You can't watch television for any length of time without seeing a commercial (or several commercials) promoting electric vehicles (EVs). The EV revolution is not just about Tesla (NASDAQ:TSLA) anymore. Many old guard automakers such as Ford (NYSE:F) and General Motors (NYSE:GM) are committing to having a fully electrified fleet (either hybrid or fully battery electric) within the next 10 to 15 years.
But for electric vehicles to be mass produced, EV batteries will also need to be available at scale. You can look at EV batteries as a chicken or egg proposition. You can also look at it like a lock and key combination. In either case, for electric vehicles to reach a mass audience, there will have to be a stockpile of EV batteries.
EVs may have fewer moving parts, but unless you're a company like Nio (NYSE:NIO) batteries will play a significant role in the cost of an electric vehicle. However, even Nio's battery-as-a-service program requires EV batteries to be readily available.
In this presentation, we look at seven battery stocks that will play a significant role in the mass production of EV batteries. And investing in these companies now can make some investors millionaires by 2030.
Quick Links
- Albemarle
- Livent Corporation
- Sociedad Quimica y Minera de Chile
- Panasonic
- Nikola
- Solid Power
- Microvast
#1 - Albemarle (NYSE:ALB)
Lithium is one of the key components to an electric vehicle battery. Albemarle (NYSE:ALB)is one of the leading lithium miners in the world. According to the global consulting firm McKinsey, lithium demand will increase from approximately 500,000 metric tons of lithium carbonate equivalent (LCE) in 2021 to over three million metric tons (and possibly four million) in 2030.
And it’s clear that the United States understands how important it is to have a substantial part of the lithium supply chain be on U.S. shores. Albemarle recently received $150 million as part of the U.S. Department of Energy’s $2.8 billion grant to increase lithium processing capabilities in the United States.
Another appealing feature of ALB stock is that the company is already profitable and as of its fiscal third quarter in 2022, the company had recorded three consecutive quarters with over $1 billion in revenue. And in its latest quarter, the company topped $2 billion in revenue for the first time ever.
About Albemarle
Albemarle Corporation develops, manufactures, and markets engineered specialty chemicals worldwide. It operates through three segments: Energy Storage, Specialties and Ketjen. The Energy Storage segment offers lithium compounds, including lithium carbonate, lithium hydroxide, and lithium chloride; technical services for the handling and use of reactive lithium products; and lithium-containing by-products recycling services.
Read More - Current Price
- $109.55
- Consensus Rating
- Hold
- Ratings Breakdown
- 6 Buy Ratings, 15 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $114.47 (4.5% Upside)
#2 - Livent Corporation (NYSE:LTHM)
As its ticker symbol suggests, the next company on this list of battery stocks is also one that can help you profit from the demand for lithium. Livent Corporation (NYSE:LTHM) doesn’t make EV batteries but supplies “performance lithium compounds” for several applications, but most notably for the EV market. The U.S. based corporation has facilities in China, Argentina, India and Japan in addition to owning mines in Canada.
Like Albemarle, investors won’t be fretting about Livent’s balance sheet. The company is profitable and, also like Albemarle, has turned in three consecutive record quarters in terms of revenue. That demand is likely to continue considering that Livent counts Tesla among its largest customers.
LTHM stock is up 7% in 2022, but it seems to be getting held back by a high level of short interest. At the time of this writing, the stock was looking to find support around its 200-day simple moving average. If it can find that investors may be able to define a bottom for the stock.
About Livent
Livent Corporation manufactures and sells performance lithium compounds primarily used in lithium-based batteries, specialty polymers, and chemical synthesis applications in North America, Latin America, Europe, the Middle East, Africa, and the Asia Pacific. The company offers lithium compounds for use in applications that have specific performance requirements, including battery-grade lithium hydroxide for use in high performance lithium-ion batteries; and butyllithium, which is used in the production of polymers and pharmaceutical products, as well as a range of specialty lithium compounds, including high purity lithium metal, which is used in non-rechargeable batteries and the production of lightweight materials for aerospace applications.
