Lithium is a key component of electric vehicle (EVs) batteries, which have surged in demand in the past few years. However, lithium prices have been volatile in the past year, causing some of the best battery stocks to reach record highs in late 2022. However, according to Koyfin, lithium carbonate prices have fallen more than 72% over the past twelve months. An oversupply of rare earth minerals is one of the reasons prices reached new lows in 2023. The other reason is most likely related to the slowing demand for electric vehicles (EVs) that many market analysts, including Tesla’s (NASDAQ:TSLA) CEO Elon Musk, have commented on.
Still, battery stocks could make great long-term investments despite short-term slumps. The three battery stocks to consider are innovators in their own respects and deserve much investor attention.
BYD (BYDDY)
Listing battery stocks without mentioning the world’s second largest EV battery supplier is challenging. BYD (OTCMKTS:BYDDY) has garnered several achievements recently. The Chinese automaker has managed to dethrone Tesla as the world’s largest EV maker in 2023, but BYD will not stop there. For those who don’t know, BYD began designing and supplying battery technology, and recently, the Chinese automaker has played a direct role in supplying battery technologies to the burgeoning electric vehicle sector. Last year, BYD even ousted LG as the world’s number 2 EV battery supplier.
BYD, in its own right, has been consistently growing its monthly sales and market share in both domestic and international markets. Despite an EV slowdown, BYD is still increasing its sales year-over-year. In particular, in January 2024, the company sold 205,588 electric vehicles, up 33.1% Y/Y but down more than 34% monthly. The Chinese EV maker was not the only large electric vehicle company to report a month-over-month decline in sales growth.
Moreover, BYD has partnered with Qatar-based dealership Mannai to introduce BYD’s electric vehicles into the market. The company is also fleshing out partnerships to increase brand awareness in Europe.
Tesla (TSLA)
Tesla, the world’s leading EV maker, is also a pioneer in battery technology. In particular, Tesla’s battery tech leverages a cylindrical shape and dry coating to enable the production of high-performance and long-range EVs at affordable prices. The automaker has invested in its Texas and Nevada plants to wean itself off third-party suppliers slowly. The reason here is straightforward. Playing a direct role in the battery supply chain will allow for fewer external supply chain risks and provide more tax credit incentives from the Inflation Reduction Act.
In 2023, quarterly earnings came in above analysts’ estimates, and the price cut strategy the automaker began to pursue in the beginning year has increased quarterly deliveries while also placing pressure on gross margins. Tesla’s Q4’2023 financial figures ended up beating Wall Street’s estimates. Still, unfortunately, the EV maker’s CEO Elon Musk shared grim guidance for Tesla and its shareholders, citing interest rates and weak consumer demand.
However, the EV maker’s overwhelming presence in the EV battery market should not be understated, and investors looking for exposure to the sector should contemplate long-term investments in Tesla shares.
Panasonic (PCRFY)
Panasonic (OTC:PCRFY), a Japanese conglomerate, produces products and services from consumer electronics to industrial solutions. The conglomerate is also a major player in the battery industry, supplying lithium-ion cells to Tesla and other automakers such as Toyota and Honda. Panasonic ranked fourth in global market share of EV batteries in 2022. Furthermore, Panasonic has been collaborating with Tesla since 2010 and currently operates a joint venture at Tesla’s Gigafactory in Nevada, producing 2170 cells for Tesla’s Model 3 vehicles. Panasonic is investing heavily in making Tesla’s new 4680 cells at its Wakayama factory in Japan.
Panasonic has seen its valuation fall more than 15% over the past six months due to fears of an EV market slump. The battery maker has been warning about one since October 2023.
Despite the slump, there is still an immense opportunity holding Panasonic shares. The battery slump will likely not last forever, and Panasonic, Tesla’s main supplier, will maintain its relevance.
On the date of publication, Tyrik Torres did not hold (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.
