The lithium battery market has grown rapidly in recent years, driven by increased demand for clean energy and transportation. The global battery market size was valued at $112.1 billion in 2021 and should reach $406.1 billion by 2023. This represents a compound annual growth rate (CAGR) of 15.9% from 2022 to 2030. The main drivers of this growth are:
- The rising adoption of electric vehicles (EVs).
- The expansion of renewable energy sources.
- The development of energy storage systems.
Despite the cloudy macroeconomic environment, global electric vehicle sales have remained resilient in 2023. This should mean companies mining lithium are seeing strong demand for their mining product. For equity investors desiring to profit from the battery markets’ overall dynamism, their best bet may be to put money into these up-and-coming lithium stocks.
Lithium Stocks: Piedmont Lithium (PLL)
Piedmont Lithium (NASDAQ:PLL) is a U.S.-based company that is developing a fully integrated lithium project in North Carolina and Tennessee. The company aims to produce battery-quality lithium hydroxide from its own spodumene concentrate, which will be sourced from the North Carolina project. However, when fully operational, the North Carolina and Tennessee lithium sites are each expected to produce 30,000 metric tons of lithium hydroxide annually.
Piedmont Lithium has signed a five-year supply agreement with Tesla (NASDAQ:TSLA), under which it will provide one-third of its planned spodumene concentrate production of 160,000 metric tons per year to Tesla. The company also plans to sell its lithium hydroxide to other battery and EV manufacturers in North America and Europe.
The lithium producer is still pre-revenue but expects the North Carolina and Tennessee lithium sites to be fully operational in 2025 and 2026, respectively. The company remains decently capitalized with $89 million in cash and cash equivalents and a low debt balance as of their latest balance. As Piedmont Lithium scales up its projects, investors should definitely keep PLL on their lithium-stocks-to-buy list.
Ganfeng Lithium Group (GNENF)
Ganfeng Lithium Group (OTCMKTS:GNENF) is a China-based company that is one of the world’s largest producers of lithium products. The company has a diversified portfolio of lithium resources, including brine, spodumene, lepidolite, and clay deposits. It also has a strong presence in the downstream lithium market, producing various products such as lithium carbonate, hydroxide, metal, chloride, and salts.
Ganfeng Lithium Group has established strategic partnerships with several leading battery and EV manufacturers, such as LG Chem, Volkswagen (OTCMKTS:VWAGY), BMW (OTCMKTS:BMWYY), and Tesla. The company also has stakes in several lithium projects worldwide, such as Caucharí-Olaroz in Argentina, Sonora in Mexico, Mt Marion in Australia, and Bacanora in the U.K.
Ganfeng Lithium’s financials have been hit or miss for the most recent quarters. In the first quarter, revenues declined quarter-to-quarter as lithium prices dropped at the beginning of the year. This was also reflected in Ganfeng Lithium’s second-quarter results. As a result, Ganfeng Lithium’s share price has fallen 49.6% year-to-date.
Nonetheless, the lithium market in China appears to have just begun to show signs of life. Moreover, Chinese electric car sales have continued unabated. These events should give potential investors confidence that lithium prices will rebound (including lithium stocks) and that Ganfeng share price has more than enough runway to make shareholders hefty returns.
Lithium Americas (LAC)
Lithium Americas (NYSE:LAC) is a lithium exploration company I have covered before. Back then, Lithium Americas had various lithium projects operating under one corporate entity: the Thacker Pass project in Nevada, holding the largest lithium deposit in the U.S., as well as the Caucharí-Olaroz and Sal de la Puna projects in Argentina, which were structured as a joint venture with Ganfeng Lithium. However, at the end of July, Lithium Americas’ shareholders approved a spin-off of the Argentina assets, which will now operate as a separate public corporate entity, “Lithium Argentina (NYSE:LAAC).” The separation recently been completed.
This new entity will own Lithium Americas’ interests in Argentina while enabling Lithium Americas to focus on the Thacker Pass lithium site. The Thacker project already has tremendous potential, with 16.1 million tons of battery-grade lithium carbonate equivalent (LCE) available for extraction.
With the Thacker Pass project having received a $650 million investment from General Motors (NYSE:GM), the project’s future role in supplying battery materials to power electric vehicles is undeniable. Moreover, the project is predicted to generate $1.2 billion in annual EBITDA, more than justifying LAC’s current enterprise value.
Investors should closely monitor this equity and the progress of its respective lithium projects’ progress. The Caucharí-Olaroz has recently started production, which could bear good news in the near and medium terms. That makes it one of the best lithium stocks, in my book.
On the date of publication, Tyrik Torres 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.
