In this article, we discuss the 10 best EV battery stocks to buy in late 2022.
The share of EV sales has taken up more than 5% of the total new automobile sales in the US as of July 2022. The US government is providing incentives to increase the sales and market share of EVs to 50% of the automobile market by the end of this decade. These developments are taking place to reduce greenhouse emissions as the US, the EU, and other leading countries are focusing on becoming net-zero emitters of greenhouse gases by 2050.
Leading automobile companies like General Motors Company (NYSE:GM), Ford Motor Company (NYSE:F), and Volkswagen AG (OTC:VWAGY) are also gearing up to boost sales of EVs. The Detroit, Michigan-based General Motors is targeting to sell 400,000 EVs in 2023. Meanwhile, the Michigan-based Ford Motor anticipates that EVs will take up 50% of its total sales by 2030. Volkswagen is making an even bolder claim as it expects EVs to take up 70% and 55% of its total sales in Europe and the US, respectively, by the end of this decade.
An Emerging Market
The massive transition towards EVs is creating a new avenue for lithium-ion battery makers. Investors recognize this change in the automobile industry, but they do not have clarity on the breadth, complexity, and speed of the emerging lithium-ion battery industry globally. The focus of governments to lower greenhouse gas emissions is making corporations invest aggressively in renewable energy sources, providing an impetus to automobile and battery manufacturers. As a result, we are seeing some of the best EV stocks in the industry gaining market share.
Adam Jonas, research head of Global Auto and Shared Mobility at Morgan Stanley, thinks that the impact of lithium-ion batteries can be revolutionary for the EV industry. The investment team at Morgan Stanley sees the battery industry as a key investment theme which is forecasted to have a total addressable market of $525 billion by 2040. The mass adoption of EVs has significantly lowered battery prices from $1,100 per kilowatt hour (kWh) in 2010 to just $110 kWh now. Experts believe that the COVID-19 pandemic has fastened the pace of development by five years as the capital investment in batteries has increased by 10 to 20 times as compared to the pre-pandemic period.
Photo by Kumpan Electric on Unsplash
Our Methodology
To shortlist the best EV battery stocks, we have looked into the growth plans of these companies in line with the changing trends in the market. The business fundamentals and analyst ratings have also been discussed. The stocks included in the list are well-positioned to capitalize on the surge in demand for EVs. Insider Monkey’s database of 895 elite funds has been utilized to rank these stocks in terms of hedge fund ownership as of Q2 2022.
Best EV Battery Stocks to Buy in Late 2022
10. Contemporary Amperex Technology Co., Limited (SZ:300750)
Contemporary Amperex Technology Co., Limited (SZ:300750), more popularly known as CATL, is a Ningde, China-based battery manufacturer specializing in manufacturing lithium-ion EV batteries.
The company is set to become the biggest seller of EVs and hybrid batteries this year. Contemporary Amperex Technology Co., Limited (SZ:300750) has experienced a YoY rise of 115.6% in battery sales as of September 2022. The company has joint ventures with some of the leading EV companies in the industry. For instance, Contemporary Amperex Technology Co., Limited (SZ:300750) provides battery components to the Shanghai gigafactory of Tesla, Inc. (NASDAQ:TSLA). The company also has deals with BMW and Volkswagen as they are shifting away from conventional fuel-powered engine vehicles.
Contemporary Amperex Technology Co., Limited (SZ:300750) has also undertaken upward integration by taking up stakes in a cobalt project in Congo, a lithium project in Australia, and an Indonesian nickel project. All these materials are key inputs for the production of lithium-ion batteries.
Contemporary Amperex Technology Co., Limited (SZ:300750) is known as the leading battery supplier in China, with a market share of around 50% as of 2022. The company invests heavily in research and development to sustain its technological efficiency. In 2021, Contemporary Amperex Technology Co., Limited (SZ:300750) had 10,000 people in its research team with 4,445 patents globally.
9. BYD Company Limited (OTC:BYDDY)
BYD Company Limited (OTC:BYDDY) is a Shenzhen, China-based EV company that is considered one of the best EV stocks in the world. The company designs and manufactures electric and hybrid vehicles along with EV batteries.
Warren Buffett’s Berkshire Hathaway Inc. (NYSE:BRK-B) is a major shareholder in BYD Company Limited (OTC:BYDDY). The Oracle of Omaha is known as a long-term value investor as he initiated his first position in the company back in 2008. Buffett still holds an interest of over 18% in BYD Company Limited (OTC:BYDDY).
Jiong Shao at Barclays initiated coverage on BYD Company Limited (OTC:BYDDY) stock with an Overweight rating and a target price of $40 on September 13. The analyst anticipates the company’s top line to grow exponentially for the rest of the year. As of August 2022, BYD Company Limited’s (OTC:BYDDY) New Energy Vehicle (NEV) sales have observed a YoY rise of 185%. The company has predicted sales of 4 million NEVs (including Battery Electric Vehicles (BEVs) and plug-in hybrids) in 2023. BYD Company Limited (OTC:BYDDY) is currently expanding at a growth rate twice as high as that of Tesla, Inc. (NASDAQ:TSLA).
