There is no electric vehicle revolution without EV batteries. The long-term investment opportunities are plentiful, from the companies that mine the raw materials to those that produce the batteries and charging stations. Today, we’ll look at the best battery stocks to buy as the world shifts gears into the electric future.
According to MarketsandMarkets, the global EV battery market is expected to expand at a compound annual growth rate (CAGR) of nearly 20% through 2027, hitting $134.6 billion. The market research company notes that demand is being driven by electric vehicle demand, technological advancements and government policies.
For those ready to place a wager on the leading players in the space, here are the best battery stocks to buy now.
Panasonic (PCRFY)
As Tesla’s (NASDAQ:TSLA) main battery manufacturer, Panasonic (OTCMKTS:PCRFY) stands out as one of the top battery stocks for investment. It’s also making noteworthy inroads with legacy automakers. The company is reportedly in talks with BMW (OTCMKTS:BMWYY) and Stellantis (NYSE:STLA), as they look to expand their EV offerings.
Panasonic’s partnership with Tesla is a key profit driver for the company, with management forecasting a record profit for the current fiscal year, which ends March 31. On June 6, Panasonic said it planned to increase production at the Nevada factory it jointly operates with Tesla by 10% by March 2026.
Panasonic previously said it would build at least two new factories in North America by the end of the decade to produce batteries for Tesla EVs. One of those is a massive $4 billion plant in Kansas, which the company announced in mid-July.
With Tesla dominating the EV space, Panasonic is in a great position. Their expanding partnership should be a boon to both companies and help drive PCRFY much higher.
Tesla (TSLA)
Tesla (NASDAQ:TSLA) is obviously one of the best EV stocks money can buy. The company reported record deliveries and revenue and beat profit estimates for the second quarter. Yet, Tesla is also one of the best battery stocks. That’s thanks to its budding EV charging business as the company remains committed to creating a holistic EV ecosystem.
As an article in Time magazine notes: “Tesla went ahead and built its own network, not to turn charging into a profit center but rather to reassure buyers that they could get across the country without running out of power.” Yet, analysts believe it could become a significant revenue generator for the company down the road.
General Motors (NYSE:GM) and Ford (NYSE:F) both announced plans to make their EVs compatible with Tesla chargers in the near future. And, as Time reports, Piper Sandler puts the revenue opportunity of other car manufacturers using Tesla’s charging network at $5 billion a year a decade from now.
The additional revenue stream should help the company as its profit margins are squeezed by vehicle markdowns and as it increases spending to ramp up production of its Cybertruck.
Albemarle (ALB)
Specialty chemicals manufacturing company Albemarle (NYSE:ALB) is one the world’s largest producers of lithium, which is key to the production of lithium-ion batteries that power electric vehicles. With lithium supply failing to keep up with demand, which is spiking due to the rise of EVs, Albemarle is in a prime position to capitalize.
The company reported first-quarter results on May 3. Revenue surged 129% year over year to $2.6 billion, although it missed estimates slightly. However, this was the third quarter in a row the company saw triple-digit revenue expansion. Meanwhile, net income rose a whopping 389% to $1.2 billion, with adjusted earnings per share (EPS) of $10.32 beating estimates by $3.26.
Within the company’s report, its energy storage segment results stood out, with net sales and adjusted EBITDA both increasing more than 300% on a year-over-year basis during the first quarter.
The green wave and ongoing lithium supply-demand imbalance should provide a strong tailwind for ALB.
Lithium Americas (LAC)
Lithium Americas (NYSE:LAC) offers a more speculative way to play the surge in lithium demand due to EVs. While it has yet to generate revenue, it offers a great deal of promise.
In May, the company’s board approved a plan to split its North American and Argentine operations into two separate publicly traded companies. This move should unlock substantial long-term value for shareholders.
Its North American operations are focused on the Thacker Pass project in Nevada, one of the largest known lithium resources in the U.S. with an impressive after-tax net present value of nearly $5 billion. With the project expected to deliver average annual EBITDA of $1.2 billion over a 40-year mine lifespan, the asset could generate colossal cash flows once production begins. Currently, it is expected to begin in the second half of 2026.
Lithium Americas recently partnered with General Motors, which plans to invest $650 million in the Thacker Pass project. This strategic alliance and a binding supply agreement provide the firm with a clear vision of future cash flows, solidifying its potential in the space.
Freyr Battery (FREY)
Freyr Battery (NYSE:FREY) is one of the smaller and more intriguing players among today’s top battery stocks to buy. Despite being in the early phases of its development, the provider of “industrial scale clean battery solutions” is generating buzz due to its twin gigafactory projects in the U.S. and Europe.
Production on Freyr’s Giga Arctic project in Norway has already begun. Earlier this month, it was announced the European Union awarded the company a 100 million euro grant to support the project. On this side of the pond, Freyr announced in November the selection of Georgia as the site for its first U.S. battery cell factory.
Investors would be wise to keep an eye on FREY, which has the potential to be one of the high-growth battery stocks of the next decade.
BYD Co. (BYDDF)
Warren Buffett-backed Chinese EV and plug-in hybrid maker BYD Co. (OTCMKTS:BYDDF) is the best-selling car brand in its home country and also accounts for nearly 40% of the sales of new-energy vehicles in China, the world’s biggest EV market.
Like Tesla, the company recently reported record quarterly sales. However, Q2 deliveries came in at more than 700,000 new energy vehicles, with about half being fully electric, outpacing the U.S. EV maker. What’s more, BYD is giving Tesla a run for its money in emerging markets like Brazil, Israel and Thailand.
But since we’re talking about the best battery stocks today, what’s of most interest is that BYD recently surpassed LG Energy Solution to become the second-largest EV battery producer in the world. BYD’s Blade Batteries are popular with EV makers, as they offer “new levels of safety, durability and performance, as well as increased battery space utilization,” according to the company.
Honeywell (HON)
Honeywell (NASDAQ:HON) operates a highly diversified business, which means its growing battery business is often overlooked.
Its energy storage systems cover the entire four-hour, 10-hour and long-term discharge cycle through its lithium-ion, flow, and hydrogen batteries. Its energy storage systems are part of its Performance Materials and Technologies segment, which demonstrated 11% organic growth last year.
Honeywell is also working to make EV batteries safer, developing sensors with Nexceris that can help prevent battery fires.
Seeking Alpha gives Honeywell’s business an A+, with the company’s performance metrics comparing favorably to historical and sector averages.
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
