In this article, we discuss the 10 best EV battery stocks to invest in. If you want to skip our detailed analysis of these stocks, go directly to the 5 Best EV Battery Stocks To Invest In.
The rising global adoption of electric vehicles has expanded the race among battery manufacturers. According to Deloitte, total EV sales will reach 11.25 million by 2025, up from 2.5 million in 2020, and eventually will hit 31.1 million by 2030.
Government initiatives to reduce fleet emissions are supporting the abrupt shift of global economies to electric mobility. The transition from a fossil-fuel economy to a green economy is another factor driving the EV battery market. Given these major catalysts, the global EV battery market is projected to grow at a CAGR of 28.1% from $27.3 billion in 2021 to $154.9 billion in 2028, according to a new market analysis published by Fortune Business Insights.
According to a survey conducted by Ernst & Young Global Ltd., the number of consumers anticipating to purchase an electric car increased by 11% in 2021 when compared to 2020. The world’s largest automakers, including Ford Motor Company (NYSE:F), Volkswagen AG (OTC:VWAGY), General Motors Company (NYSE:GM), and Toyota Motor Corporation (NYSE:TM), are scrambling to capitalize on the growing consumer preference for electric vehicles, alongside EV leader Tesla, Inc. (NASDAQ:TSLA).
Our Methodology
These EV battery stocks were selected based on their fundamentals and growth prospects. These are the companies that manufacture and commercialize electric batteries and the components that power EVs.
The hedge fund sentiment around each stock was gauged using the data of 867 hedge funds tracked by Insider Monkey in Q3 2021.
With this context in mind, here’s our list of the 10 best EV battery stocks to invest in.
Photo by Kumpan Electric on Unsplash
Best EV Battery Stocks To Invest In
10. Panasonic Corporation (OTC:PCRFY)
Number of Hedge Fund Holders: N/A
Japanese electronics giant Panasonic Corporation (OTC:PCRFY) is one of the biggest EV battery suppliers in the world. For years, the Osaka-based company has been manufacturing and supplying high-performance electric vehicle batteries to American EV behemoth Tesla, Inc. (NASDAQ:TSLA). Furthermore, Panasonic Corporation (OTC:PCRFY) owns 49% of a joint venture with Toyota Motor Corporation (NYSE:TM) which develops lithium-ion prismatic batteries.
Panasonic Corporation (OTC:PCRFY) recently introduced a new massive prototype 4680 format battery to support Tesla, Inc. (NASDAQ:TSLA). The battery manufacturer’s new battery model aims to reduce the cost of producing Tesla, Inc.’s (NASDAQ:TSLA) electric vehicles.
Panasonic Corporation (OTC:PCRFY) saw a 28% year-over-year increase in revenue in its automotive segment in the second quarter of fiscal 2022, driven by a recovery in automotive products and higher sales of automotive batteries in response to rising demand. Panasonic Corporation (OTC:PCRFY) reported revenue from its automotive segment of 731 billion yen.
9. Contemporary Amperex Technology Co., Limited (SHE:300750)
Number of Hedge Fund Holders: N/A
Contemporary Amperex Technology Co., Limited (SHE:300750) is one of the EV battery stocks to invest in as the company controls 26% of the global EV battery market. The Chinese battery maker supplies batteries to some of the biggest global automakers including Tesla, Inc. (NASDAQ:TSLA), Volkswagen AG (OTC:VWAGY), and Bayerische Motoren Werke Aktiengesellschaft (OTC:BMWYY).
Contemporary Amperex Technology Co., Limited (SHE:300750) develops battery systems for electric light trucks, forklifts, garbage trucks, and minivans. On December 13, Contemporary Amperex Technology Co., Limited (SHE:300750) was given a two-year contract to supply 175 megawatt-hours (MWh) of CATL battery products to Lightning eMotors, Inc. (NYSE:ZEV).
In October, the Chinese battery manufacturer reported a third-quarter net profit of 3.27 billion yuan. Contemporary Amperex Technology Co., Limited’s (SHE:300750) revenue increased 130.7% year on year in the third quarter to 29.3 billion yuan. As of the second week of January, shares of Contemporary Amperex Technology Co., Limited (SHE:300750) increased 35% in the past twelve months.
8. Solid Power Inc. (NASDAQ:SLDP)
Number of Hedge Fund Holders: N/A
Shares of Solid Power Inc. (NASDAQ:SLDP) jumped nearly 14% on December 9 following a merger with Decarbonization Plus Acquisition Corp III (NASDAQ:DCRC). The Colorado-based solid-state battery maker was backed by Ford Motor Company (NYSE:F), Bayerische Motoren Werke Aktiengesellschaft (OTC:BMWYY), and Volta Energy Technologies in a $135 million Series B funding in September 2021 prior to the SPAC deal.
Solid Power Inc. (NASDAQ:SLDP) commercializes low-cost all-solid-state battery cell technology that gives EVs longer battery life. The company was founded in 2011.
In recent months, the EV battery manufacturer has made headlines as a result of new contracts and partnerships that have expanded its solid-state battery business. In October, Solid Power Inc. (NASDAQ:SLDP) closed a $12.5 million multi-year research contract with Intelligence Advanced Research Projects Activity (IARPA) to develop nickel and cobalt-free all-solid-state battery cells. At the same time, Solid Power Inc. (NASDAQ:SLDP) signed an agreement to co-develop all-solid-state batteries with Korean chemical company SK Innovation Co., Ltd.
Solid Power Inc. (NASDAQ:SLDP), like Ford Motor Company (NYSE:F), Volkswagen AG (OTC:VWAGY), General Motors Company (NYSE:GM), Toyota Motor Corporation (NYSE:TM), and Tesla, Inc. (NASDAQ:TSLA), is striving to reinvent its products to match the expanding EV sector.
7. Romeo Power, Inc. (NYSE:RMO)
Number of Hedge Fund Holders: 9
Romeo Power, Inc. (NYSE:RMO) is a California-based manufacturer of lithium-ion battery modules and packs for commercial EVs. The company also provides engineering solutions to electric vehicle manufacturers. One of the major clients of Romeo Power, Inc. (NYSE:RMO) is Washington-based truck maker PACCAR Inc (NASDAQ:PCAR).
On November 16, shares of Romeo Power, Inc. (NYSE:RMO) surged 20% following solid Q3 earnings. In the third quarter of 2021, the company’s revenue grew 747% year over year to $5.76 million and beat revenue estimates by $2.6 million.
Following a better than expected Q3 earnings, BTIG analyst Gregory Lewis maintained a Buy rating on Romeo Power, Inc. (NYSE:RMO) with a price target of $9. Lewis believes that the EV battery manufacturer still has a lot of work to do in terms of increasing sales and customer base, despite exceeding its 2021 manufacturing capacity target of 1 GWh earlier than expected.
At the end of the third quarter of 2021, 9 hedge funds in the database of Insider Monkey held stakes worth $9.75 million in Romeo Power, Inc. (NYSE:RMO), compared to 14 in the previous quarter worth $18.7 million.
6. Lithium Americas Corp. (NYSE:LAC)
Number of Hedge Fund Holders: 12
Lithium Americas Corp. (NYSE:LAC) is in the spotlight amid the rising demand for electric vehicles recently. The Canadian lithium mining company is expanding its lithium operations in Argentina, where its Cauchari-Olaroz project is set to begin production in mid-2022 with a capacity of 40,000 tonnes per year. The stock is up 75% over the last six months.
After delivering Q3 earnings, Lithium Americas Corp.’s (NYSE:LAC) price target was upgraded to $44 from $25 by B. Riley analyst Lucas Pipes on November 24. Pipes kept a Buy rating on the lithium stock.
Singaporean investment fund Himension Capital is the biggest shareholder of Lithium Americas Corp. (NYSE:LAC), owning 2.27 million shares worth $51 million at the end of the September quarter. Overall, 12 funds of the 867 elite funds tracked by Insider Monkey reported owning stakes in Lithium Americas Corp. (NYSE:LAC) at the end of the third quarter of 2021, up from 9 hedge funds in the preceding quarter.
Lithium Americas Corp. (NYSE:LAC), together with electric car makers Ford Motor Company (NYSE:F), Volkswagen AG (OTC:VWAGY), General Motors Company (NYSE:GM), Toyota Motor Corporation (NYSE:TM), and Tesla, Inc. (NASDAQ:TSLA), is gaining attention from institutional investors.
Here is what Massif Capital has to say about Lithium Americas Corp. in their Q1 2021 investor letter:
“Lithium Americas: The volatility noted above in LAC has resulted in solid returns via our options trades around our core equity position. At the current time, we are short calls on LAC, as we have done multiple times throughout the position’s life, expiring on May 21, 2021, at a $17.5 and $22.5 strike price. The volume of contracts sold at each strike corresponds to the size of the equity position we want should the calls expire in the money, and the underlying equity gets called away from us. The thought process behind this trade construction is that if we know the size of the position we want at a particular price point, there is no reason not to accumulate additional returns by pre-selling the stock we would have sold anyway.
High levels of volatility positively impact the price of options, increasing the premium we can earn from selling covered calls. To date, we have sold covered calls on LAC that have expired worthless four times, yielding a roughly 7% return on the equity position’s current value or 71bps for the portfolio overall. The outstanding covered calls appear to be trending towards a similar worthless expiration. If they do, the covered call trades on LAC will result in us owning the shares with committed capital of -$0.28 per share.
Although we believe in the fullness of time LAC warrants a $30+ valuation, the prices achieved in early January of this year were not justified by the underlying fundamentals. Some will argue we should have sold down our position. We had already established our option positions and believe LAC is an emerging major in the lithium mining industry. Thus, we decided to maintain the position unchanged. Although still relatively high, the current $15 per share valuation is not crazy compared to where we think the firm should be trading based on fundamentals, so we are no longer overly concerned with the position as is.
LAC management also took advantage of the volatility issuing stock on January 22 for $22 a share. The ~$400 million in proceeds will be used to develop Thacker Pass, the US-based clay lithium deposit, which will likely be the largest producing Lithium mine in America when turned on. In our opinion, the stock issuance could not have come at a better time. LAC management has advanced the project through various development stages (de-risking), but with the share issuance, they have significantly reduced the need to bring in an outside partner to develop the asset as the first phase of the project is expected to cost roughly $581 million. After-tax and at an 8% discount rate, the Thacker Pass project’s present value is approximately $2.6 billion (the firm’s current market capitalization is $1.5 billion). Although the share issuance was dilutive, increasing the total shares by 17%, we believe it will, in the long run, prove a forward-looking, value-additive decision by management.
The lithium market remains an area of interest and focus for us. This reflects our belief that the most exciting investment opportunities to capture secular trends in EV’s and batteries are found upstream in the mining industry. It is also a reflection that there is a greater diversity of lithium investment opportunities relative to other battery metals.”
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Disclosure: None. 10 Best EV Battery Stocks To Invest In is originally published on Insider Monkey.
