Batteries have transitioned from mere cheap accessories to vital components in electronics and the EV (Electric Vehicle) revolution. Transformations have increased demand both for batteries and for the best battery stocks.
Batteries have come a long way since the Energizer Bunny. Now the sector includes everything from micro-batteries powering sleek, pocket-sized tools to grid-scale storage systems saving solar and wind energy.
Those uses translate into high demand and pressure to innovate, making this a fascinating sector for investors. In this post, we look into some of the best battery stocks and ETFs to pay attention to this year.
Best Battery Stocks of 2024
Battery demand is exploding, and manufacturers can barely keep up with it at times. While they are obviously an important part of the supply chain, this list does not include any miners of battery metals like copper, lithium, nickel, or cobalt and will focus on battery manufacturers instead.
We also excluded Samsung. It’s an important battery manufacturer, but the Korean mega-conglomerate is so large and dominated by other activities that it cannot be called a “battery stock”.
So let’s look at the best battery stocks.
These are designed as introductions, and if something catches your eye, you will want to do additional research!
1. Tesla, Inc. (TSLA)
| Market Cap: | $782.9B |
| P/E: | 68.24 |
| Dividend Yield: | – N/A |
Tesla is a hot topic among investors, with many either loving or hating the EV automaker. The company’s image is deeply tied to its eccentric and controversial CEO – and at times, the richest man in the world – Elon Musk.
While the company is famous for its cars, it is also active in solar roof and battery manufacturing. These batteries are used in cars, but also in individual houses, with the Powerwall.
Tesla has moved into power backups for electrical grids and industrial facilities, with 10 GWh deployed in 65 countries. The deployed capacity is increasing quickly, with an installed capacity in the last 4 quarters, almost equalling the entire history of Tesla’s battery deployment.
The Megapack will, from now on, be manufactured in a brand new factory able to produce 40 GWh/year in Lathrop, California. Another identical factory will start construction in Shanghai in 2023.
All Tesla batteries are lithium-ion, although the exact chemistry can vary, with CATL’s lithium iron phosphate batteries being used for lower-range cars.
Besides CATL, Tesla used to rely on Panasonic and LG for its supply of batteries but is now producing its own 4680-type cell high-density batteries with undisclosed chemistry.
Tesla’s stock performance depends on its battery quality in the sense that its car sales depend on Tesla keeping its historical edge on EV quality, range, and performance.
Still, for now, the solar and separate battery segments are relatively small. So the future of the company and its stock prices will be more determined by the auto segment, including the elusive promises of the “robotaxi” and a fully self-driving car.
⛏ Learn more: Delve into the details of Elon’s tunneling vision: A concise guide to Boring Company stock acquisition.
2. CATL – Contemporary Amperex Technology Co., Limited (300750.SZ)
| Market Cap: | $137.4B |
| P/E: | 24.7 |
| Dividend Yield: | 1.39% |
China-based CATL is THE leader in battery manufacturing, producing around half of the world’s total batteries if measured by GWh. It is also the leader in lithium iron phosphate battery technology, allowing for cheap and “dense enough” batteries to lower EV costs.
Another chemistry option is the already impressive 160 Wh/kg Sodium-ion battery announced in 2021. By using abundant sodium, it bypasses the problem of the growing cost of lithium and its price volatility.
More important for the long term, another leading position of CATL is in battery density. It recently announced a record-breaking 500 Wh/kg “condensed” battery, which would be dense enough to power long-range EVs and even planes.
In addition, it has a 330 Wh/ kg ultra-durable “million miles” battery that charges to 80% in 5 minutes, ready for commercialization, which should solve the problem of durability and the “anxiety range” for EVs’ definitely.
CATL combines both an almost unbeatable scale with an impressive technological edge. While its competitors might catch up, for now, CATL’s position seems solid, which makes it one of the best battery stocks around.
The main risk for investors in this company is not business-related but the rising US-China tensions, with the stock only listed in Chinese exchanges.
A repeat of Huawei falling under sanctions and being banned from selling to Western markets is a distant but very real possibility. So cautious diversification is highly recommended, despite CATL’s lead in the industry.
🔋 Learn more: CATL has made waves in battery tech; here’s how you can get involved with their stock this year.
3. Panasonic Holdings Corporation (PCRFY)
| Market Cap: | $27.7B |
| P/E: | 17.44 |
| Dividend Yield: | 1.84% |
Panasonic has been in the battery business for a long time and was among the first suppliers to Tesla. It is still supplying batteries to other automakers. Notably, it established a joint venture with Toyota to develop new battery technologies, with a focus on solid-state batteries, which are, in theory, the best end-game for EV batteries in terms of price, range, and safety.
While CATL and Tesla are working on new battery technologies, Panasonic is not far behind, with a focus on reducing or eliminating the need for hard-to-find metals. Notably, it has achieved the world’s first battery with less than 5% cobalt content. The long-term goal is to introduce lithium-ion batteries that are cobalt-free and require less nickel as well.
The company is launching a $4B, 30 GWh factory in Kansas, expected to start production in early 2025. Panasonic is also in talks with Stellantis and BMW for new battery plants.
While batteries (energy and automotive) are an important part of the company’s future and focus, a large part of the current business is also electronic, software, electric components, and appliances.