Read More - Current Price
- $16.51
- Consensus Rating
- Reduce
- Ratings Breakdown
- 0 Buy Ratings, 2 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $16.67 (0.9% Upside)
#3 - Sociedad Quimica y Minera de Chile (NYSE:SQM)
The third and last lithium producer on this list is Sociedad Quimica y Minera de Chile (NYSE:SQM). The Chilean-based chemical maker is becoming a major supplier of lithium to the EV market.
Continuing the theme from the first two stocks in this report, SQM has posted three consecutive quarters of successively higher record revenue levels. The company is now generating over $2 billion of revenue every quarter.
And lithium is a big reason why. In its second quarter report the company said it was well on its way to reaching its goal of having 210,000 metric tons of lithium carbonate capacity. The company said that capacity will be used to deliver “high-value-added lithium products” for over 5 million electric vehicles.
SQM stock trades at a compelling P/E ratio of around 8.4x. And, among the stocks on this list, it also appears to be a solid candidate for dividend investing. The current yield is 5.3% and the company currently pays out a dividend of $4.82 on an annual basis.
About Sociedad Química y Minera de Chile
Sociedad Química y Minera de Chile SA operates as a mining company worldwide. The company offers specialty plant nutrients, including sodium potassium nitrate, specialty blends, and other specialty fertilizers under Ultrasol, Qrop, Speedfol, Allganic, Ultrasoline, ProP, and Prohydric brands. It also provides iodine and its derivatives for use in medical, agricultural, industrial, and human and animal nutrition products comprising x-ray contrast media, biocides, antiseptics and disinfectants, pharmaceutical intermediates, polarizing films for LCD and LED screens, chemicals, organic compounds, and pigments, as well as added to edible salt to prevent iodine deficiency disorders.
Read More - Current Price
- $38.78
- Consensus Rating
- Hold
- Ratings Breakdown
- 4 Buy Ratings, 3 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $48.69 (25.5% Upside)
#4 - Panasonic (OTCMKTS:PCRFY)
Panasonic (OTCMKTS:PCRFY) is another battery stock with ties to Tesla. The company has over 9% of the global EV battery market share. And that’s mostly due to its relationship with Tesla.
The bearish view may be that Tesla has plans to bring much of its battery production in-house. On the other hand, that still seems to be some time away. And Panasonic’s leadership in the category means that it will likely not be short of companies looking to partner up.
To that end, the company joint venture with Toyota Motors (NYSE:TM) Prime Planet Energy & Solutions recently announced plans to build a manufacturing site in Japan. This is in addition to Panasonic’s plans to build a second EV battery plant in the United States.
These announcements help to ensure that Panasonic has a long runway growth. And that seems to be getting the attention of investors. PCRFY stock bounced off its 52-week low and has moved above both its 50- and 200-day moving averages.
About Panasonic
Panasonic Holdings Corporation, together with its subsidiaries, research, develops, manufactures, sells, and services various electrical and electronic products worldwide. It operates through five segments: Lifestyle, Automotive, Connect, Industry, and Energy. The Lifestyle segment offers refrigerators, microwave ovens, rice cookers, washing machines, lighting fixtures, vacuum cleaners, air-conditioners, air to water heat pump system, air purifiers/sterilizers, and freezing or refrigerating showcases, as well as ventilation and perflation equipment.
Read More - Current Price
- $9.36
- Consensus Rating
- Hold
- Ratings Breakdown
- 0 Buy Ratings, 3 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- N/A
#5 - Nikola (NASDAQ:NKLA)
An emerging trend in the electric vehicle space is vehicle manufacturers attempting to control their battery supply chain. Nikola (NASDAQ:NKLA) is one example of this. The company has recently acquired Romeo Power, a company that went public via a special purpose acquisition company in 2020.
Romeo manufactures battery modules and packs for large electric commercial vehicles and Nikola was the company’s largest customer. To that end, Nikola says the acquisition could save the company $350 million over four years.
