The increasing spread of electromobility and renewable energies inevitably leads to an increasing need for the most modern accumulators and battery storage systems. This megatrend also offers opportunities for future-oriented investors.
• Huge demand for batteries predicted in 2030
• E-car manufacturers often have a second pillar in the field of battery technology
• Lithium is establishing itself as “the new oil” – opportunities for producers
The beginning of the 21st century was accompanied by a significant change in consciousness in large parts of the world. Suddenly the fight against climate change and sustainable nature conservation play an important role in many people’s everyday lives.
The future belongs to renewable energy sources
While fossil fuels such as brown coal, natural gas and crude oil have covered people’s electricity and energy needs for centuries, the focus is now increasingly on renewable energy sources such as wind, bio and solar energy as well as geothermal energy and hydropower. In contrast to coal, natural gas and oil, these renewable energies, despite many advantages, also have a significant disadvantage, which brings with it many problems.
Electricity production from renewable energies cannot be adapted arbitrarily to the individual consumption of users. In phases in which, for example, there is no wind or the sun is not shining, wind turbines and photovoltaic systems cannot of course produce any electricity. In contrast, fossil energy sources such as natural gas and crude oil can always be consumed as needed and therefore offer a significant advantage.
No energy transition without modern electricity storage
In order to ensure individual energy needs and security of supply, the energy world of tomorrow will need sophisticated storage solutions and storage capacities. Renewable energy sources can only continue their triumph if they can adapt to fluctuating consumer demand. “Batteries are [somit] “The key to the green energy revolution” was the assessment by Yeon-ju Park from the analysis house Mirae Asset Daewoo in 2020.
In response to this challenge, countless development departments around the world are researching solutions for efficient electricity storage. In the future, high-performance electricity storage or batteries and accumulators will not only have to be installed in electric vehicles, smartphones and laptops, but also near photovoltaic and wind turbines.
The demand for batteries is exploding
According to a study by the World Economic Forum (WEF), global demand for batteries will grow by 25 percent annually until 2030 and ultimately reach a volume of 2,600 gigawatt hours. Sales generated from battery production are expected to rise to well over $300 billion by 2030. Although the demand for batteries for consumer electronics such as smartphones and laptops is expected to remain relatively constant during this period, the demand for batteries for energy storage and for electromobility is likely to increase sharply, according to the WEF.
Huge potential for investors
The incredible growth fantasies surrounding batteries and accumulators naturally also offer enormous opportunities for future-oriented investors. Investors have various options to benefit from the expected battery boom. Depending on their risk appetite, investors can now bet on shares in electric car manufacturers, battery producers, raw materials companies or even entire industry ETFs.
E-car manufacturer shares promising
The best-known representative of the global electric car manufacturer is of course Tesla. However, due to the extremely strong share price development over the last few years, the company is now anything but an insider tip for investors. The analyst recommendations collected by “TipRanks” are correspondingly mixed: 14 buy recommendations compared to 14 hold ratings. After all: Only five analysts recommend selling Tesla shares (as of October 21, 2023).
However, Tesla shares offer several opportunities for investors to benefit from the battery boom. In addition to electric cars, Tesla also offers photovoltaic systems and energy storage. With the Powerwall, customers can bring electricity storage based on lithium-ion technology into their own home and thus become more independent of the public power grid.
In addition to electric cars, the Chinese car manufacturer BYD also has a battery and accumulator division. According to the experts at the online broker Lynx, the Chinese company is the world’s largest producer of batteries and power storage solutions, which are used in the company’s own electric cars, but also in mobile phones, power plants and private households. Investors who bet on BYD not only benefit from a comprehensive product portfolio in the area of e-mobility, but also from increasing global demand for batteries. However, due to the political uncertainty in China and the tensions with the West, you should always proceed with caution when investing.
However, the stocks of traditional car manufacturers could also emerge as real insider tips in the future. German, American and Japanese manufacturers such as VW, BMW, Mercedes-Benz, General Motors and Toyota are increasingly penetrating the electromobility market. VW, for example, wants to launch numerous fully electric models by 2030 and battery technology should also become a new core competency for the group.
Exciting battery producers: Battery stars from South Korea and Germany
However, investors who do not want to focus their investment exclusively on electric car manufacturers will also find two real champions in the field of battery production with shares in Samsung and Varta.
The Korean smartphone manufacturer Samsung is a leader in the production of batteries with its subsidiary Samsung SDI, although according to “FinMent” the foundation for this business was only laid in 2015. However, Samsung SDI now has a huge production facility for electric car batteries in Xi’an, China.
However, investors who want to invest in a traditional battery company do not always necessarily have to look to Asia. The Varta group, based in Ellwangen in Baden-Württemberg, also has a lot in its portfolio in the accumulators and batteries segment. Although Varta’s focus has so far been on very small batteries, which are used in wireless headphones, for example, the energy density of these batteries is brilliant. In addition, the Swabians are one of the largest providers of electricity storage for photovoltaic systems in the private sector or in the home sector throughout Europe. However, it is still completely open whether Varta will venture into the e-mobility market in the future and release energy storage devices for electric cars.
Lithium – the raw material of the 21st century
When it comes to battery systems for electric cars, the focus is particularly on lithium-ion cells. And as the name suggests, lithium-ion batteries of course also require a lot of lithium. According to “FinMent”, there are around 120 to 180 grams of lithium in a lithium-ion cell. The average requirement for an electric car is at least eight kilograms of lithium, but this can quickly double for vehicles with a lot of power and range. Accordingly, demand for the raw material is likely to continue to rise in the next few years as electromobility becomes more widespread. According to CNBC, McKinsey experts expect a demand of three to four million tons of lithium in 2030. Tesla boss Elon Musk even referred to lithium as “the new oil”. Of course, this also creates a lot of imagination for one or two lithium producers. Investors who would like to benefit directly from increasing lithium demand can, for example, take a look at the shares of Albemarle, SQM, Rock Tech Lithium, Dragonfly Energy, Enovix Corporation, Atlas Lithium or Sigma Lithium.
According to “Benchmark Source”, Albemarle is one of the world’s largest producers of lithium chemicals in terms of production volume and has mines in Australia, Chile and the United States. According to the site’s data, SQM is also at the top of the list of lithium producers and should therefore benefit from the continued high demand for the “white gold”.
ETFs as a universal solution
Particularly for investors who don’t want to miss the megatrend surrounding batteries and accumulators but are wary of making a volatile individual investment, buying exchange-traded ETFs that are exclusively stocked with stocks from the sector is a good idea. The broad diversification of such an ETF should not obscure the fact that the entire battery sector is subject to high fluctuations.
One option for investing in the entire sector is the Global Investors can also add shares of electric car manufacturers, mining companies and battery technology providers to their portfolio via the L&G Battery Value-Chain UCITS ETF. The WisdomTree Battery Solutions ETF also focuses on companies that develop energy storage technologies, mine metals or are active in the processing sector.
Worrying ecological balance
However, when making any investments, investors should note that the current boom in lithium-ion batteries depends primarily on technical developments in this area. As efficient and powerful as the current generations of batteries and accumulators are, their production still leaves a very large CO2 footprint. The enormous demand for raw materials and the high energy requirement for production ensure that batteries have a rather sober ecological balance. As a result, electric cars are only really beneficial for the environment if they are driven over 150,000 kilometers.
Editorial team finanzen.net
This text is for informational purposes only and does not constitute an investment recommendation. finanzen.net GmbH excludes any claims for recourse.