by 20 times to supply the expected demand. 

Tesla plans to stay ahead of the competition by adding BYD as a supplier for lithium-iron-phosphate (LFP) batteries, according to a Reuters report. Tesla disclosed that LFP made up nearly half of batteries used in its vehicles produced in the first quarter. They are potentially a safer and cheaper rival to nickel-and-cobalt-based lithium-ion batteries. 

BYD launched its LFP Blade battery two years ago. Battery sales only made up 7.3% of total revenue for BYD in 2021, but now Tesla may become a customer and help that figure grow. 

Buffett-backed supplier

Tesla had already begun forging relationships with South Korea’s LG Energy Solutions and China’s Contemporary Amperex Technology (CATL) for its LFP battery needs. BYD isn’t nearly as big a player in the EV market as those other Asian companies. But that may soon change due to a relationship with Tesla. 

The report quoted Lian Yubo, BYD’s executive vice president, as saying in an interview this week, “We are now good friends with Elon Musk because we are preparing to supply batteries to Tesla very soon.” If that pans out, Musk won’t be the only famous billionaire to be attracted to BYD. Warren Buffett’s Berkshire Hathaway has been a longtime investor in the Chinese EV company, and it held a 7.7% stake worth nearly $7.7 billion as of Dec. 31, 2021.

While a relationship between the two automotive leaders may be a positive for both companies, Tesla could become the big winner. The company now has four global manufacturing plants. An adequate battery supply could be the critical factor to be able to maximize production from those facilities to supply growing demand. The takeaway for investors is that Tesla seems to have things in place to continue dominating even as fierce competition enters the market. It makes the company’s estimate of 50% annual production growth over multiple years more viable.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Tesla Looks to Reinforce Its Battery Supply Chain: Why That Matters appeared first on The Motley Fool Australia.

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Howard Smith has positions in BYD and Berkshire Hathaway (B shares). The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway (B shares), Tesla, and Volkswagen AG. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), short January 2023 $200 puts on Berkshire Hathaway (B shares), and short January 2023 $265 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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