Battery stocks jumped on Oct. 19 after the Biden administration announced $2.8 billion for 21 projects to boost the American supply chain.
Amprius (NASDAQ:AMPX) jumped 77% and has already announced $50 million in aid. Microvast (NASDAQ:MVST) jumped 40%, American Battery Technology (NASDAQ:ABML) rose 38%, and Piedmont Lithium (NASDAQ:PLL) was up 12%. All three have programs listed in the administration’s release. Each one has since pulled back into the red in early morning trading this morning as well.
None of the four companies is very large. Amprius is the most valuable with a market capitalization of $1.2 billion. Piedmont Lithium is worth a little over $1 billion. Microvast is worth $674 million. American Battery Technology is worth $450 million as trading opens on Oct. 20.
Batteries for National Defense
The aid is part of the Infrastructure Bill’s effort to inshore American production of products deemed crucial to competitiveness, like electric car batteries. Global supply chains that came under strain during Covid-19 are being further stressed by international tensions. The administration argues that China currently controls most of the market for materials like graphite and lithium.
The $2.8 billion is called the American Battery Materials Initiative. The recipients will match the aid privately for a $9 billion investment.
Amprius came public just a month ago and replaces graphite anodes with silicon nanowires that save weight on military drones. Microvast has fast-charging batteries already being made in Germany and China. ABT is a recycler that can take the needed material out of old batteries. Piedmont is mining for lithium in North Carolina.
The four companies are among dozens that will benefit from new government aid to the sector, and many will fail. The hope is that by placing many bets across the country, and across the supply chain, America can become self-sufficient in electric battery production.
Battery Stocks: What Happens Next?
All four companies remain small, and all these stocks are speculative. Most still have little or no revenue, and none are yet showing a profit. But that’s what venture funding is all about, wherever the money comes from.
On the date of publication, Dana Blankenhorn held no positions in any companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.