In the final segment of our Battery 101 series, we highlight the companies best positioned to benefit from the electrification of everything. While we have identified around 20 companies that are well capitalized and targeting the battery space, we see one to two key companies in each of the three categories of electrification: mining, materials and manufacturing.
Miners:
Livent (NYSE: LTHM) — Livent has been in the lithium mining and refinement business for 80 years. The company went public in 2018 and has a market cap around $5B. Livent is headquartered in the US, and mines lithium in Fénix, Argentina. The lithium is shipped to five refining facilities in the US, UK, Argentina, China and India. In 2022, the company opened its North Carolina facility for lithium refinement. Revenue is expected to almost double in 2022 and consensus expectations are for 33% growth in 2023, inline with the growth of the broader EV market.
Most appealing about the Livent opportunity is that it’s the largest lithium mining company with a US-based management team which reduces its geopolitical risk. While 65% of last year’s revenue came from China buyers, Livent is working to diversify away from China to buyers within the US and Western Europe.
Materials:
Redwood Materials (private) — Founded by JB Straubel, co-founder and former CTO of Tesla, Redwood Materials has maintained a relatively low profile when it comes to the discussion of next-generation foundational tech companies. The business model is unique: The company recycles batteries and extracts metals like lithium, cobalt and nickel. Next, Redwood uses those metals to manufacture new cathodes and anodes, which are sold in turn to battery manufacturers for the production of new battery cells. Recently, Redwood announced a deal to supply Panasonic with nickel cathodes. The company also has partnerships with Toyota, Volkswagen and Audi to recycle their EV batteries. Redwood has raised $792 million in funding and was valued at around $3.7B in September of 2021.
Most appealing about Redwood is their ability to recycle old batteries (low input costs) into the most expensive components of a new battery (higher margins). JB Straubel is one of the world’s most well-regarded battery experts, and the company is focused on supplying the most important components of batteries to manufactures within the US and Western Europe.
Manufacturers:
LG Energy Solutions (ticker: 373220-KR) — A subsidiary of LG Chem, LG Energy is a Korean manufacturer of batteries that are sold to end customers like automakers. The company is the second largest EV battery maker, with about 15% global share, behind China’s CATL 35% share. LG recently announced a joint venture with Honda to invest $4.4B toward battery production within the US, where lithium battery production will begin in 2025.
Panasonic (ticker: PCRFY) — The Japanese company is the fourth largest EV battery maker with about 10% global share. Panasonic is building a new $4B factory in Kansas which will which will begin to produce lithium batteries in 2025.
Most appealing about LG Energy and Panasonic is that they understand how to turn a profit by making EV batteries at scale and are expanding manufacturing capacity within the US. Both companies are based in countries with favorable ties to the West.