Electric vehicle (EV) stocks have been on fire over the past year with investors promising that the industry will continue to grow. And as EV sales grow, there could be a number of businesses and companies that will benefit.
As we scrambled the market for opportunities alongside EV production, Xcel Power (NASDAQ: XEL), American Lithium (NYSE: LAC), and QuantumScape (NYSE: QS) jump out to our Foolish donors as great opportunities.
Image source: Getty Images.
The handy play
Travis Hoium (Xcel Energy): If electric vehicles continue to grow and eventually take over the vehicle market, that will mean a huge increase in electricity consumption. A report prepared for the Department of Energy in 2019 estimated that, by the end of the decade, 14 gigawatts or more of power generation would be needed to sustain the growth of EVs by 2030. That would be almost double the size magnification. electricity generation capacity will be added each year and this could lead to growth in electricity consumption, which has been declining for more than a decade.
Non-stop demand influences resource revenue growth. Over the last decade, Xcel’s revenue has grown to just over 1% made up each year, so this is not a growth stock. However, the rate of growth may change if electric vehicles take over transport.
XEL Finance Data (TTM) with YCharts.
EVs alone could stimulate the growth of all facilities, and Xcel Energy would be no different. And with stock trading at 22 hours of earnings and the share yielding 2.8%, this stock could be a long-term winner if Xcel’s growth rate improves due to electric vehicles.
Profiting on batteries
Howard Smith (America Lithium): Investors can bet on the appearance of electric vehicles in a number of ways. There are many uncertainties, including the development of technologies, competition, and theory of market acceptance. One approach for investors is to create a basket of tenures with a range of risk and reward potential.
EV battery technology investments are at the high end of the spectrum. But as part of a basket approach, given that lithium-ion batteries are still an obvious choice for EV manufacturers, lithium suppliers themselves should be part of the equation. Lithium Americas does not yet have a working mine, but is in the construction and licensing stages of two projects, including one on U.S. soil.
Lithium Americas reservation lunch. Image source: Lithium Americas.
Lithium Americas ’two mining projects include one under construction in Argentina scheduled to begin in mid-2022 and the Thacker Pass project in Nevada. Thacker Pass is particularly special because of its location, as drivers try to get household items needed for electric vehicles.
The company believes its Thacker Pass project is still on track to begin operations at the end of 2022. In the 2020 fourth quarter employment release earlier this month, the company said, “ expect state permits and remaining water right moves to begin construction later a year. “
The Thacker Pass project is currently 100% owned by Lithium Americas, but the company could bring in partners or investors. But after a recent capital increase, Lithium Americas had $ 518 million in cash as of February 28, 2021. Most of that is available for the Thacker Pass project, as its mine project is in Argentina has already spent about 70% of the required capital.
Investment in Lithium Americas is highly profitable at this rate, and investment could be a total loss. In addition to the risks specific to the company, domestic lithium mining operations will be competitive in the U.S. But if electric vehicles take over, and lithium-ion batteries retain their preferred technology, early entry could pay off Nice too.
Worrying about the unrest
Jason Hall (QuantumScape): I think it’s more of a “when” than “if” electric vehicles get the upper hand, although it’s likely to take years before that happens due to high costs and limited battery supply. This is a problem that QuantumScape is working to address, and with technology that could be the biggest driver the automotive industry has seen from Tesla.
Accepted? To do that, the company needs to deliver technology that no one else – so far – can deliver at the cost and scale it takes to deliver the car industry.
Without going down in detail, solid-state batteries are lighter, more reliable, and much quicker to recharge than the more familiar liquid or gel batteries such as lithium-ion. Accepted? QuantumScape is still years away from delivering a commercially viable product and it has not yet been proven that it can deliver on its promises at scale. So this is far from a certainty.
But investors include Tesla co-founder JB Straubel, who led the company ‘s battery cell design, and Volkswagen, which invested $ 300 million in the company before it went public, has put their money behind the company ‘s efforts. It will probably be several more years before we know if it can do that, but if QuantumScape can crack the hard state code, its technology would be a huge competitive advantage, leaving it as the most important – and the most important. profitable – automated. world supplier.
The danger is great. If they can’t pull it off, investors will lose a lot of money. Pay attention to that danger as well as the upside potential.
Riding the tail EV
If electric vehicle sales continue to grow, we are likely to see an increase in electricity consumption, lithium consumption, and the need for better batteries. That’s why these three stocks were able to dominate the market in the long run and why they are so good for us today.
This article represents the opinion of the writer, who may not agree with the “official” recommendation position of the Motley Fool chief consulting service. We are motley! Questioning an investment dissertation – even one of our own – helps us to think critically about investing and make decisions that will help us become softer, happier and richer.