Goldman Sachs believes batteries for electric vehicles are becoming “critical” to the energy transition and names two companies that could benefit from diversifying supply chains from China and developing local production.
– China currently accounts for about 60% of global demand for electric vehicle batteries, but by 2030, the bank estimates that share will drop to 30% amid growing demand from the U.S., EU, India and other markets. Manufacturers outside China are expected to benefit from this redistribution.
– Creating fully localized battery production without China’s participation requires significant investment, which Goldman Sachs estimates at $160 billion for the U.S. and EU alone. At the same time, it is noted that some successes in the realization of this goal have already been achieved.
– For example, thanks to trade agreements with Australia, Chile and Canada, the U.S. now has several options for supplying lithium, a key metal for electric car batteries.
Top peaks in the industry – Investment bank analysts favor companies that are beneficiaries of the U.S. Inflation Reduction Act:
Tesla #TSLA Target price is $330, upside +80% Tesla benefits from being an early entrant in the market and already has large production volumes in Nevada (thanks to a partnership with Panasonic). In addition, the company is in the process of ramping up battery production in Texas, which Tesla plans to use on production vehicles starting in 4Q22.
Freyr Battery #FREY Target price is $19, upside potential +31% According to analysts, German battery maker Freyr is one of the biggest beneficiaries of the Inflation Reduction Act. Earlier this month, the company announced plans to build a gigafactory in the U.S. state of Georgia.