But the move is also intriguing because Romeo Power is attempting to create a battery that addresses two common obstacles for EV batteries. First, they are creating a battery with 25% higher energy density. This should allow a battery to go farther on a single charge. Second, the company is working on a design that will hold up in all weather conditions.
And Romeo Power is targeting their battery solution at commercial vehicles such as the electric trucks that Nikola makes. Having the backing of Nikola should help expedite the development of this battery design, which will give NKLA stock an additional catalyst.
About Nikola
Nikola Corporation operates as a technology innovator and integrator that develops energy and transportation solutions in the United States and internationally. The company operates in truck and energy units. It commercializes battery electric vehicles (BEV) and hydrogen fuel cell electric vehicles (FCEV) to the trucking sector.
Read More - Current Price
- $1.91
- Consensus Rating
- Hold
- Ratings Breakdown
- 1 Buy Ratings, 4 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $12.00 (528.3% Upside)
#6 - Solid Power (NASDAQ:SLDP)
The alternative to lithium-ion batteries is solid-state batteries. To date, there is no solid-state battery that is available, but the total addressable market is estimated to be around $220 billion. And Solid Power (NASDAQ:SLDP) is one of several companies trying to change that. A solid-state battery is expected to go longer on a single charge and charge faster than lithium-ion batteries.
But, despite having some prototypes available for customers such as Ford and BMW, Solid Power is not expected to have batteries commercially available until 2025.
But that means that now is the time to invest in companies that are in the solid-state battery race. For example, SLDP stock is trading well below its SPAC IPO price.
About Solid Power
Solid Power, Inc develops solid state battery technologies for the electric vehicles (EV) and other markets in the United States. The company sells its sulfide-based solid electrolyte; and licenses its solid-state cell designs and manufacturing processes. It also produces and sells 0.2, 2, 20 ampere-hour (Ah), and EV cells.
Read More - Current Price
- $1.06
- Consensus Rating
- Hold
- Ratings Breakdown
- 2 Buy Ratings, 1 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $2.75 (159.4% Upside)
#7 - Microvast (NASDAQ:MVST)
Microvast (NASDAQ:MVST) is another picks-and-shovel play on electric vehicle batteries. The company doesn’t make the whole battery, but they provide customized battery solutions including cells, modules and packs. They also manufacture the separator which is seen as a key component in improving the performance of lithium-ion batteries.
At the time of this writing, the company’s main exporting facility was in Shanghai. That’s putting pressure on the company’s supply chain. But the company does have contracts worth $2.5 billion between now and 2030.
But investors with a long-term outlook should be aware that Microvast is one of the company’s receiving funding from the Biden administration’s $2.8 billion award aimed at improving the U.S. supply chain. Microvast plans to use its share of the funding to build a separator facility in the United States.
About Microvast
Microvast Holdings, Inc provides battery technologies for electric vehicles and energy storage solutions. The company offers a range of cell chemistries, such as lithium titanate oxide, lithium iron phosphate, and nickel manganese cobalt version 1 and 2. It also designs, develops, and manufactures battery components, such as cathode, anode, electrolyte, and separator.
Read More - Current Price
- $0.58
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 3 Buy Ratings, 1 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $4.50 (675.9% Upside)
With EV sales as a percentage of the overall market still being in the single digits, investing in battery stocks does contain some risk. But a simple reality that most investors must face is that growth typically comes at a price. To achieve the meteoric gains that many investors desire requires the fortitude to invest in some stocks that may go against the conventional wisdom.
This is where due diligence plays a roll. Analysts forecast that the EV battery market will grow to $155 billion by 2028. That would be 7 times larger than it was in 2020.
In other words, if you invest in companies that are among the best-in-class right now, there is likely to be a solid return. But getting to that payoff will require patience and conviction. In this presentation, we've given you seven battery stocks you can feel good about owning today with the likelihood of a big payoff by 2030.
More Investing Slideshows:
