We recently compiled a list of the 10 Best Battery Stocks To Buy Now According to Short Sellers. In this article, we are going to take a look at where Solid Power, Inc. (NASDAQ:SLDP) stands against the other battery stocks.
Electric vehicles are the latest trend in the automotive market which is revolutionizing the whole industry. According to Grand View Research, the global electric vehicle (EV) market was valued at $1.07 trillion in 2023 and is projected to grow at a compound annual growth rate (CAGR) of 33.6% from 2024 to 2030 and reach $8.85 trillion by the end of the forecast.
The growth is driven by government policies, incentives, and advancements in battery technology, which are making EVs more affordable and appealing. The transportation and logistics sectors are increasingly adopting EVs due to their lower emissions and operational costs, with companies like Amazon integrating electric trucks into their fleets.
Similarly, Grand View Research believes that the global EV battery market was valued at $44.69 billion in 2022 and is projected to grow at a CAGR of 21.1% from 2023 to 2030. Strategic collaborations among battery manufacturers, e-mobility providers, and energy suppliers are improving battery durability and lifespan, while the increasing production of EVs in countries like China, Germany, and Japan, along with government investments in EV charging infrastructure, is further accelerating the market. However, fluctuating raw material prices, such as lithium-ion, could impact production costs.
The Growing Importance of Critical Minerals in Energy Transition
According to BP’s Energy Outlook 2024, the transition to a low-carbon energy system will require a substantial increase in the use of critical minerals, such as copper, lithium, and nickel, essential for supporting the infrastructure and assets needed for this transition. According to the report, the rapid expansion of electric vehicles is projected to reach 1.2 billion (current trajectory) to 2.1 billion (goal to reach Net Zero) by 2050, which will significantly increase the demand for batteries and in turn, higher demand for minerals like lithium and nickel.
Copper demand is expected to rise by 75-100% by 2050, mostly due to its use in EVs and the extension of electricity networks. Lithium demand could grow 8 to 14 times by 2050, mainly driven by its use in EV batteries, which will account for about 80% of total lithium demand by 2050. Lastly, nickel demand is projected to increase two to three times by 2050, with most of this growth linked to lithium-ion batteries in EVs.
How Competitive Pricing and Leasing Are Shaping the EV Market
In an interview at CNBC Power Lunch, Erin Keating, Cox Automotives executive analyst, explored the factors shaping the EV market. She noted that Tesla and Chevy initially dominated EV sales, which is why a growing supply of used cars from the former is now available. These used EVs have become more affordable, partly due to tax credits of up to $4,000. This is helping to drive sales in the used EV market and making it a more attractive option for consumers.
However, the lease market is offering deals that compete with used EV prices. According to Keating, while this puts downward pressure on used EV prices, she emphasized the benefit of the situation and said that more leased vehicles today will enter the used market in a few years, which will ensure a steady supply of affordable used EVs in the future.
Keating also addressed the issue of buyer’s remorse, as some people are frustrated with the slower development of EV infrastructure and range anxiety. Despite this, she reassured consumers that the batteries in used EVs are holding up well with minimal degradation.
It means consumers can trust the longevity of these vehicles, and automakers are committed to supporting them. Although some challenges remain, she believes that as infrastructure improves, consumer confidence and adoption of EVs will continue to grow.
Our Methodology
For this article, we used stock screeners and ETFs including Amplify Lithium & Battery Technology ETF and Lithium & Battery Tech ETF to identify companies involved in the EV battery market. We then selected 10 stocks with the smallest short interest and listed them in descending order of their short interest. We also mentioned the hedge fund sentiment around each stock which was taken from Insider Monkey’s database of over 900 elite hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A battery powered electric vehicle charging in a city storefront.
Solid Power, Inc. (NASDAQ:SLDP)
Short Interest as % of Shares Outstanding: 7.82%
Number of Hedge Fund Holders: 14
Solid Power, Inc. (NASDAQ:SLDP) is a Colorado-based company that focuses on developing solid-state battery technology for EVs and various other industries across the U.S. The company provides sulfide-based solid electrolytes and licenses its proprietary cell designs and production techniques.
Its proprietary sulfide solid electrolyte technology significantly boosts safety and improves energy density by 50-75% over traditional batteries, making it an attractive option for a range of uses such as EVs, portable electronics, and aerospace applications.
The company focuses on creating and producing all-solid-state battery cells and manufacturing sulfide solid electrolytes for other producers. The company has set up pilot production lines to fine-tune its cell designs and offer different cell sizes, which facilitates collaborations with leading automotive manufacturers. It is one of the best stocks to buy now according to short sellers.
Solid Power’s (NASDAQ:SLDP) management is quite optimistic about its future. At its latest earnings call, the management discussed its focus on expanding its electrolyte production and market reach, improving its A-2 cell designs, and strengthening partnerships with major players like SK On, Ford, and BMW. Progress is being made on various fronts, including increased electrolyte sample shipments and advancements in cell design, which is aimed at higher performance and safety.
Moreover, they said that significant collaborations are underway, particularly with SK On in Korea, where the company is working towards the installation of an EV cell production line by mid-2025. Solid Power (NASDAQ:SLDP) is deepening its relationships in Korea and Japan to further engage with the battery ecosystem in those regions. Additionally, the company is continuing to work closely with BMW on improving cell performance and preparing for potential future collaborations, including BMW’s demo car program.
On August 7, Needham analyst, Chris Pierce issued a Buy rating on Solid Power (NASDAQ:SLDP) with a $3 price target, as reported by TipRanks. The analyst noted the company’s strong position in the growing all solid-state batteries (ASSBs) market, which offers advantages like longer range and improved safety for EVs.
Despite a recent dip in revenue forecasts, he believes the company’s long-term outlook remains stable. Pierce views the company’s current valuation as conservative, with expectations of significant growth as the EV market expands.
In Q2, 14 hedge funds had stakes worth $7.063 million in Solid Power (NASDAQ:SLDP). As of the second quarter, Yaupon Capital is the company’s most prominent shareholder with over 1.86 million shares worth $3.1 million.
Overall SLDP ranks 7th on our list of the best battery stocks to buy. While we acknowledge the potential of SLDP as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than SLDP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
