The future of electric vehicles (EV) appears bright. However, there is one area that many individuals have overlooked: electric vehicle battery stocks. Now is a perfect moment to invest in the sector, given how rapidly electric cars are increasing.
Investing in electric vehicle equities directly is one method to profit from the industry’s broad shift. Investing in the businesses that provide batteries, the most significant and costly components of electric cars, is another option. The demand for electric vehicle batteries will grow even faster if production levels significantly rise in the next decade.
Automakers and battery makers that already produce many batteries are putting significant effort into meeting increasing EV battery demand. Meanwhile, new types of energy storage systems are being developed by startups in the sector (some of which will go public via SPAC mergers). So it’s an exciting time to invest in EV battery stocks.
What are Electric Vehicle (EV) Battery Stocks?
The enterprise value (EV) is a measurement of a firm’s overall value frequently used as a more comprehensive alternative to equity market capitalization. The market data capitalization of a firm is included in the enterprise value, as well as short-term and long-term debt and any cash on the company’s balance sheet.
The Potential of Electric Vehicle Battery Stocks
Electric vehicles are becoming increasingly popular as they become more widespread. On the other hand, car manufacturers are simply one aspect of the exploding market for electric automobile equities. Battery manufacturers are critical to the growth of electric vehicles. Furthermore, as EVs become more popular, battery EV sales will rise, which will benefit these companies.
Investing in EV battery companies might be wise for investors looking to cash in on the clean energy revolution. EV stocks have been one of the most volatile sectors in recent years, but they’ve also been some of the market’s top performers. In addition, the EV sector offers a significant long-term growth prospect. As a result, investors have snapped up early market leaders and EV IPOs.
According to Fortune Business Insights, the electric vehicle (EV) market will expand at 24.3% annually from 2021 to 2028, reaching $1.3 trillion. And this presents an exciting prospect for EV battery firms.
Best EV Battery Stocks Worth Considering
QuantumScape is a German EV startup that went public in 2020 and was backed by Volkswagen AG. The firm is an electric vehicle company based in California specializing in solid-state lithium-metal batteries.
At the moment, solid-state batteries are not used in electric vehicles. However, they’re predicted to be the next step forward in EV battery technology. These batteries will last longer and be safer than current batteries, increasing the range of electric cars.
The firm is a world leader in the development of solid-state batteries. There has yet to be a commercial release of solid-state batteries for vehicles. If QuantumScape is the first, these attractive investments may pay off handsomely. This makes this stock a little riskier than the others. However, the company announced behind this EV battery stock appears solid. In 2022, QuantumScape will sell its prototype batteries to electric vehicle manufacturers. If approved in 2023, their solid-state batteries could be used in commercial EVs by 2024.
FREYR Battery –
The Norwegian EV firm FREYR Battery develops and produces lithium-ion batteries for automobiles, buses, ships, and trucks. The firm also provides energy storage systems.
In 2021, Nissan started the construction of its Customer Qualification Plant (CQP) and first battery cell production line in Mo I Rana, Norway. The firm plans to begin production in the second half of 2022. As a result, the company can practice its 24M new technology and examine its components and battery cells.
It will start offering samples to customers as well. Tom Jensen, CEO of FREYR, stated that the facility would be the first lithium-ion battery cell production plant at an industrial scale in Norway, supporting its goal of speed, scale, and sustainability. Furthermore, the firm’s breakthrough in Norway offers it a once-in-a-lifetime chance.
Microvast Holdings –
Microvast Holdings is a pioneer in the field of rapid charging battery systems. The firm serves a variety of vehicles, including passenger and commercial EVs, heavy-duty trucks, and railways. Furthermore, it provides battery backups for data centers and energy storage systems.
Microvast goal is to disrupt the EV market and develop high-performance energy storage devices. The firm thinks charging EVs will be as easy as fueling diesel cars, thanks to its ultra-fast charging capability. In a press release, Enphase Energy also claims that its battery systems’ longer battery life may reduce the overall total cost of ownership for electric vehicles and energy storage system applications.
Microvast has a 75,000-square-foot facility in Florida that it acquired in November as part of its growth strategy. The new headquarters will be used for battery prototyping research.
