A List of 16 Battery Stocks Reviewed

If you've invested in battery stocks or you're  thinking about investing in battery stocks then this is a video that you're going to want to  watch so we've produced no fewer than a dozen research pieces on this topic vetting all kinds  of companies and we've broken down the energy storage thesis into three broad areas so the  first would be lithium battery manufacturers these would be the pick and shovel plays on  energy storage then we have energy storage solutions providers such such as Stem and Fluence  and then new Battery Technology developers such as the work Quantumscape is doing on solid state  lithium batteries so before we get into this I wanted to ask you to do me a favor and go ahead  and click subscribe on the lower right corner of the screen there's a button that says subscribe  click that please and subscribe to our Channel many of you have asked how you can support us  and keep these videos being produced and that's how you can do it so let's go ahead and talk about  lithium-ion battery packs they're quickly becoming a commodity play and you can see how rapidly  the cost of a battery pack is decreasing over time what does this mean well the larger producers  will be able to use economies of scale and produce batteries profitably as margins shrink and what's  happening is that the cost component of batteries for an electric car is also decreasing over time  and electric vehicle companies are now starting to produce their own batteries companies  like Tesla and BYD now we did an analysis on the largest lithium battery producers by 2028  based on forecasts that analysts have produced and the largest would be this firm CATL in  China and then you see LG Chem, Tesla, BYD two firms on here were of Interest the first  obviously being the largest and they aren't publicly traded in Hong Kong so when we look at  Chinese firms we'll only invest in H shares we won't invest in VIE structures and if you don't  know what that's referring to I'll put a link in the description of this video that talks about the  dangers of Chinese stocks now we're going to go ahead and take a second look at BYD the last time  we looked at that firm they're about a hundred billion dollar manufacturer of electric vehicles  we last looked at them in 2017 so we're due for an update in terms of CATL we want to wait until they  are traded as an H share there were rumors this fall that they may begin trading in Hong Kong and  then there's Tesla of course Tesla and BYD these aren't pure plays and we're particularly looking  for Pure plays both BYD and Tesla also are fairly large firms so when you look here at the optimal  size of a firm we'd like to invest in you can see that the large bucket between 10 billion dollars  and 100 billion dollars that's our sweet spot so other firms that we've looked at let's say mid cap  battery stocks three names here we did a piece on Varta, EnerSys and Simplo in terms of Varta they  have a heavy dependency on Apple and that actually has affected their revenues just as we warned  and they've had a decrease in demand they build the batteries for those earbuds and then there's  been a decrease in demand for those as for EnerSys we're actually holding that stock and I'll talk a  little bit more later about why that is and then you have Simplo a Taiwanese firm and honestly with  a lot of these Asian firms there's a localization problem where unless you read Mandarin you're  probably not going to be a successful investor because you're not going to be able to tell  what's going on so we would skip out on Simplo now another firm that's often talked about is  Microvast and sure they're selling a lot of batteries and Equipment but they're having a  hard time making a profitable business out of it and here we've taken the last four quarters and  looked at the gross margins so you could see total revenue and that cost of goods sold what they  refer here is cost of Revenue and there's just no profitability here there's also a heavy dependency  on China where nearly all their operations are located now I want to caveat that by saying when  we have suspicions about China that's because I've personally seen how bad things can be in  China and there's a lot of opaque firms over there that you don't really have visibility into  what they're doing now this vote of confidence for Microvast of a 200 million dollar grant that  they received in partnership with General Motors that sure helps alleviate some of those concerns  however we can't get past these very low gross margins so Microvast isn't a firm that we would  take a any sort of a closer look at until they get that problem resolved another one that is  often brought up Enovix they raised in 2020 the last time we looked at them 45 million dollars  to complete their fully automated commercial production line and in their recent shareholder  letter they talk about how they're continuing to push the boundaries of what's possible with their  technology we'd like to see more battery sales and less boundary pushing so this 1. 9 billion dollar  firm expects 11 million dollars for 2022 and that number will magically rise to 100 76 million for  2023 so if they hit that 2022 goal of 11 million dollars that we consider that to be meaningful  Revenue because it's above 10 million we'll come back around for a second look now let's talk  about energy storage solutions these are probably some of the most talked about stocks that we're  going to cover today so Fluence energy again we see a problem where cost of goods sold is greater  than revenues that means they don't have a viable business now of course they'll argue well that  changes as we scale cool we'll take a look once you've managed to solve that problem Siemens is  a related party they account for more than half affluence's revenues that's a concentration risk  I believe they're also heavily concentrated in the United States nearly all their revenues come from  selling Hardware we like to see recurring revenues a component of that somewhere in there and we  say here we'll take another look once they can show recurring revenues constitute a meaningful  percentage of total revenues because presumably at that time they would then have a profitable  business stem 79 of their revenues come from reselling solar Hardware purchased from other  manufacturers that's not the AI SaaS business that we had in mind the low margins aren't  promising either and when we look at their recurring revenues they've only grown five percent  sequentially quarter on quarter now whilst their revenues are certainly starting to soar we need  to see recurring become a bigger component and we need to see better than the nine percent gross  margins that they have today again that recurring element helps boost your margins in both of these  cases and we need to see more proof of that now let's talk about new battery technologies we put  up a handful of companies here these are all SPACs you can see how well they've performed over time  we've simply taken the ten dollar a share price that all specs begin trading at and then easily  you can calculate the post SPAC returns three of these companies or above our one billion dollar  market cap threshold we've put the cash down here which should give you some indication of  their ability to survive in the face of a bear Market where raising money will become even more  difficult now just some updates on these firms the most notable being Quantum scape they're in bed  with Volkswagen since their peak of 114 dollars a share they QS shares have fallen 94 and they're  not expecting revenue from sales of their solid state batteries until 2024. cool we'll take a look  then solid power this might be the best one of the lot they beat their 2022 Revenue estimates of  three million dollars they're in bed with BMW and another major automaker they have year-to-date  revenues of 7.

6 million over their estimates but they're at half our market cap threshold of  a billion dollars so we had said before late last year we're not entirely pessimistic with two  solid automakers in their corner but we won't fund the company's R&D so we'll probably take another  look at them next year then you have Freyr they're licensing Tech from a Boston startup that we've  written about gosh I would think a decade ago when we first started looking at them and they're  building out production capabilities we won't look at them until they have meaningful revenues  same holds true for SC yes they don't expect to see money rolling in until 2024. now also on our  list is EOS this is a name that's often brought up they began shipping systems in 2018 they had  6.