Although the electric vehicle (EV) revolution began a few years ago, increasing climate change concerns and supportive government policies are expected to help drive the industry’s growth. At the recent COP26 conference, governments, automobile manufacturers, and other interested parties signed an agreement to transition to sales of 100% zero-emission new cars and vans by 2035 in the major markets and by 2040 globally.
EV batteries represent a considerable chunk of an EV’s cost, and EV battery manufacturers are constantly looking for sustainable solutions to reduce the cost of these batteries. Companies are also looking to increase the range and longevity of batteries to compete with the range and reliability offered by internal combustion engine (ICE) vehicles. According to a Fortune Business Insights report, the global EV battery market is expected to grow at a 28.1% CAGR to $154.90 billion by 2028.
So, we think EV battery manufacturers QuantumScape Corporation (QS) and FREYR Battery (FREY) could be good additions to one’s watch list. Wall Street analysts expect them to gain more than 40% in the near term.
QuantumScape Corporation (QS)
QS in San Jose, Calif., develops battery technology for EVs and other applications. The company focuses on developing and commercializing its solid-state lithium metal batteries. Also, it aims to revolutionize energy storage to facilitate a sustainable future.
On November 16, 2021, QS released the testing results of its 10-layer battery cell which delivered 800 cycles at better than one-hour charge rates at 25°C, thereby fulfilling its 2021 goal. The tests reveal that the cells have 100% depth discharge and a life of 800 cycles. This development bodes well for QS because it will likely attract the attention of many OEMs that are looking for a solid solution on the battery front.
For the third quarter, ended September 30, 2021, QS’ net income came in at $15.35 million compared to a $375.85 million loss in the year-ago period. The company’s total assets for the nine months ended September 30, 2021, came in at $1.76 billion compared to $1.07 billion for the period ended December 31, 2020.
Analysts expect QSs EPS for the quarter ending December 31, 2021, to increase 95.4% year-over-year to $0.11. The stock has declined 33.7% in price over the past month to close yesterday’s trading session at $24.33. However, Wall Street analysts expect the stock to hit $35.50 in the near term, indicating a potential 46% upside.
FREYR Battery (FREY)
Based in Luxembourg, FREY develops batteries and battery cells. The company specializes in producing materials required for battery cell manufacturing and sells batteries and battery cells for energy storage, electric mobility, and marine applications.
On December 8, 2021, FREY announced that Volkswagen AG (VWAGY) would invest in its strategic partner, 24M Technologies, Inc., to manufacture the next-generation lithium-ion EV batteries using 24M’s SemiSolid platform. The partnership will help develop the production technology for SemiSolid battery cells for use in VWAGY EVs. As part of its license agreement with 24M, FREY will receive the rights to unlimited production of battery cells based on 24M’s current and future technology.
FREY’s cash, cash equivalents, and restricted cash for the nine months ended September 30, 2021, came in at $623.46 million compared to $14.95 million for the period ended December 31, 2020. The company’s total assets for the nine months ended September 30, 2021, were $636.27 million compared to $15.93 million for the period ended December 31, 2020.
For its fiscal 2022, FREY’s EPS is expected to increase 6% year-over-year to $0.63. Over the past month, the stock has declined 4.6% in price to close yesterday’s trading session at $10.74. However, Wall Street analysts expect the stock to hit $15.23 in the near term, indicating a potential 41.8% upside.
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QS shares rose $0.34 (+1.40%) in premarket trading Friday. Year-to-date, QS has declined -70.85%, versus a 26.87% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets. More...
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