So investors in Panasonic will need to also asses these other elements and not focus solely only on the battery activities. This can also provide plenty of synergies, upsells, and cross-sells between Panasonic departments, like, for example, in-car entertainment systems for Ford or a mobile app for Harley-Davidson’s first electric motorcycle. Certainly one of the main players on our list of the best battery stocks in 2024.
4. QuantumScape Corporation (QS)
| Market Cap: | $2.9B |
| P/E: | – N/A |
| Dividend Yield: | – N/A |
QuantumScape is a pre-revenues company solely dedicated to making solid-state batteries a commercial reality.
The battery industry has been focused on making lithium-ion technology more efficient, more dense, safer, etc. But lithium-ion batteries have some limitations tied to fundamental physics that make it probably impossible to overcome.
Notably, lithium-ion batteries require an electrolyte, and even if not liquid but in gel or another form, it is still causing some “dead” space and weight in the batteries.
Using only a solid replacement for the electrolyte is the promise of so-called solid-state batteries. The company has backing from Bill Gates and a partnership with Volkswagen since 2012.
🚗 Learn more: Volkswagen has been making moves in the auto world; here’s what their stock tells us now.
Quantum Scape is aiming for its battery to be way above its competitors in both charging speed and density, which would put it right among the best battery stocks for the long term. Notably, it claims it has a path to battery density of 500 Wh/kg and even ultimately up to 1,000 Wh/kg.
The switch from lab to mass manufacturing has nevertheless been challenging. Solid-state batteries are hard to make durable, and automated mass production can be difficult in itself. This has caused repeated delays in QuantumScape’s projections, and the company only started to ship prototypes for testing to automakers in Q1 2023.
The company expects to have enough cash until 2025 and is targeting consumer electronics as a first step, as this is an industry that could accommodate initial small production batches and provide cash flow earlier.
Considering CATL’s recent announcement of a 500 Wh/kg “condensed” / semi-solid battery, Quantum Scape’s solid-state battery might be facing tougher than expected competition (follow the link for a more detailed and technical discussion on this topic).
Overall, QuantumScape will need to keep the speed up. Still, its long-standing partnership with Volkswagen, the largest automaker in the world by revenue, should ensure QuantumScape a share of the market if it achieves its technical ambitions, even if CATL captures the Chinese automakers and some of the Western markets.
5. FREYR Battery (FREY)
| Market Cap: | $1.05B |
| P/E: | – N/A |
| Dividend Yield: | – N/A |
FREYR is an ambitious newcomer to the battery war. The company is looking to develop mass manufacturing for the semi-solid battery technology developed by the MIT spinoff startup 24M.
The company claims to have reduced the complexity of lithium battery manufacturing, reducing production costs by 40% and improving battery characteristics overall. It has already licensed its technology to Volkswagen and Fujifilm and has partnerships for building battery factories with FREYR (Norway), Lucas TVS (India), and Axxiva (China).
The company is planning to build a 43 GW battery factory in Norway, leveraging the country’s low-carbon power grid, and a 38 GWh factory in the USA for $8B, of which $2.5B comes directly from the benefits of the Inflation Reduction Act.
While at an early stage of building its factories, FREYR has already managed to secure a serious commitment from partners in the green industry to buy batteries from it in the 2025-2030 period:
- 10-14 GWh from Impact Clean Power Technology.
- 38 GWh from Nidec Corporation.
- 19 GWh from Honeywell
- 28.5 GWh from Powin
- Undisclosed volume from Maersk, Siemens Energy, Scatec, ITOCHU, and Eguana.
Investors in FREYR will need to accept the inherent risks and incertitude in a recent venture using a relatively secret technology. They might be reassured by the enthusiastic endorsement of the technology by large and serious industrial partners, who obviously have access to more confidential data.
FREYR also fits into the willingness of the West, and especially the EU, to relocate the green supply chain closer to home and away from China.
ETFs (Exchange Traded Funds)
If you prefer to have exposure to the sector as a whole rather than investing in individual best battery stocks, there are several battery-focused ETFs available, usually with holdings in multiple levels of the battery supply chain.
1. Global X Battery Tech & Lithium ETF (ACDC)
This ETF mixes lithium producers (Alkem, Livent) and battery makers (Tesla, Panasonic), covering most of the battery supply chain. The exposure is low on China and mostly focused on Western countries and its allies, and can be a good option for low geopolitical risk.
2. Amplify Lithium & Battery Technology ETF (BATT)
35% of this ETF’s holdings are in battery tech energy storage and battery components (CATL, LG, Panasonic). The rest is spread on EVs, electricity infrastructure, and battery metals.
3. L&G Battery Value-Chain UCITS ETF (BATT)
The ETF includes automakers (BMW, Mercedes, Renault, BYD) and electric suppliers (ABB, SolarEdge). This can be a complement to battery manufacturer stocks to cover the entirety of the supply chain, maybe together with lithium stocks or ETFs.
Conclusion
Batteries have become increasingly central to modern life and are required in ever-increasing volumes for renewable power, decarbonization, grid stability, and mobility. Leading manufacturers will likely benefit from this growing demand.
With new technological developments emerging on a regular basis and a strategic sector for all the major economic powers, the competition to be among the best battery stocks is intensifying.
Investors should be careful to diversify to limit the risks associated with a specific technology, company, or geography.
