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 Piedmont Lithium Inc. (NASDAQ:PLL) 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).
A close-up of an open-pit mine in the Carolina Lithium Project.
Piedmont Lithium Inc. (NASDAQ:PLL)
Average Analyst Price Target Upside as of September 12: 175.86%
Number of Hedge Fund Holders: 9
Piedmont Lithium Inc. (NASDAQ:PLL) is well-known in the lithium market, specifically targeting the growing EV battery sector. The company’s Carolina Lithium Project spans approximately 3,706 acres in North Carolina’s Carolina Tin-Spodumene Belt. The region, located northwest of Charlotte, is crucial for its spodumene ore, a primary source of lithium.
In addition to this major project, it also owns properties in Bessemer City and Kings Mountain, North Carolina, which advance its development efforts. Aiming to capitalize on the growing demand for EVs, the company is focused on lithium hydroxide production. The compound is important for the lithium-ion batteries that power EVs.
In addition to its North Carolina projects, the company is advancing its lithium endeavors in Quebec. The North American Lithium project is known for being the largest spodumene mine in North America, which will be instrumental in meeting the increasing battery market needs. The company aims to produce around 60,000 metric tons of lithium hydroxide annually from these operations, contributing significantly to the U.S. lithium supply.
The company’s vision is to become a top lithium producer in North America and respond to the need for a more localized supply chain. Its goal is to produce 30,000 metric tons of lithium hydroxide annually from its Carolina Lithium Project, which will be a comprehensive operation converting spodumene ore into lithium hydroxide.
In 2022, Piedmont Lithium (NASDAQ:PLL) secured an important supply contract with Tesla, agreeing to supply spodumene concentrate through 2025. The agreement was adjusted in 2023 to include a floating price mechanism, which allows for more adaptability in pricing. Under the updated terms, the company will deliver 125,000 tonnes of spodumene concentrate, sourced from Sayona Mining’s North American Lithium project in Quebec, Canada.
The company is also forging strong partnerships to fuel its expansion. A significant development occurred in April 2023 when LG Chem, a prominent battery manufacturer, made a $75 million equity investment in Piedmont Lithium (NASDAQ:PLL).
The deal not only provides significant capital but also involves LG Chem committing to purchase 200,000 metric tons of spodumene concentrate over four years. The partnership is in line with the growing demand for battery materials in North America, supported by incentives for domestic production through the Inflation Reduction Act.
On August 12, B. Riley analyst Matthew Key lowered the price target on the stock to $20 from $26 and kept a Buy rating after the Q2 report. The revision reflects the company’s decision to consolidate its operations, moving the proposed Tennessee Lithium capacity to Carolina Lithium.
As per the analyst, the shift is expected to enhance economic efficiency and technical performance, making the North Carolina project more economically viable due to its integrated nature. The strategic move positions the company for continued growth and success in the expanding lithium market.
The stock has received a consensus Buy rating from 10 analysts. As of September 12, the average price target of $20 has an upside of 175.86% from the current levels. It takes the top spot on our list of the most promising EV battery stocks according to analysts.
In the second quarter, 9 hedge funds had stakes in Piedmont Lithium (NASDAQ:PLL), with total positions worth $9.559 million.
Overall PLL ranks 1st on our list of the most promising EV battery stocks. While we acknowledge the potential of PLL 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 PLL, check out our report about the cheapest AI stock.
Read Next: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published at Insider Monkey.