Lithium-ion battery prices are falling and the attractiveness of electric vehicle manufacturers to investors is growing. Automakers have big plans for the future, and investors in the sector have an Omaha-based oracle. Warren Buffett put on lithium-ion batteries. How can you make money?
The electric vehicle market has revived noticeably over the past ten years. At the end of 2018, there were already 5.1 million electric vehicles in the world. And this is 60% more than at the end of 2017.
In addition to cars, lithium-ion batteries are used as energy storage in many areas of the economy. So there are many ways to capitalize on your batteries. The most obvious investment may be in the papers of auto companies such as Tesla or Ford.
Tesla is a pioneer in the electric vehicle market
Tesla was the first car company to launch an electric car powered by a lithium-ion battery, with the all-electric Tesla Roadster introduced in 2008.
At the time, automakers were developing hybrid models combining gasoline and electric engines. There was no question of all-electric traction, since such cars were expensive. For example, Tesla was selling a Roadster for $ 110,000.
Now the production of electric vehicles is already a more profitable and less labor-intensive business than the production of cars with a gasoline engine. Almost all automakers are either already selling or planning to produce all-electric, or at least hybrid vehicles.
Ford announced in November that it was starting to take orders for the Mustang Mach-E. This is an all-electric car of the legendary model. Ford developed the Mustang Mach-E as one of the first in a line of 40 electric vehicles that Ford plans to build by 2022.
According to the International Energy Agency, 1.98 million electric vehicles were sold worldwide in 2018 alone, powered by an external power source. As we wrote above, the total number of cars on electric traction was 5.1 million. So far, this is relatively small, since now there are more than 1 billion cars on the roads. However, experts expect the share of electric vehicles to grow.
Bloomberg NEF predicts that 57% of total sales will come from electric vehicles by 2040.
Who makes the batteries
Like many automakers, Tesla outsourced battery manufacturing. The Japanese Panasonic makes them especially for Tesla. However, the manufacturer itself is engaged in the development of batteries.
Reuters recently conducted a study listing the names of the world's largest electric vehicle battery manufacturers. The leader of this market is the Chinese Contemporary Amperex Technology. She has partnerships with car manufacturers such as BMW, Volkswagen, Daimler, Volvo, Toyota and Honda.
The already mentioned Panasonic is in second place. The company manufactures batteries for electric vehicles in Japan and China. However, Panasonic's main factory is located in Nevada, USA. It produces batteries for Tesla cars.
China's BYD is one of the three largest manufacturers of batteries for electric vehicles in the world. It uses batteries mainly for its own cars and buses, but plans to start production in Europe.
It is noteworthy that the famous investor Warren Buffett invested money in BYD. He owns 25% of the company.
What's with the shares
At the moment, analysts do not believe in Tesla's growth. The consensus gathered by the Refinitiv service expects that in the coming year the manufacturer's shares will fall in price by 33%, to $ 315 per share ( but the shares are already worth more ). Nevertheless, the experts who entered the consensus recommend keeping Tesla shares.
Hold recommendation for Ford shares. But experts on average believe that on the horizon of the year they will grow by 11%, to $ 10.23 per share.