In this article, we discuss the 11 best lithium and battery stocks to invest in along with the latest updates around the industry.

The West Auto Industry Faces Uncertainty with Potential Tariffs and Policy Reversals

According to a Reuters report from November 6, automakers are preparing for potential changes under President-elect Donald Trump, including new tariffs on vehicles imported from Mexico and the reversal of pro-electric vehicle policies. Trump has indicated plans to rescind EPA and Transportation Department regulations and may reduce or eliminate EV tax incentives.

Moreover, the Zero Emission Transportation Association expressed a willingness to collaborate with Trump on future EV development. Trump has also warned of tariffs of up to 200% on Mexican vehicles and is considering similar measures for imports from other regions while encouraging foreign automakers to build plants in the US.

Additionally, in October, Reuters reported that the European Union approved additional tariffs on Chinese electric vehicles, ranging from 7.8% to 35.3%, on top of the existing 10% duty, in response to what it calls unfair subsidies by China. These tariffs, effective October 30, aim to address concerns over subsidized raw materials, batteries, and financing, with China opposing the decision and calling for negotiations to prevent further trade tensions.

China has launched its own probes into EU imports, including pork, dairy, and brandy, potentially retaliating against the EU measures. Chinese EVs currently account for 8% of the EU market, a figure expected to grow to 15% by 2025, with their prices typically 20% lower than European counterparts. The investigation has caused division within the EU, with Germany opposing tariffs while France supports them.

Future of Electric Vehicles in the U.S. Amid Political Changes

GlobalData lowered its 2030 U.S. EV market share forecast from 33% to 28%, citing weakened emissions standards and a focus on lower oil prices after the 2024 elections. Bloomberg reported on November 7 that Mark Wakefield of AlixPartners highlighted that $129 billion in EV investments through 2027 and the $7,500 EV tax credit may be at risk. Automakers are expected to cut EV spending, delay new models, and shift production toward hybrids and gasoline vehicles, like Volkswagen’s adaptation at its South Carolina plant. While reversing Biden’s Inflation Reduction Act could prove challenging, changes to fuel economy standards are likely, though their impact may not be felt until later in the decade.

Optimism for Lithium Demand Amid Market Recovery

The lithium market has experienced a huge decline over the past several quarters due to oversupply and lower demand. However, Ana Cabral, Co-Chair & CEO at Sigma Lithium is positive about the future demand for lithium as discussed in a September interview with CNBC. She noted that lithium prices hit a low point in August but have been recovering steadily. The Chinese recovery package, the largest since COVID, has especially boosted the market, as China accounts for more than half of global EV sales.

While the U.S. has seen slower EV adoption compared to China and Europe, with growth in China outpacing the U.S. and Europe, the fundamentals remain strong. As China continues to dominate the EV market, it plays a crucial role in driving demand and lithium prices. Regarding other uses of lithium, Cabral emphasized that EV batteries remain the primary driver, especially as automakers shift away from combustion vehicles, which is expected to create further demand in the coming years.

Our Methodology

For this article, we used stock screeners to identify around 20 lithium and/or battery stocks and chose the 11 stocks most widely held by institutional investors. The stocks are listed in ascending order of their hedge fund sentiment, as of Q3 2024.

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).

11 Best Lithium and Battery Stocks To Invest In

11. Lithium Americas Corp. (NYSE:LAC)

Number of Hedge Fund Holders: 10

Lithium Americas Corp. (NYSE:LAC) explores and develops lithium resources in the U.S. and Canada. The company fully owns the Thacker Pass project in northern Nevada and has investments in other exploration sites in both countries.

In Q3 2024, the company highlighted significant progress on its Thacker Pass project. The U.S. Department of Energy (DOE) approved a $2.26 billion loan to Lithium Americas’s subsidiary, Lithium Nevada Corp., to fund the construction of a lithium carbonate manufacturing facility at Thacker Pass in Humboldt County, Nevada. The facility will produce 40,000 tonnes of battery-grade lithium carbonate annually, supporting the U.S. clean transportation sector. The project is expected to generate 1,800 jobs during construction and 360 permanent jobs once operational. It will help reduce reliance on foreign sources of critical materials.

The facility could provide enough lithium for batteries to power 800,000 electric vehicles each year, preventing the consumption of 317 million gallons of gasoline. In a key development, Lithium Americas and General Motors formed a joint venture, with GM contributing $625 million and acquiring a 38% stake in Thacker Pass. This replaced a previous subscription agreement with GM.

After the loan was finalized, B. Riley analyst Matthew Key increased the price target for Lithium Americas (NYSE:LAC) to $5 from $4.50 and maintained a Buy rating as reported by The Fly on November 12. The firm noted that work on the Thacker Pass project is progressing as planned, and Lithium Americas is on track to make a final investment decision by the end of this year.

10. Sociedad Química y Minera de Chile S.A. (NYSE:SQM)

Number of Hedge Fund Holders: 12

Sociedad Química y Minera de Chile S.A. (NYSE:SQM) is a global leader in producing lithium, iodine, and specialty plant nutrients, leveraging its exclusive access to mineral-rich reserves in Chile’s Atacama Desert. This position enables the company to support industries like EVs and renewable energy storage.

Operating in over 100 countries, SQM held an 18% share of the global lithium market in 2023, supplying products to 207 customers across 39 nations, with a strong focus on Asia. Its partnership with Kidman Resources in Australia has further expanded its lithium operations. Moreover, a partnership with Chilean state-owned Codelco, lasting until 2060, aims to improve production and adopt advanced extraction technologies.

In Q3, SQM reported solid performance across its business lines in Q3 2024. Specialty Plant Nutrition volumes grew by more than 20%, boosting revenues by 12% year-over-year despite lower prices. Iodine prices showed steady growth due to strong demand and limited supply. In lithium, sales volumes exceeded 51,000 metric tons, an 18% increase from the previous year, though prices declined 24% from the previous quarter due to temporary oversupply.

Analysts are also quite optimistic about the long-term prospects for SQM. On November 25, The Fly reported that Scotiabank lowered its price target for SQM shares from $60 to $50 but still rated it as Outperform. The bank sees SQM as the best long-term option among the lithium companies it covers. However, the price target was reduced due to expectations that lithium prices will stay low for a longer period.