The progress of electric vehicles (EV) in the global marketplace is primarily due to the evolution of EV batteries. A decade ago, the price per kilowatt-hour (kWh) was about $1,100 while today you can buy a kWh for just under $180. Over the next decade, some expect this price to decrease by half.
What will be the next big thing? Private equity investors directed nearly $650 million towards automotive tech startups in February of last year, according to Automotive News. Over 70% of this amount went to EV battery stocks, specifically those pursuing solid-state battery tech.
Current lithium-ion batteries are heavy, expensive to produce, don’t last all that long and take considerable time to recharge. Some believe they will, in time, be rendered obsolete by solid-state batteries.
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Let me explain why, though this is all a bit technical. Lithium-ion batteries are made up of three layers: a positive cathode and a negative anode, each with an electrical contact, and between them is a porous polymer separator, and the whole cell is flooded by a liquid electrolyte. Batteries work by flowing ions between a cathode and anode through the electrolyte.
In layman’s terms, this means more energy can be stored in a smaller space, giving the battery greater energy density.
Greater density means these batteries can achieve greater range, superior reliability, and a longer life than their lithium-ion cousins. In addition, they’re also capable of charging to 80% in as little as fifteen minutes, half the time the fastest Tesla Supercharger can charge in. Solid-state batteries will make our phones hold a charge for days at a time and they’ll power electric cars that can drive for thousands of miles on a single charge.
Even better, these batteries will be much cheaper than lithium-ion ones once production scales up because of fewer and cheaper materials.
Here are three solid-state battery stocks seeking to capitalize on the new technology.
3 Solid-State Battery Stocks
Solid Power (SLDP) recently delivered sample cells to BMW as part of the automotive qualification process and is actively delivering EV cells to other joint development partners. Solid Power claims to have a competitive advantage because its batteries can be produced using the same tooling and processes already used in factories to make lithium-ion battery cells.
California-based QuantumScape (QS) is working on some breakthrough electric vehicle battery technology backed by some heavyweight industrialists as well as Volkswagen (VWAGY).
In 2020, Volkswagen invested $300 million in QuantumScape, securing 20% equity ownership of the company. When Volkswagen’s QuantumScape batteries go operational, Volkswagen and its brands such as Audi, Porsche and Bentley could offer cars with 450 to 500-mile range batteries.
QuantumScape is making steady incremental progress. Last year, it demonstrated its 16-layer battery’s successful results at over 500 cycles and sent a 24-layer prototype to automakers for testing. This is a game-changer in the EV battery universe.
QuantumScape’s stock price climbed sharply in late 2020 from around 20 to 114 before coming back to earth in January 2021. Now it trades at just 8.58.
Startups also need to keep an eye on big auto companies like Toyota (TM) that are developing solid-state battery technology in-house. While clearly not a pure-play solid-state battery stock, Toyota has been working on producing a solid-state battery technology of its own, applying for over 1,000 patents related to solid-state batteries.
Toyota is a supporter of this technology and claims that its first vehicle with solid-state batteries is targeting a release in 2025 as a hybrid.
These three ideas all have merit and span the risk-reward spectrum. Join Cabot Explorer and learn which one of these stocks the advisory will recommend.
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*This post is periodically updated to reflect market conditions.