In this article, we discuss the 10 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.”
5. Microvast Holdings, Inc. (NASDAQ:MVST)
Number of Hedge Fund Holders: 19
Microvast Holdings, Inc. (NASDAQ:MVST) manufactures fast-charging battery systems from passenger and commercial electric vehicles to heavy-duty trucks and railways. In addition, the Texas-based company produces energy storage systems and battery backup units for data centers.
Microvast Holdings, Inc.’s (NASDAQ:MVST) revenue increased 20% year over year to $36.9 million in the third quarter of 2021, fueled by higher sales of battery products to new and current customers. Microvast Holdings, Inc. (NASDAQ:MVST) reiterated its revenue forecast for the fiscal year ending in December 2021, which is expected to be in the $145 million to $155 million range.
In early November, Microvast Holdings, Inc. (NASDAQ:MVST) expanded its presence in Florida by acquiring a 75,000 square feet facility which will become the company’s battery prototyping headquarters.
At the end of September, 19 hedge funds were long Microvast Holdings, Inc. (NASDAQ:MVST), with a total stake of $185 million, up from 8 in the previous quarter with a stake worth $22.8 million.
4. FREYR Battery (NYSE:FREY)
Number of Hedge Fund Holders: 20
FREYR Battery (NYSE:FREY) is a Norwegian EV company that commercializes environmentally friendly and low-cost battery cells for electric vehicles, buses, marine vessels, and trucks. The company also offers energy storage systems.
In August, the clean battery manufacturer was listed on the New York Stock Exchange, raising an estimated $850 million. In November, FREYR Battery (NYSE:FREY) was given an Overweight rating and a 12-month price target of $18 a share by Morgan Stanley analyst Adam Jonas. According to Jonas, FREYR Battery (NYSE:FREY) is experiencing an increase in end-market demand for EV batteries and is in discussions with an additional 85 prospective customers.
FREYR Battery (NYSE:FREY) has started the construction of its Customer Qualification Plant (CQP) and first battery cell production line in Mo I Rana, Norway. The plant is scheduled to launch in the second half of 2022.
At the end of the third quarter of 2021, 20 hedge funds in the database of Insider Monkey held stakes worth $378 million in FREYR Battery (NYSE:FREY), up from 0 in the previous quarter.
Out of all the hedge funds tracked by Insider Monkey, Sylebra Capital Management was the leading shareholder in Q3 2021, with over 12 million shares of FREYR Battery (NYSE:FREY) valued at $123 million.
3. QuantumScape Corporation (NYSE:QS)
Number of Hedge Fund Holders: 25
QuantumScape Corporation (NYSE:QS) is an electric vehicle firm based in California that creates solid-state lithium-metal batteries which extend the range of electric vehicles and make them recharge faster. QuantumScape Corporation (NYSE:QS) is a Volkswagen AG-backed EV startup that went public in 2020.
As the company ended the third quarter with $1.5 billion in liquidity, the QuantumScape Corporation (NYSE:QS) is gaining attention from retail and institutional investors recently. At the end of the September quarter, 25 out of 867 hedge funds tracked by Insider Monkey had stakes in the EV battery company. The total value of these stakes is $197 million. The largest shareholder of QuantumScape Corporation (NYSE:QS) is New York-based investment firm JS Capital, which owns 2.29 million shares worth $56.3 million.
Cowen analyst Gabe Daoud maintained an Outperform rating on QuantumScape Corporation (NYSE:QS) with a price target of $36 on December 8.
During its third-quarter earnings report, the California-based company announced that it had reached an agreement with one of the top ten global automotive OEMs to purchase QuantumScape Corporation’s (NYSE:QS) 10 megawatt-hours of batteries.
QuantumScape Corporation (NYSE:QS) plans to supply prototype battery samples to electric vehicle manufacturers in 2022, test car batteries in 2023, and begin commercial solid-state battery cells production in 2024.
2. NIO Inc. (NYSE:NIO)
Number of Hedge Fund Holders: 30
NIO Inc. (NYSE:NIO) is a Chinese EV manufacturer that was first to offer battery-as-a-service to EV owners. In April, the Shanghai-based company introduced NIO Power Swap Station 2.0, a drive stop where EV owners can get a fresh battery pack installed in about five minutes. By the end of September, the EV manufacturer had deployed a total of 517 battery swap stations across China. NIO Inc. (NYSE:NIO) intends to build 4,000 battery swap stations in China by 2025, with 1,000 of them deployed internationally.
Bo Pei of Tiger Securities is bullish on NIO Inc. (NYSE:NIO), initiating a Buy rating on the EV stock with a price target of $45 on December 8. Pei believes the Chinese electric car manufacturer is best positioned to “ride the global smart” electric vehicle adoption trend in the next ten years.
In the third quarter of 2021, NIO Inc.’s (NYSE:NIO) total revenue grew 116.6% year over year to $1.52 billion. The EV maker was able to increase its gross margin in Q3 2021 to 20.3% from 12.9% in Q3 2020.
Among the 867 elite funds tracked by Insider Monkey, New York-based investment firm D E Shaw is the biggest shareholder of NIO Inc. (NYSE:NIO). As of the end of the September quarter, the fund owned 6.9 million shares of the EV company worth $246 million.
1. Albemarle Corporation (NYSE:ALB)
Number of Hedge Fund Holders: 38
While Albemarle Corporation (NYSE:ALB) doesn’t directly manufacture EV batteries, the North Carolina-based company is one of the biggest lithium suppliers in the world. The company then produces lithium metals used in manufacturing EV batteries. Albemarle Corporation (NYSE:ALB) has operations in Chile, Australia, and the US.
Albemarle Corporation (NYSE:ALB) expanded its production in China in September following the acquisition of a Chinese lithium converter firm, Guangxi Tianyuan New Energy Materials Co., Ltd. The Chinese lithium factory manufactures battery-grade lithium carbonate and lithium hydroxide, with an annual capacity of 25,000 metric tons of lithium carbonate equivalent (LCE).
On November 3, the lithium manufacturer reported third-quarter earnings that exceeded consensus estimates by $65.9 million. Albemarle Corporation’s (NYSE:ALB) revenue in the third quarter was $831 million, an increase of 11% year on year. The company’s revenue from the lithium segment jumped 35% year on year to $359.2 million during the period, owing to increasing demand and higher lithium prices.
On November 19, Berenberg analyst Andres Castanos-Mollor increased his price target for Albemarle Corporation (NYSE:ALB) to $298 from $280 while maintaining a Buy rating on the shares. Meanwhile, 38 hedge funds out of 867 funds tracked by Insider Monkey reported owning stakes in Albemarle Corporation (NYSE:ALB) at the end of the third quarter, up from 28 in the previous quarter.
Here is what Carillon Tower Advisers has to say about Albemarle Corporation (NYSE:ALB) in its Q3 2021 investor letter:
“Albemarle is a global specialty chemicals company with leading positions in lithium, bromine, and refining catalysts. The firm’s shares outperformed in the quarter, driven largely by the current robust demand environment for lithium used in the manufacturing of electric vehicle batteries. As the global push towards the reduction of carbon emissions continues to gain steam, Albemarle is well-positioned to benefit from the accelerating adoption of electric vehicles.”
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Disclosure: None. 10 Best EV Battery Stocks To Invest In is originally published on Insider Monkey.
