Growing concerns regarding climate change and emission control targets worldwide have propelled the demand for electric vehicles (EV), leading to the growth of the electric vehicle battery market. Furthermore, the growing emphasis by prominent automakers on entering the EV space and increasing consumer interest in electric vehicles are expected to drive the market’s growth in the coming years. The EV battery market is expected to grow at a 31.6% CAGR to $218.47 billion in 2027, with the lithium-ion battery segment expected to dominate the market over the period.
Furthermore, President Biden’s Bipartisan infrastructure bill allocates nearly $7 billion to strengthen the U.S. battery supply chain, which should boost the industry significantly. “As electric cars and trucks continue to grow in popularity within the United States and around the world, we must seize the chance to make advanced batteries—the heart of this growing industry—right here at home,” said U.S. Secretary of Energy Jennifer Granholm.
Given this backdrop, Wall Street analysts see significant upside potential in EV battery stocks, Solid Power, Inc. (SLDP), FREYR Battery (FREY), and Flux Power Holdings, Inc. (FLUX).
Click here to checkout our Electric Vehicle Industry Report for 2022
Solid Power, Inc. (SLDP)
SLDP in Louisville, Colo., focuses on developing and commercializing all-solid-state battery cells and solid electrolyte materials for electric vehicles and mobile power markets.
Shares of SLDP began trading on Nasdaq Global Select Market on Dec. 9, 2021, following the completion of an SPAC deal. The company received gross proceeds of approximately $542.90 million from the transaction. “Solid Power’s focus continues to be on the commercialization of our next-generation all-solid-state battery cells for automotive applications. We plan to use the proceeds from this transaction to fund our capital-light business model through vehicle integration, which we expect to occur in 2026,” said Doug Campbell, Co-Founder and Chief Executive Officer of Solid Power.
Analysts expect SLDP’s revenue to grow 41.4% year-over-year to $2.97 million in its fiscal year 2022, while its EPS is expected to increase 8.7% year-over-year in the same period.
The stock has gained 3.6% in price over the past five days to close yesterday’s trading session at $7.51. Furthermore, Wall Street’s 12-month median price target of $13.00 indicates a 73.1% potential upside.
FREYR Battery (FREY)
Based in Luxembourg, FREY designs, manufactures, and sells lithium-ion-based battery cell facilities to stationary energy storage, electric mobility, and marine applications in Europe and internationally.
On Feb. 21, 2022, FREY announced that it received a grant of $11 million through the Norwegian Green Platform initiative along with some other companies. The consortium of companies will work together to reduce their respective environmental footprints along the entire value chain. This should help the company move faster with its sustainability-first agenda-based research and innovation.
Also last month, FREY entered into nine frame agreements with key suppliers to supply battery materials required for the Customer Qualification Plant (“CQP”) being built in Norway. Given the global supply chain disruptions and shortage of raw materials, this initiative should help secure its supply chain and thus help in improving its operating capability.
Earlier this year, FREY signed an agreement to leverage Honeywell International Inc.’s (HON) leading technology offerings to provide smart energy storage solutions to commercial and industrial customers. Honeywell’s 20 years of lithium-ion battery industry know-how and established routes to markets and customers should benefit FREY in multiple verticals.
FREY’s net cash provided by financing activities for its fiscal year ended Dec. 31, 2021, increased 3,072.4% year-over-year to $649 million, while its cash and cash equivalents stood at $565.63 million, representing a 3,684.7% increase from the period ended Dec. 31, 2020.
The Street expects the company’s revenue for the fiscal year ending Dec. 31, 2022, to come in at $7.26 million. Also, FREY’s revenue is expected to increase substantially in the following year to $163.82 million. In addition, the consensus EPS estimate for the current year indicates 33.3% year-over-year growth. Over the past five days, FREY’s shares have gained 2.9% in price to close the last trading session at $8.76. The 12-month median price target of $15.25 indicates a 74.1% potential upside.
Flux Power Holdings, Inc. (FLUX)
FLUX designs, manufactures, and sells lithium-ion energy storage solutions for lift trucks, industrial applications, including airport ground support equipment (GSE), solar energy storage, and other commercial applications. The Vista, Calif.-based company operates in the United States through its subsidiary Flux Power, Inc.
On March 9, 2022, FLUX announced that it would participate in the world’s largest manufacturing and supply chain trade show, MODEX 2022, later this month. The company plans to showcase its complete product line and introduce two new products in its industrial and commercial energy solutions for the three-wheel forklift segment and the Autonomous Mobile Robot and Automated Guided Vehicle spaces, thus boosting its product portfolio.
FLUX’s revenues increased 18.9% year-over-year to $7.69 million in its fiscal second quarter, ended Dec. 31, 2021. Also, the company received $19.80 million in new purchase orders during the quarter, with a customer order backlog at a record $31.40 million.
The company’s EPS for its fiscal year ending June 30, 2022, is expected to improve 1.5% year-over-year. Furthermore, the $34.23 million consensus revenue estimate for the same period represents a 30.4% increase year-over-year.
The stock slumped 4.8% in price intraday to close the last trading session at $2.00. Wall Street analysts’ 12-month median price target of $11.50 indicates a potential 475% upside.
Click here to checkout our Electric Vehicle Industry Report for 2022
SLDP shares were trading at $8.03 per share on Tuesday afternoon, up $0.52 (+6.92%). Year-to-date, SLDP has declined -8.12%, versus a -10.19% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.
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