When it comes to electric vehicles, it’s all about the batteries, which is why you should be on the lookout for game-changing battery stocks.
After all, batteries power EVs. Improving the driving range and charging times of car batteries should lead to mass consumer adoption in the coming years. As a result, automakers are pouring billions of dollars into both securing the materials needed to make EV batteries, and improving the technology behind the batteries.
According to the International Energy Agency, demand for electric vehicle batteries is outstripping demand for EVs themselves. Specifically, battery demand in the U.S. grew 80% in 2022, while EV sales only increased 55% last year.
The worldwide market for electric vehicle batteries is forecast to reach $135 billion by 2027, up from $56 billion in 2022, data from Markets and Markets shows. Given the crucial nature of EV batteries to the automotive industry and consumers, now is a good time for investors to take a position in battery stocks.
Want to get rich? Here are three game-changing battery stocks to buy right now.
Lithium Americas Corp. (LAC)
The latest news from Lithium Americas Corp. (NYSE:LAC) is that shareholders approved the company’s plan to split its U.S. and Argentina-based operations into two separate business units. Following the approval, Lithium Americas will separate into two entities: Lithium Americas (Argentina) Corp. and Lithium Americas Corp.
Going forward, the Lithium Argentina team will advance the Cauchari-Oloroz lithium project, while the Lithium Americas team will focus on the Thacker Pass project situated in Nevada.
The separation should be finalized in October subject to regulatory approvals. News of the separation into two operating units comes months after automotive giant General Motors (NYSE:GM) signed a deal to invest $650 million in the company to give it access to the lithium developed at the Thacker Pass project.
Lithium is a key component in electric vehicle batteries and in high demand. While LAC stock is down 3% so far in 2023, it is up 315% over the last five years, making it one of the game-changing battery stocks for wealth generation.
Tesla’s (NASDAQ:TSLA) stock has slumped more than 20% since the company delivered second-quarter financial results in July, and on news that the company continues to cut prices on the electric vehicles it sells in China. This should be viewed as a buy-the-dip opportunity.
Tesla recently announced that it its lowering prices in China for its Model Y long-range and performance version vehicles, dropping the starting prices of both models by nearly $2,000. Tesla CEO Elon Musk has said that further price cuts are a possibility in China.
Tesla has slashed prices several times in the U.S., China, and other markets, since late last year as it tries to reduce its surplus inventory.
The price cuts have worried analysts and investors, as have Q2 results that showed lower profit margins due to various incentives being offered on the company’s electric vehicles worldwide.
During the Q2 earnings call, Musk dismissed concerns about weakening profit margins but warned that Tesla’s vehicle production would likely slow during the current third quarter because of shutdowns for factory maintenance.
TSLA stock has declined 20% over the last 12 months and is currently trading 26% below its 52-week high. However, over the past five years, the company’s share price has increased 975%.
Another lithium producer whose stock investors should snap up on the downslope is Albemarle (NYSE:ALB).
The world’s largest provider of lithium for electric vehicle batteries has seen its share price fall 32% over the past year, including a 12% decline so far in 2023.
However, over five years, ALB stock is up nearly 100%. Currently trading at just five times future earnings, Albemarle stock looks undervalued at current levels. The stock also offers a dividend of 40 cents a share per quarter, which is more than most other battery stocks.
The company’s Q2 print released in early August was nothing short of stellar. Revenue in the April through June period rose 60% year-over- year, while earnings per share increased an incredible 112% from the same quarter of 2022, obliterating the 29% increase that had been analysts’ consensus expectation.
The company also raised its 2023 guidance on both the top and bottom lines, citing rising lithium prices. Sadly, the company’s Q2 revenue growth fell slightly below the 64% expected on Wall Street, sending the stock 10% lower recently.
Investors shouldn’t be discouraged as Albemarle remains one of the best battery stocks to buy right now.
On the date of publication, Joel Baglole 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.