8. Panasonic Holdings Corporation (OTC:PCRFY)
Panasonic Holdings Corporation (OTC:PCRFY) is a Kadoma, Osaka-based conglomerate and a leading producer of EV batteries.
Panasonic Holdings Corporation (OTC:PCRFY) has been in a partnership with Elon Musk’s Tesla, Inc. (NASDAQ:TSLA) since 2009. Although the company is not the exclusive battery supplier to Tesla, Inc. (NASDAQ:TSLA), it still provides a significant volume of batteries to the Austin, Texas-based company through its gigafactory joint venture. Panasonic Holdings Corporation (OTC:PCRFY) is working on increasing its production capabilities in its Japanese EV battery factory and has co-located its manufacturing facility with Tesla’s Nevada gigafactory.
The company is also diversifying its portfolio by entering into joint ventures with Toyota Motor Corporation (NYSE:TM) to produce EV batteries with a focus on the North American region. The joint venture is enabling Panasonic Holdings Corporation (OTC:PCRFY) to lower its cost by bringing into use the production techniques learned from the Japanese automaker. Panasonic Holdings Corporation (OTC:PCRFY) is targeting a 20% increase in battery energy density by the end of this decade. The technological advancement would help the company improve its market share.
7. Lithium Americas Corp. (NYSE:LAC)
Number of Hedge Fund Holders: 9
Lithium Americas Corp. (NYSE:LAC) is a Vancouver, Canada-based lithium mining company.
Charles Neivert at Piper Sandler resumed coverage on Lithium Americas Corp. (NYSE:LAC) stock with an Overweight rating and a target price of $38 in a research note issued to investors on September 19. The analyst thinks that the company is aggressively working on its Thacker Pass Lithium project. The project is integral for the US to achieve lithium independence as it is trying to lower greenhouse gas emissions and take an aggressive stance on climate change.
Neivert added that the current valuation of Lithium Americas Corp. (NYSE:LAC) stock includes a significant aspect of speculation, opening the door to a wide range of outcomes. However, the risk and reward aspect of the stock is more tilted towards the reward side.
Lithium Americas Corp. (NYSE:LAC) is expected to have a robust revenue stream by 2023 to help the company finance three new lithium sites. Experts believe Lithium Americas Corp. (NYSE:LAC) is currently undervalued, considering the company’s portfolio of assets. By 2027, Lithium Americas Corp. (NYSE:LAC) is predicted to be generating a revenue of $1.48 billion and an EBITDA of $1.07 billion.
Citadel Investment Group increased its stake in Lithium Americas Corp. (NYSE:LAC) by 214% during Q2 2022.
6. Nikola Corporation (NASDAQ:NKLA)
Number of Hedge Fund Holders: 9
Nikola Corporation (NASDAQ:NKLA) is a Phoenix, Arizona-based producer of heavy-duty batteries for commercial EVs.
The Inflation Reduction Act, which offers tax credits of up to $40,000 for every commercial BEV, is expected to greatly increase Nikola Corporation’s (NASDAQ:NKLA) near-term total addressable market. By 2024, Nikola expects to begin shipping its hydrogen fuel cell electric vehicles. The company’s second phase of expansion of its Arizona factory expansion is also underway. This will allow Nikola Corporation (NASDAQ:NKLA) to produce 20,000 BEVs per year.
Furthermore, Nikola Corporation (NASDAQ:NKLA) is in the middle of a takeover effort of Romeo Power, Inc. (NYSE:RMO). The company is looking to enhance its battery manufacturing capabilities by acquiring its battery pack supplier to achieve cost synergies. Nikola has launched a tender offer that requires at least 50% of Romeo Power’s shareholders to complete the exchange of shares. As of September 26, Nikola had received nearly 38% of Romeo Power’s outstanding shares. Nikola Corporation (NASDAQ:NKLA) has now extended the offer deadline to October 12. The extension is a positive sign as it reflects Nikola Corporation’s (NASDAQ:NKLA) intention to complete the deal. Following the acquisition, the combined entity is expected to save up to $350 million in the next four years.
Besides Nikola Corporation (NASDAQ:NKLA), stocks like General Motors Company (NYSE:GM), Ford Motor Company (NYSE:F), and Volkswagen AG (OTC:VWAGY) are some of the leading names in the EV industry.
5. Microvast Holdings, Inc. (NASDAQ:MVST)
Number of Hedge Fund Holders: 12
Microvast Holdings, Inc. (NASDAQ:MVST) is a Stafford, Texas-based battery manufacturer founded in 2006. The company became public in 2021 following a merger with a special purpose acquisition company (SPAC). The batteries manufactured by Microvast Holdings, Inc. (NASDAQ:MVST) are installed in over 30,000 vehicles that are operating in 160 cities globally as of 2022.
On August 18, Colin Rusch at Oppenheimer commenced coverage on Microvast Holdings, Inc. (NASDAQ:MVST) stock with an Outperform rating and a target price of $8. The target price reflects a potential upside of over 312% from the closing price as of October 7. In Q2 2022, Microvast Holdings, Inc. (NASDAQ:MVST) observed a YoY revenue growth of 93%. The company also reiterated its FY22 guidance for a 35% – 45% YoY revenue increase.
