If you want to pick an individual battery maker, one surefire way to ride with Tesla is to buy its battery supplier Panasonic (PCRFY) and its Panasonic EV Energy division.
While you may know the Japanese company best from its old life as a consumer electronics giant, which admittedly has crumbled in recent years, Panasonic currently provides Tesla with Model S batteries — and that gives it a prime position to play a role in the electric vehicle revolution. In fact, the EV Energy group started in 1996 as a joint venture with Toyota (TM) to produce batteries for its Prius and has now grown to supply a big chunk of the hybrid and electric vehicle market.
If you can look past the decline of legacy business divisions at Panasonic that resulted in 10,000 layoffs just about a year ago and another 36,000 before that, it may be worth taking a flier on this bargain-priced Japanese stock to benefit from its front-running role in the EV space.
While we can quibble over whether Tesla will crash and burn or whether it’s fairly valued, the benefit of buying its battery provider is that Panasonic is certainly not riding a momentum wave with a return of -40% since early 2010. And regardless of whether expectations and sentiment change for TSLA stock, as long as the company keep writing checks to Panasonic for batteries then the cash will keep flowing.
Panasonic stock looks to have turned a corner with 58% gains year-to-date in 2013, though it is admittedly still in restructuring mode.