Romeo Power –
Romeo Power, a California-based firm, produces lithium-ion battery modules and packs for commercial electric vehicles. It also provides engineering services to vehicle producers. A group of Tesla and SpaceX engineers set out to provide everyone with clean energy in an electrical age. Thus the firm was born.
Romeo’s US base is in Sparks, Maryland, employing around 400 individuals. One of its significant patrons is the Washington-based truck maker PACCAR. In 2021, Romeo Power announced a long-term deal to supply battery packs, modules, and battery management systems to PACCAR’s electric vehicles. In the United States and Canada, Romeo Power will provide batteries for Peterbilt 579 and 520 electric vehicles through 2025.
Solid Power –
Solid Power is a Canadian startup launched in 2011 to commercialize low-cost, all-solid-state battery industry cell technology for electric vehicles. Furthermore, the firm collaborates closely with BMW and Ford to create all-solid-state batteries.
Solid Power has inked a multi-year deal worth $12.5 million with the Intelligence Advanced Research Projects Activity (IARPA) to create nickel and cobalt-free all-solid-state batteries. The firm also collaborated with SK Innovation to produce Solid Power’s automobile-scale all-solid-state battery cells. The batteries are being developed by SK Innovation utilizing Solid Power’s sulfide-based solid electrolyte, unique cell designs, and manufacturing processes.
Tesla is the most well-known maker of all-solid-state batteries and currently utilizes them in its vehicles. However, EVs do not use only all-solid-state batteries at the moment, as previously stated. However, if its efforts are successful, the company developing EV battery stocks may make a significant breakthrough in the EV industry.
BYD is a Chinese electric vehicle company listed among the world’s most valuable automakers. It creates and sells hybrid and battery-powered automobiles, buses, trucks, and monorails. It also designs the batteries, semiconductors, and other components used in its vehicles.
Warren Buffett’s Berkshire Hathaway is a major stockholder in BYD, distinguishing it from other EV firms. He first purchased shares of the battery and EV firm in 2008, when he bought a 7.74 percent stake for more than $6.5 billion from Berkshire Hathaway (NYSE: BRK.A).
BYD’s electric vehicles are among the best-selling in China. The firm accounts for almost half of all new energy vehicles sold in the country, where it is the market leader overall. BYD sold nearly 105,000 new energy automobiles in March 2022, more than four times as many as in March 2021. Its battery business benefits from the strong demand because it is a fully integrated EV firm.
Albemarle is one of the world’s top lithium producers, an essential component in most battery cells. However, in recent years, the mining and base materials firm has narrowed its attention to lithium as it does a comprehensive study on whether to sell its fossil fuels catalyst businesses.
Albemarle is working on several projects in Chile, Australia, and China to meet the growing demand for battery-grade lithium. In addition, increased production capacity has prompted Albemarle to raise its financial expectations numerous times in the past year due to increased demand for lithium and rising prices. This is based on analyzing the company’s higher battery sales and profitability over five years, predicting double-digit percentage revenue growth and improved profitability in 2022.
Albemarle will be a cyclical business, much like many commodities producers. Its revenue and profits will fluctuate depending on the supply and demand for lithium and the other base materials it extracts from its mining operations. However, given the anticipated rise in electric vehicle sales this decade, Albemarle may have a lot of tailwinds to help it maintain its long-term trajectory.
Panasonic is a major supplier of electric vehicle batteries and has been a collaborator and vendor for many years. In 2009, the two firms began a supply batteries agreement. Despite no longer being Tesla’s sole battery supplier, the firm continues to manufacture a significant quantity of batteries for the EV company through their “gigafactory” cooperation.
In Nevada, Panasonic co-located its North American battery production operation with Tesla’s massive Gigafactory 1 and expanded it in 2021 by installing a new manufacturing line. It’s also planning to increase capacity at its Japanese electric vehicle battery plant. In addition, the firm is producing various types of electric batteries and has begun to install new manufacturing equipment to meet Tesla’s needs for more excellent batteries.
Although Tesla’s relationship with Panasonic may not last indefinitely, the battery maker is well-positioned to supply EV batteries to all of the significant carmakers that have announced big plans for electric vehicles. So even though Panasonic isn’t a pure-play electric vehicle battery business, it is expected to maintain its position as a leader.