Rusch believes that Microvast Holdings, Inc. (NASDAQ:MVST) is innovating to improve the performance of its batteries and lower the use of raw materials. This is integral because the mass adoption of batteries is hindered by the limited supply of raw materials. Microvast Holdings, Inc. (NASDAQ:MVST) is also receiving support from the concerned offices in the US Department of Energy for these technological advancements.
4. FREYR Battery (NYSE:FREY)
Number of Hedge Fund Holders: 16
FREYR Battery (NYSE:FREY) is a Luxemburg-based provider of lithium-ion-based battery cells. The company is working on achieving a production capacity of 43 gigawatt-hours (GWh) by 2025 and becoming one of the leading battery cell suppliers in Europe.
In an update issued to investors on September 21, Adam Jonas at Morgan Stanley increased the price target on FREYR Battery (NYSE:FREY) from $18 to $26 and maintained an Overweight rating. The analyst believes that FREYR Battery (NYSE:FREY) will evolve in the future from its current status of being a Norwegian battery start-up and will have a strong presence in the global battery industry in the next 10 years, making it one of the best EV stocks to invest in now.
FREYR Battery (NYSE:FREY) approved the construction of the Giga Arctic battery facility in June. The factory will be able to produce roughly 29-gigawatt hours of battery capacity every year. This would be sufficient to power about 500,000 EVs annually. The company has also entered into a strategic partnership with Hana Technology to develop automation solutions for FREYR Battery’s (NYSE:FREY) Customer Qualification Plant.
3. Solid Power, Inc. (NASDAQ:SLDP)
Number of Hedge Fund Holders: 17
Solid Power, Inc. (NASDAQ:SLDP) is a Louisville, Colorado-based producer of solid-state rechargeable batteries for EVs and other applications. Solid Power, Inc. (NASDAQ:SLDP) has secured the third position on our list of the 10 best EV battery stocks.
Solid Power, Inc. (NASDAQ:SLDP) has partnerships with some of the best EV companies, such as BMW and Ford. The company anticipates beginning commercial-level production by 2026. Experts term Solid Power, Inc. (NASDAQ:SLDP) as a game changer as it would provide the EV industry with solid-state batteries that have a shorter charging time and a longer range.
As of Q2 2022, Solid Power, Inc. (NASDAQ:SLDP) has a reserve of $553 million of cash and cash equivalents. According to the management, this would be sufficient to fund the company’s operations till 2026. Experts think Solid Power, Inc. (NASDAQ:SLDP) will continue to experience an increase in battery sales which would help the company offset its capital expenditures (CapEx) costs.
Of the 895 hedge funds tracked by Insider Monkey at the end of Q2 2022, Solid Power, Inc. (NASDAQ:SLDP) was held by 17 funds.
2. QuantumScape Corporation (NYSE:QS)
Number of Hedge Fund Holders: 19
QuantumScape Corporation (NYSE:QS) is a San Jose, California-based company that is a developer of lithium-powered solid-state batteries. The company has the distinction of having Bill Gates and Volkswagen as key investors.
Experts believe that QuantumScape Corporation (NYSE:QS) is becoming a leading name in the EV battery segment. The company has received interest from some of the best EV stocks and has also entered into a joint venture (JV) agreement with Volkswagen for a solid-state battery pilot-line facility. It is believed that QuantumScape Corporation (NYSE:QS) has the potential to play a significant role in enhancing performance and lowering the costs of EV batteries in the future. Compared to conventional lithium-ion batteries, QuantumScape Corporation’s (NYSE:QS) solid-state batteries can have an energy density that is 50% to 80% stronger. The company is on track to achieving key milestones for 2022.
As of Q2 2022, QuantumScape Corporation (NYSE:QS) was held by 19 hedge funds.
1. Albemarle Corporation (NYSE:ALB)
Number of Hedge Fund Holders: 39
Albemarle Corporation (NYSE:ALB) is a Charlotte, North Carolina-based specialty chemicals company that has the distinction of being the biggest lithium producer in the world. Lithium is critical to fulfilling the needs of the EV battery industry.
Albemarle Corporation (NYSE:ALB) is forecasting a production increase of 20% YoY for its refined products due to strong demand for lithium and its rising prices. The company intends to serve the end markets to the maximum. During Q2 2022, the sales of Albemarle Corporation’s (NYSE:ALB) refined products increased by 178% YoY to $892 million.
Albemarle Corporation (NYSE:ALB) is also working on developing its midstream segment aggressively. Given the geopolitical tension between US and China, this is a wise decision, as 90% of the lithium refining capabilities are presently located in China, implying a need for geographical diversification. Albemarle Corporation (NYSE:ALB) is also forming tolling arrangements to gain a strategic advantage against its industry peers, allowing the company to sustain its position as one of the best EV stocks in the market.
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Disclose. None. 10 Best EV Battery Stocks to Buy in Late 2022 is originally published on Insider Monkey.
