John Kang Liquidmetal | Amorphous Alloys and Tesla

Effects of China’s Tariff Cut and Lifting Ownership Restrictions on John Kang’s Liquidmetal

It was announced earlier this year that the 50%-50% ownership restriction on manufacturing companies in China will be lifted by 2022, along with the 25% tariff on gas-powered and commercial vehicles. The lifting on ownership restrictions and tariffs on electric vehicles, however, will become effective this year. John Kang of Liquidmetal Industries Inc. weighs in on the implications on Tesla, Inc., and its Chinese-based suppliers, including Liquidmetal Industries.

The recent announcements from Beijing effectively give Tesla a three-and-a-half year head start on greater manufacturing control for Tesla cars manufactured in China and lower retail prices for Tesla cars sold in China.When the announcement was made in April, Tesla’s stock (TSLA) jumped back from a one year low of $252.48 to $305.72 in a matter of a couple of days. The 24% gain remained fairly stable before shooting up again in June. Image Source: Tesla Youtube

Soon after, Liquidmetal, a supplier of bulk metallic glass (BMG) for Tesla, saw its stock price (LQMT)followed suit and jumped from an all time low of $0.21 to $0.26 within a span of about a week. This constitutes a 24% gain, which has been sustained ever since.

According to its latest filing with the Securities and Exchange Commission (SEC), the description of Liquidmetal Technologies is as follows:

We are a materials technology company that develops and commercializes products made from amorphous alloys. Our Liquidmetal family of alloys consists of a variety of proprietary bulk alloys and composites that utilize the advantages offered by amorphous alloy technology. We design, develop and sell custom products and parts from bulk amorphous alloys to customers in various industries. We also partner with third-party manufacturers and licensees to develop and commercialize Liquidmetal alloy products.

Although, John Kang says Liquidmetal Technologies benefits only indirectly from the lifted tariffs on electric vehicle sales, through Tesla, the company has much to benefit from the phasing out of the 50%-50% ownership restriction. By owning more of its subsidiaries in China, John Kang says Liquidmetal can both exercise greater management and control over its Chinese partners while receiving a greater percentage of the company’s revenues. Most importantly, it can also keep a tighter lid on the proprietary formulas and manufacturing processes that it has been developing for commercial use for nearly two decades.

Much in the same grain of Apple, which only used the material for its SIM card ejection pin (although the tech giant also filed a patent for a Liquidmetal home button in 2016), Tesla is also taking it slow with BMG’s. Being a relatively new and untested, hence futuristic, material, the use of amorphous metals in Tesla’s cars will be relegated to the car’s door lock cases.

In time, however, the highly durable and non-corrosive material may be promoted to heavier tasks, such as gearing and other engine parts. In fact, a study at NASA’s Jet Propulsion Laboratory has shown that gears molded from amorphous metals demonstrate strong torque and smooth operation with no lubrication, at extreme temperatures.

John Kang states, Liquidmetal’s Chinese counterpart, Eontec, is already considered to be the market leader in amorphous metals.