tkMC Case: Market entry strategy in the lithium materials trade market

• A sales forecast for e-vehicles is shown in appendix 1.
• A 60W-h battery pack commonly used in e-vehicles contains the equivalent of 9.1kg of Lithium. We assume no dramatic improvement in the Lithium-ion battery tech in the upcoming years.
• The production of Lithium-ion batteries is a complex process, which is associated with scrapped Lithium. Moreover, a small portion of produced batteries requires a replacement covered by OEM guarantees. Additional demand for Lithium can be factored in as 10% of yearly base-line demand.
• tk ComT aims at stable 25% target market share for the period 2030-2035, and forecasts the Lithum sales price to its customers of €80,000 per ton.

• An organic expansion into the Lithium trade market requires an initial investment in the MX infrastructure as well as in market development campaigns.
• The expected payback is considered in terms of business cash flow.
• NWC is proportional to sales volumes. For the period before 2030, tk ComT has the NWC of €1,6000 mn secured to build up the initial stocks.
• Relevant figures and formulas (if needed) are shown in appendix 2.

• Apart of an organic market penetration, tk ComT has an opportunity to acquire the company "LiCo GmbH"- a local trader specializing on rare-earth metals who has an established access to the Li trade market.
• The market exposure, the pricing, and the cash flow are similar to an "organic" market entry case. However, LiCo GmbH has an additional attractive business aspect, as it possesses an expertise to buy-back the scrapped Li-components from OEM customers, recycle them and re-sell the lower-grade Li with lower margin for other applications. This generates an additional cash flow for the business.
• Buy-back of Li-scrap from the OEM customers goes with 100% deferred payment. LiCo GmbH pays to OEMs only after the sales of the respective Li-scrap, which significantly decreases required NWC.
• The acquisition of LiCo GmbH as well as the enablement of the Li-recycle activities for full Li-turnover volume demands an additional investment from tk ComT.
• Relevant figures shown in appendix 3.

Conclusion: Acquisition of "LiCo GmbH" is a preferred option: both market penetration options indicate same payback period of 3 years, but LiCo GmbH promises higher cash flow in later years due to recycling of Li.

Alternative conclusion: Organic market entry is preferred due to lower cash commitment in the first years and lower risks.

• Worldwide deposits of raw materials for EV-batteries are shown in appendix 4.