The Bottom Line on EV Battery Stocks
The world is increasingly looking to clean energy and renewable teck resources. As a result, the momentum toward battery-powered cars replacing internal combustion engines is gaining speed. In addition, this represents a significant change in the transportation sector. And it offers significant chances for investors who get in early on the EV revolution.
However, before investing, do your study. There are always dangers when investing, and returns are never guaranteed. Furthermore, there are several investment alternatives to explore.
Are Electric-Vehicle Stocks A Good Buy?
Even though the electric vehicle (EV) market is expected to develop, the S&P Kensho Electric Vehicles Index has fallen by 32.7% year-to-date (YTD) and 33.4% in 12 months. As a result, many electric vehicle firms provide more excellent value today.
According to CAN SLIM guidelines, companies with two qualities are typically the best candidates for stocks to buy and monitor. First, they must have a track record of revenue growth. Second, the stock should display market outperformance elements and form bullish chart formations.
Most of the new electric vehicle stocks, on the other hand, do not possess these characteristics. Fisker (FSR), Gooey (GOEV), Faraday Future (FFIE), Lordstown (RIDE), and Xos are a few examples. Moreover, in reality, many of these EV startups aren’t producing or began delivering electric vehicles.
Which EV stock will grow the most?
As the electric vehicle (EV) market grows, battery stocks may generate shareholder value.
- FREYR Battery (FREY) — Large energy corporations are likelier to offer a growth path.
- Panasonic (PCRFY) — The opening of a new factory in Japan dedicated to the production of EV lithium-ion batteries is expected to boost production and revenue.
- QuantumScape (QS) — A new research and development facility in Kyoto is expected to create a new market of consumers throughout the Asia-Pacific region.
- Romeo Power (RMO) — Increased revenue may be in store for Tesla if the company wins a contract to supply lithium-ion batteries for a new low-speed vehicle line.
Who is the largest producer of EV batteries?
The contemporary Amperex Technology Co. Limited, often known as CATL, is a Chinese battery company specializing in lithium-ion electric vehicle batteries. CATL is the world’s largest lithium-ion battery manufacturer, producing 96.7 gigawatts hours (GWh) of the planet’s total 296.8 GWh.
How do you invest in (EV) Battery Stocks?
Every investor wants a piece of the EV pie, which is why stocks in electric vehicles are so popular. By investing in US-based electric vehicle stocks, investors can not only invest in firms based in the United States but also in foreign companies involved in the sector from China, Japan, and other countries.
We think of electric vehicle (EV) stocks whenever we consider EV investments. However, when examined in its entirety, the EV equities cover a much broader scope of businesses involved in the value chain for EVs.
Tesla is the most well-known pure-EV firm, and it’s an excellent example of an emerging business. Tesla specializes in just producing electric cars. Pure EV stocks are a type of company. The Tesla Model 3 has been the world’s best-selling electric vehicle for four years running, according to reports! Nio and Li Auto, both Let’s not forget that Apple is also developing an electric automobile.
Second, major car manufacturers continue to make conventional automobiles despite their strong efforts to develop and sell electric vehicles. For example, General Motors has stated that it will exclusively produce electric cars by 2035. On the other hand, Toyota intends to deliver 3.5 million EVs annually in 2030.
Following that, some firms produce vehicle key components or materials necessary to construct electric vehicles. These firms, for example, Qualcomm, develop technology that enables electric cars to exist. Qualcomm has also developed a wireless charging system for EVs. Nvidia is another significant player in the auto industry that creates processors for electric vehicles. Intel has just launched a new division dedicated to developing chips and processors for electric automobiles. Finally, there’s Google, which heavily invested in EV and autonomous vehicle technology.
Batteries are an essential component of every electric vehicle. For example, Panasonic and Contemporary Amperex Technology are significant players in the EV world in producing batteries. As a result, battery stocks are yet another speculative investment sector.
Just Start Investing is a personal finance website that makes investing easy. Learn the simple strategies to start investing today, as well as ways to optimize your credit cards, banking, and budget. Just Start Investing has been featured on Business Insider, Forbes, and US News & World Report, among other major publications for its easy-to-follow writing.