Lithium-ion battery technology company Microvast is planning a reverse merger through a special purpose acquisition company (SPAC) called Tuscan Holdings Corp (NASDAQ:THCB). Shares have seen a surge due to the momentum of the best performing EV battery SPAC to date Quantumscape (NYSE:QS). Is Microvast a true sympathy play to QuantumScape? Let’s check the similarities and the differences.
Tuscan Holdings is still a SPAC
It’s important to keep in mind that QuantumScape has already reverse-merged into former SPAC Kensington Capital and changed its symbol to QS. Microvast is still a private company until it reverse merged into Tuscan Holdings and likely trades under a new stock symbol. Once publicly trading, more details of the Company become available including the various required reporting forms like 8-Ks and 10-Ks. Preceding the reverse merger, an S-1 filing detailing Microvast should become available. Until that becomes public, we can only speculate on the financials based on available public information on its website.
What is Known About Microvast?
Microvast has been in the electric vehicle (EV) battery business for over a decade as its batteries are already used in mass transit EVs, originally founded in 2008. According to its website, the first electric bus fleet utilizing the Company’s ultra-fast charging battery system has been in operation since 2011 in Chongqinq, China. The Company proclaims as of October 2020, it had more than 40,000 EVs powered by its Microvast battery systems operating in over 170 cities spanning over 19 countries having accumulated over four billion kilometers (Km) without any operation accidents caused by batteries. It is worth noting, the graphic indicates “40+ Billion Km Operating Milage”. Yes, mileage is misspelled and possibly a 36+ billion milage overstatement depending on the extra zero. The Company seems like it’s a real business with products already in circulation as opposed to QuantumScape, which is not expected to release its solid-state lithium metal commercial battery until 2025.
Recent News
On Mar. 24, 2020, Microvast announced it was awarded $4.5 million contract by The United States Advanced Battery Consortium, LLC (USABC) which is a collaborative organization of FCA US LLC, Ford Motor Company (NYSE:F) and General Motors (NYSE:GM) in January 2020. The contract is a 36-month effort to develop safe, low-cost EV automotive lithium-ion batteries that can fast-charge in 15-minutes. USCAR executive director, Steve Zimmer stated, “The technology contract with Microvast is part of USABC’s broad battery technology research and development program.” The USABC is a subsidiary of the U.S. Council on the Advancement of Battery Research, LLC (USCAR).
On Dec. 5, 2020, Microvast received the R&D 100 award for “High Energy Density and Safe Battery System for Powering Electric Vehicles”. The press released summed it, “By designing battery components optimized for high performance and uncompromising safety, Microvast developed three state-of-art products: a high-temperature separator, non-flammable electrolyte, and gradient-controlled cathode. These battery components are integrated into battery cells to meet the highest energy density in production today. A similar class of components produced powerful, ultra-fast battery charging solutions with a long cycle life for applications like commercial vehicles, mining trucks, ride-sharing vehicles, and buses.”
Institutional Holders
China’s sovereign wealth fund, CITIC led a $400 million round in 2017. Mizuho Securities USA, LLC boosted its stake in Tuscan Holdings to 2.91 million shares in Q3 2020, bringing the total institutional holdings to 72%.
QuantumScape Vs. Microvast Battery Technology
In a nutshell, QuantumScape replaces the graphic in traditional lithium-ion batteries with ceramic. This alleviates the potential for them catching on fire. QuantumScape claims 15-minute charge times with more efficiency enabling the potential for up to 600 miles on a single charge. Microvast already has ultra-fast charging with its lithium-ion batteries that incorporate a patented composite carbon with a surface area 20 times of traditional graphite providing high density, longer battery life, and “super long driving” mileage. The Company’s new generation battery is a Lithium iron phosphate battery and continues to push R&D for more solutions. With the exception of misspellings, it appears Microvast is an operating EV battery technology company. More details on the Company and financials should be forthcoming in the S-1 filing. In the meantime, high-risk tolerant investors or nimble traders looking to jump the gun can watch Tuscan Holdings for opportunistic pullback levels for minimal speculative exposure. Keep in mind that the symbol will change upon completion of the reverse merger into the SPAC.
THCB Opportunistic Pullback Levels
Since THCB is a volatile stock, we use the rifle charts on the daily and 60-minute time frames to provide a short-term perspective for nimble trades and only the highest-risk tolerant investors to consider trading. The daily rifle chart formed a pup breakout powered by the stochastic mini pup. The rising 5-period moving average is at $14.88 which will test the strength of the mini pup. If it fails then a channel tightening towards the 15-period MA is possible near the $12.85 22 Fibonacci (fib) level. The 60-minute rifle chart formed a market structure low (MSL) buy trigger above $12.25 while forming a market structure high (MSH) sell trigger under $14.60. The 60-minute Bollinger Bands are compressing indicating a tighter price range that precedes a break. The break can be a breakout or a breakdown. A breakdown can provide nimble traders with opportunistic pullback levels at the $13.75 fib, $12.25 fib, $11.58 fib, and the $11.08 fib. Be aware this stock is pure speculation and only high risk-tolerant investors should even consider exposure. Potential upside trajectories range from the $18.09 fib to the $22.63 fib. Once again, this stock is reserved for the most high-risk tolerant investors and nimble traders. The rest should wait for the reverse merger and trading under the new symbol before considering an investment.