We recently published a list of the 11 Most Promising EV Battery Stocks According to Analysts. In this article, we are going to take a look at where Lithium Americas Corp. (NYSE:LAC) stands against the other promising EV battery stocks.
Despite the electric vehicle industry growing at a fast pace, some challenges remain. The major ones are range anxiety among consumers, slow battery charging time, and the availability of charging infrastructure. However, even with these challenges, the industry remains healthy and a lot of energy and resources are being contributed toward it.
The infrastructure market is expected to grow at a phenomenal pace as PwC expects the EV supply equipment (EVSE) market to grow from $7 billion to $100 billion by 2040, at a 15% compound annual growth rate.
For electric vehicle components, governments around the world are incentivizing EV production. For example, the U.S. Department of Energy (DOE) recently announced $1.7 billion in funding to transition 11 vulnerable auto manufacturing plants across eight states to EV production and related components. For more details, you can read 8 Best EV Stocks to Buy According to Short Sellers.
Advancements in EV Battery Technology
Due to the environmental impacts of internal combustion engines, scientists have also been working tirelessly to solve the current problems faced by EV batteries. Researchers, led by the University of Colorado Boulder, have uncovered the cause of battery degradation, a common issue that leads to reduced capacity over time. Their study, published in Science.org, may pave the way for improved lithium-ion batteries, which are crucial for EVs and energy storage.
Using advanced X-ray technology, they discovered that hydrogen molecules from the battery’s electrolyte bind to the cathode, taking spots meant for lithium ions, which weaken the battery’s performance. This new understanding could help engineers develop longer-lasting, cobalt-free batteries for EVs, which would increase driving range, reduce costs, and address environmental and ethical concerns related to cobalt mining.
Additionally, according to a research report published in Frontiers in Quantum Science and Technology, Yuji Hatano and his team explored the impact of transverse magnetic fields on diamond quantum sensors for EV battery monitoring. Their research aimed to improve measurement accuracy for temperature and magnetic fields, which are crucial for determining the state of charge (SOC).
The study showed that diamond sensors enhance SOC estimation, which could potentially increase the EV cruising range by 10%. A prototype demonstrated high precision with currents up to 1,000 amperes, and misalignment detection was highly accurate. The findings suggest diamond quantum sensors could significantly improve battery monitoring in EVs and other industries.
Moreover, solid-state batteries could also reduce the charging time in batteries which could drastically improve the consumer sentiment and increase the demand for EVs. It was suggested by Mark Fields, former Ford CEO and President on CNBC’s ‘Squawk Box’ and we discussed it in our article on the best EV stocks for the long term. Here is an excerpt from the article:
“Fields suggested that automakers need to offer more affordable EVs and expand hybrid offerings while working towards breakthroughs in battery technology, especially solid-state batteries. These batteries could eventually reduce charging times to match the convenience of filling up at a gas station…
…He emphasized that while automakers are working on delivering low-cost EVs, the real game-changer will be the development of solid-state batteries, which could significantly improve charging times and consumer convenience.”
Our Methodology
For this article, we identified over 20 EV battery stocks through screeners and ETFs. We narrowed our list to 11 stocks with the highest average analyst price target upside, as of September 12. We also added the hedge fund sentiment around each stock which was taken from Insider Monkey’s database of over 900 hedge funds as of the second quarter of 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
An aerial view of the vast Lihtium deposits in the Jujuy province of Argentina.
Lithium Americas Corp. (NYSE:LAC)
Average Analyst Price Target Upside as of September 12: 87.97%
Number of Hedge Fund Holders: 13
Lithium Americas Corp. (NYSE:LAC) is a lithium exploration and development company, with projects in both the United States and Canada. Its flagship initiative, the Thacker Pass project, is located in the McDermitt Caldera. It is recognized as the site of the world’s largest known lithium deposit. It ranks at 5 on our list of most promising EV battery stocks according to analysts.
As a company poised to become a key player in the global lithium market, Lithium Americas (NYSE:LAC) is strategically positioned to benefit from the surging demand for lithium, driven by the EV revolution and advancements in renewable energy storage.
The Thacker Pass project represents the most promising growth catalyst for the company. It reflects its strategic significance in the lithium supply chain. It is backed by a substantial $2.26 billion loan from the U.S. Department of Energy, which shows the national importance of securing domestic lithium supplies.
Additionally, General Motors has secured exclusive rights to Phase 1 production, which further validates the long-term potential of Thacker Pass. Once operational, the initial phase is projected to produce enough lithium annually to power 800,000 EVs, which marks a significant role for the company in the global transition to clean energy. Despite recent fluctuations in lithium prices, the long-term outlook for rising demand along with the company’s strategic positioning show a compelling case for growth.
On October 3, 2023, Lithium Americas underwent a corporate reorganization, splitting into two distinct publicly traded entities. The separation resulted in the creation of Lithium Americas (Argentina) Corp., also known as Lithium Argentina, which trades on the TSX and NYSE under the symbol “LAAC.” The remaining company, which retained the original name Lithium Americas Corp., trades under “LAC” on both the TSX and NYSE.
The stock is covered by 14 analysts with an average price target of $4.63, which implies an upside of 87.97% from the September 12 levels. On the other hand, Lithium Americas (Argentina) (NYSE:LAAC) has been covered by 13 analyst with a median price target of $5.00, which represents an upside of 93.05%.
While the Thacker Pass is Lithium Americas’ (NYSE:LAC) flagship project, Lithium Americas (Argentina) (NYSE:LAAC) holds interests in several projects, including the Cauchari-Olaroz project in Jujuy Province, Argentina, a development and exploration portfolio in Salta Province, and full ownership of the Antofalla Project in Catamarca Province.
As of the second quarter, 13 hedge funds had stakes worth nearly $32 million in Lithium Americas (NYSE:LAC) and 8 hedge funds had stakes worth $4.005 million in LAAC.
Massif Capital Real Assets Strategy stated the following regarding Lithium Americas Corp. (NYSE:LAC) in its Q2 2024 investor letter:
“Lithium Americas Corp. (NYSE:LAC): No Massif Capital letter would be complete without examining something that is not working or that we got wrong. Thus far this year, the clear winner is our expectation that lithium would make a rebound. Lithium prices have continued to sell off, with lithium hydroxide and carbonate in China down ~10% since the start of the year and the lithium mining sector, as measured by the Global X Lithium ETF, down 18%. The fund’s two lithium investments, Lithium Americas Corp. (NYSE:LAC) and Lithium Argentina, are down 48% and 46%, respectively.
While the story with Lithium Americas, a development company focused on building an exceptionally large lithium asset in Nevada, is complicated, the story with Lithium Argentina is similar to the situation in Siemens Energy last year. The market tossed the baby out with the bath water. The firm’s Cauchari asset in Argentina is a bottom-cost quartile brine asset that is fully built, went into operation last year and continues ramping to full commercial production on schedule. At a 10% discount rate and $12,000 per ton lithium in perpetuity, we still think the firm’s 44% ownership stake in the mine is worth $6 a share, 82% above the current price. At $18,000 per ton, the mine is worth more than $15 a share to the company. The operating leverage to the lithium price is fantastic…” (Click here to read the full text)
Overall LAC ranks 5th on our list of the most promising EV battery stocks. While we acknowledge the potential of LAC as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than LAC, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.