The EV industry has a new focus: building the best battery.
The future of electric vehicles (EVs) is predicated on battery power — whoever can make the longest-lasting, furthest-driving, cheapest battery will eventually dominate the market. It’s no wonder then that competition in the EV market has grown extremely heated in the last year, with companies old and new joining the race to build the perfect battery. But in a field that’s growing more crowded by the day, which is the best EV stock for investors to focus on? Here are seven companies working on improving EV battery technology. It’s a list that includes old automakers that are looking to utilize their market positions to capitalize on a growing trend as well as new companies trying to break the old business model, and of course, Tesla (ticker: TSLA).
Tesla (ticker: TSLA)
Tesla practically dragged the rest of the auto industry into the electric vehicles business, growing so large so fast that it became impossible to ignore. In 2020 alone Tesla’s market cap grew by more than $550 billion, and today it’s bigger than the next nine largest automakers combined. But what’s most incredible is that Tesla still has room to grow from here — the company came just shy of delivering its promised 500,000 vehicles in 2020, and management is aiming for 50% average annual deliveries growth in 2021 and beyond. With a revamped facility in Fremont, California and more production ramping up in its Shanghai factory, there will be more Tesla cars rolling off the line this year than ever. And as newer, smaller competitors join the EV race alongside old school automobile companies, Tesla is the standard by which their EV strategies will be judged.
The electric batteries in an EV are one of the most expensive components in the vehicle, but Nio has found a revolutionary way to sidestep this issue: battery-as-a-service. By selling a subscription battery service Nio not only reduces the initial cost of its cars but also keeps customers coming back, paying a monthly fee of about $142. This subscription provides consistent revenue in return for access to Nio’s 143 battery-swapping stations across 64 cities in China. Nio has already had a strong 2021, with the announcement that it delivered 7,225 EVs in January 2021, a new record achieved just a month after setting its old record. The unveiling of its new ET7 luxury sedan last month was seen as a shot across the bow at Tesla, a declaration that Nio won’t let Tesla’s new Model Y take over the Chinese market.
Switchback Energy Acquisition Corp. (SBE)
Batteries, even the newest and most powerful, eventually need to be recharged. That’s where ChargePoint, the largest network of independently-owned EV charging stations in the world, comes in. ChargePoint has recently become the target of a SPAC merger with Switchback Energy Acquisition, and the two will join forces in early February. With the groundwork already laid out for it thanks to a network of more than 114,000 charging stations spread across 14 countries and fresh capital on its way thanks to the merger, the newly-merged company will be in an excellent position to capitalize on the growth of EVs around the world. ChargePoint is projecting revenue of $135 million in 2020, but anticipates 60% compound annual growth for the next seven years, aiming for $2 billion in revenue by 2027. That’s a big goal, but ChargePoint looks capable of pulling it off.
Plug Power (PLUG)
The potential for revolutionizing freight transportation via electric-powered commercial vehicles is incredible, but somebody needs to power them. Enter Plug Power, which makes hydrogen fuel cells for commercial vehicles like trucks and forklifts. Shares of Plug have soared over the last year, and are up about 100% year to date alone thanks to a slew of announcements. Plug raised more than $1 billion in equity in November to fund the construction of green hydrogen facilities throughout the U.S. and recently revealed the first will be built in upstate New York. Plug also joined a strategic partnership with South Korea’s SK Group that landed Plug a cool $1.5 billion in funding, then it formed a joint venture with French automaker Renault in a bid to target the European light commercial vehicle market. Deals like these open up new business opportunities around the globe for Plug, and investors may want to plug Plug into their portfolios.
QuantumScape Corp. (QS)
The importance of battery life for the future of EVs can’t be overstated — the company that can provide the furthest range for its electric-powered cars at the lowest cost will have a distinct advantage over the competition. That’s what makes QuantumScape so enticing for investors — the company’s promise of delivering a solid-state lithium battery could revolutionize the EV industry, and batteries themselves. The only problem is that right now that’s all the company has — a promise. QuantumScape likely won’t have any products hitting the market before 2024, but despite that, the stock has garnered incredible attention since its debut on Wall Street in November via a SPAC. Shares have rocketed by more than 200% in the last three months. With big ideas, along with big investments from Volkswagen (VWAGY) and cash in its pockets from going public, QuantumScape is poised to revolutionize the EV industry.
Ford Motor Co. (F)
Ford just announced mixed results for the fourth quarter. While adjusted earnings per share of 34 cents beat analyst expectations and were a dramatic improvement from the same quarter in 2019, automotive revenue came in lower than expected at $33.2 billion. But Wall Street was extremely forgiving thanks to the highlight of the announcement: Ford is doubling its investments in EVs. The company had already committed $11 billion to developing electric vehicle technology between 2018 and 2022, but in the earnings announcement Ford announced it will up the ante by an additional $11.5 billion, bringing its total investment in EV to $22 billion between now and 2025. Ford began selling its new all-electric Mustang this year car buyers should expect to see a lot more electric-powered Fords on the lot in the years to come.
General Motors Co. (GM)
General Motors has slowly but surely been turning up the heat on EV competitors both old and new. In March 2020 GM announced it would spend more than $20 billion by 2025 on developing autonomous vehicle and EV technology and offer 20 new electric vehicles by 2023. GM went a step further in November, declaring it was upping its investment to $27 billion, and releasing 30 new global EVs by 2025, with a goal of 1 million EV sales by the mid-2020s. But perhaps the biggest announcement that GM has made was the revelation of its new Ultium battery at CES 2021 in January, a battery that can power an EV for 500 to 600 miles in a single charge. GM has made it clear it plans on being the leader of the EV revolution and the company is investing heavily to make it happen.
Top EV stocks and battery companies:
— Tesla (TSLA)
— Nio (NIO)
— Switchback Energy Acquisition Corp. (SBE)
— Plug Power (PLUG)
— QuantumScape Corp. (QS)
— Ford Motor Co. (F)
— General Motors Co. (GM)
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