Battery stocks have an incredible outlook ahead for several reasons. Electric vehicles (EVs) had a record year in 2020, and the trend has improved significantly this year as well. EV sales growth during the first half of 2021 has outpaced the broader industry.
Naturally, with the proliferation of EVs, the demand for EV battery anodes and cathodes is expected to rise at a healthy pace.
Lithium batteries currently dominate the EV space. Though many believe solid-state batteries to be the holy grail of electrification, lithium batteries currently present the most viable option for EV manufacturers.
EV batteries have been improving quickly but are still a long way from what they would be at this point. Range, charge times and energy density issues persist. However, legacy automakers and startups alike are working diligently in improving existing batteries to power the next generation of EVs.
Here are three battery stocks that are considered to be the needle-movers in the sector.
Battery Stocks to Buy: Lithium Americas (LAC)
Lithium Americas explores lithium deposits and currently owns two long-life, low-cost lithium ore resources.
The Canada-based company owns interests in the Cauchari-Olaroz Project located in Argentina and the Thacker Pass project located in the United States. Both resources will become production assets by 2023.
LAC stock has a bright future ahead, as CEO Jon Evans predicts a 7,000% increase in lithium demand over the next decade.
Production in its Argentinian asset will begin in the second quarter of 2022. The soaring lithium prices have convinced the company to expand production by 50% over its original goal.
Moreover, The Thacker Pass project was also green-lit by the U.S. Bureau of Land Management this year. The management is hopeful that the rushed schedule could bring production online by the end of 2022.
Albemarle Corporation is one of the top manufacturers of specialty chemicals globally, operating through its lithium, bromine specialties, and catalysts segments.
Though its business is highly diversified across its three segments, its lithium business will boost ALB stock in the long term.
The company is set to benefit from the expected demand increase in lithium. It is investing heavily in its lithium mines in Australia and Chile which will become operational next year.
This is part of Albemarle’s Wave 2 project, which involves the production of 175,000 tons of lithium carbonate and hydroxide from the company’s new mines. Moreover, it plans to work on Wave 3 and 4 projects depending on demand.
Lithium accounts for roughly 41% of its total revenues, and its contribution is likely to increase significantly in the next few years. From a fundamentals perspective, it expects to generate $6 billion to $7 billion in 2022, including a 25% to 35% increase in adjusted EBITDA on a year-over-year basis.
Best Battery Stocks to Buy: QuantumScape (QS)
QuantumScape is currently the front-runner in developing solid-state lithium-metal batteries, which will pave the way for the EV future.
Solid-state batteries use a solid electrolyte and are much lighter, denser, recharge faster, and offer greater range than lithium-ion batteries.
So far, the company is on track to realizing its goals and become an EV battery disruptor. QS stock remains a high-risk, high-reward play in the EV realm.
QuantumScape has done a fine job of finding partners to help it execute its vision and acquire funding. Its main client is automotive giant Volkswagen (OTCMKTS:VWAGY), with whom it has established milestone goals which it needs to execute. So far, its progress has been remarkable in the development of its single-cell batteries.
It plans to develop four-cell and 10-cell batteries in the future, which could be game-changers for various sectors. QS stock has a strong long-term case that could pay a lot of dividends down the road.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.