Battery stocks are a logical investment for those seeking to capitalize on growing EV demand. Auto manufacturers are making it clear – the future for this sector is all-electric. That means retooling processes and supply chains to produce electric vehicles that resemble their fossil fuel forefathers in brand alone. Additionally, this means gravitating toward an entirely new set of suppliers to support the development of EVs.
Battery stocks are, therefore, likely to continue to garner significant interest among investors. The production of lithium ion batteries, and other improved technologies, will need to increase as demand grows.
Among the battery stocks I’m watching right now are these three companies. These are among the battery stocks with the best long-term upside, given their growth prospects and unique technological processes.
Without further ado, let’s dive in.
FREYR Battery (FREY)
FREYR Battery (NYSE:FREY) is an exciting company for investors looking to increase exposure to battery production. It’s an early-stage startup in this space. Accordingly, FREYR has yet to charge ahead of its competition. Nevertheless, it’s a company worth understanding, because its positioning and brand have clear potential.
FREYR has its roots in Norway, with business operations in Luxembourg. Norway has quickly emerged as one of the primary early adopter geographies in the EV space. The country is well-known for its environmental focus, so it should be no surprise that EV supply chain opportunities will crop up there.
And that is what’s currently occurring, as the company approaches the commencement of Customer Qualification Plant operations on March 28.
The company remains on track to invest $1.7 billion into its Giga America manufacturing plant. That plant is expected to open in 2025.
Right now, investors are looking at FREYR as a pre-revenue firm. But it is a pre-revenue company that emerged from the ashes of many SPAC EV failures, which successfully validated its technology. That technology will be applied to operations that will come online in weeks. Accordingly, this is among the early-stage investments in this space I think is worth making, for those looking for a long-term battery stock to buy right now.
Albemarle (NYSE:ALB) is one of the safest bets an investor can make within the EV sector. The Charlotte-based company produces lithium, a dominant component in commercial battery chemistry. Lithium has proven to be the most commercially viable choice, although other electrolytes are adequate. That said, Albemarle has become a significant player in lithium mining, giving it a clear competitive advantage in this space.
The current supply and demand setup for this sector favors Albemarle and any other firm that quenches surging demand. Demand for lithium can be best charted as a hockey stick. There’s been a long, flat period of demand that’s given way to a surge. This uptick could take years to work through, leading to outsized profitability, should lithium prices remain high.
There’s been some volatility in this regard. But the impressive spike of lithium prices in 2022 essentially continued into this year. Indeed, for Albemarle, it’s been a godsend. In Q4, sales increased 193% to $2.6 billion, more than doubling for full year 2022, eclipsing $7 billion. The firm has established itself as a leader in the sector, and investors also get a modest dividend with each share.
QuantumScape (NYSE: QS), like FREYR, is another stock that emerged from the pandemic-era SPAC boom in EVs. It was one of the most focused-on SPAC companies of the time, quickly becoming seriously overvalued. This was evidenced but he company’s share price that peaked above $130 in late-2020.
Ultimately, the excitement subsided, and prices fell rapidly. QS shares now trade for $7 and change. Well, that’s not a particularly intriguing narrative, then, is it?
That said, I don’t think it’s time to rule QuantumScape out. The company has achieved a number of promising milestones, showing its is progressing in its bid to bring solid-state batteries to market. These solid-state batteries are often viewed as the crown jewel of the sector. That’s because they charge faster, hold their charge for longer, and provide better range than traditional lithium-ion batteries.
QuantumScape continues to overcome technological barriers that impede the development and commercialization of solid-state lithium-metal batteries. In 2022, that meant improving separator film and cathode technology. The result was that the company shipping its first 24-layer A0 prototype battery cells to customers.
Over the long-term, I think this is one of the top battery stocks worth holding.
On the date of publication, Alex Sirois 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.