Battery stocks are becoming more prominent as electric vehicles become a mainstay. The industry is set to achieve a compounded annual growth rate of 10.07% from now until 2028. According to the International Energy Agency, demand for electric cars is booming. The agency predicts EV sales will jump by 35% this year.
When most investors think of electric vehicle stocks, they think of Tesla (NASDAQ:TSLA). Tesla shares have gained over 1,000% over the past five years and have created generational wealth for numerous investors.
While electric vehicle producers can make plenty of money from these vehicles, there is also money to be had by investors who look at the components of each vehicle.
For instance, every electric vehicle relies on a battery as its power source. These batteries are different from the ones you would find in a combustible-engine car. Investors looking for exposure to EV battery stocks may want to consider these up-and-coming picks.
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Volkswagen (OTCMKTS:VWAPY) is an automobile giant that has been around since 1937. The company has been generating billions of dollars in profits each quarter and has had double-digit year-over-year revenue growth for the past several quarters.
Although the business model is solid, it hasn’t given the impression of a growth stock. Shares are down by 10% over the past five years and are down by 3.65% year-to-date.
However, Volkswagen’s investments in electric batteries can change the tide. Volkswagen plans to grow its PowerCo battery unit exponentially and already has large partnerships in place. For instance, Volkswagen provides EV batteries for Ford’s (NYSE:F) vehicles.
The automaker is investing in mines and is striving to produce more affordable batteries. Lower costs will make Volkswagen’s batteries more desirable and improve the company’s profit margins. The corporation has plenty of cash on hand and a stable business model to realize its goals.
Panasonic has been around for over 100 years and offers an enticing value proposition for investors. Shares trade at a 9.4 P/E ratio and have a dividend yield approaching 2%. Shares are down by 4% over the past five years but have gained 37% year-to-date.
The company reported 2.83% year-over-year revenue growth in the second quarter and more than quadrupled its net income to the tune of a 310.48% increase. Those numbers should continue to rise due to the company’s status as a leading global supplier of the critical components of EV batteries.
Panasonic has an edge over the competition, and it’s no wonder Tesla has a good relationship with the company. Investors looking to benefit from the rise of electric vehicles may want to scoop up shares of this up-and-coming battery stock.
Solid Power (SLDP)
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Solid Power (NASDAQ:SLDP) is one of the more speculative EV battery stocks that has high revenue growth, rising net losses and a lofty valuation. It has the key elements of a feast-or-famine battery stock.
Solid Power is a leader in the emerging solid-state battery industry. Solid-state batteries have many advantages over lithium-ion batteries that rely on liquid electrolytes. These batteries are safer and more efficient than the current EV batteries on the market.
The company’s batteries will forgo expensive minerals like nickel and cobalt. Solid-state batteries can reduce the costs of creating electric vehicles and become the most logical choice for EV manufacturers. Sulfur is the substitute material.
Lower prices for electric vehicles will attract more customers, creating more demand for solid-state batteries in the process. Solid Power is a leader in the industry. It is a high-risk, high-reward stock that isn’t for everyone, but solid-state batteries may be the next step forward for the electric vehicle industry.
On the date of publication, Marc Guberti 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.
Marc Guberti is a finance freelance writer at InvestorPlace.com who hosts the Breakthrough Success Podcast. He has contributed to several publications, including the U.S. News & World Report, Benzinga, and Joy Wallet.
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