When it comes to identifying next-generation breakthrough investments that could rise 100%, 200%, 500%, or more, I always come back to one saying.
Where there’s disruption, there’s opportunity.
Case-in-point: The internet.
Throughout the 1990s, the emergence of the internet rapidly disrupted how people across the globe worked, communicated, and played.
For many, it was a scary time. Change is never easy. For many more, it was an exciting time, as the internet was unlocking a new world of possibilities.
But… for investors… it was an opportunity.
Specifically, it was a once-in-a-decade opportunity to invest early in emerging titans of the internet industry.
Like Amazon (AMZN)… when it was a $438 million company in 1997…
It’s a $1.6 TRILLION company today – representing a whopping 365,000% return.
That means a mere $1,000 investment in Amazon in 1997 would be worth more than $3.6 million today.
Need I say more?
Where there’s disruption, there’s opportunity – and the bigger the disruption, the bigger the opportunity.
Right now, we are on the cusp of an enormous disruption.
This disruption will fundamentally and entirely change the world’s multi-trillion-dollar transportation work. In its wake, it will create new hundred-billion-dollar titans of the auto industry – most of whom are just tiny companies today.
What disruption am I talking about specifically?
The shift toward electric vehicles.
Long story short, the world’s transportation network is rapidly being electrified. This electrification wave is nothing new. Electric cars have been around for over a decade. To-date, they’ve barely moved the needle – in 2019, only 2.1 million new EVs were sold, representing just 3.3% of the total global new car market.
But… in 2020… multiple game-changing trends have converged to set the stage for the nascent EV market to rapidly march toward global ubiquity over the next decade.
Simply consider the following:
- Demand is shifting. Today’s consumers are more aware than ever before of climate change, and are increasingly aligning their purchasing decisions to “go green.” As a result, over 60% of prospective car buyers in the U.S. today want an EV – and that number is going up every single year.
- Laws are changing. Governments are also more aware than ever before of climate change and are increasingly enacting legislature to promote adoption of “green” technologies. More than 200 cities and counties across the world have a “100% clean energy” target for 2030, 2040, or 2050 – while districts on the cutting edge of green tech (like California and New Jersey) are outright banning gas car sales after 2035.
- Tech is improving. EVs used to be significantly limited by driving range. Thanks to major technological improvements on the battery front, that’s no longer true. The average range of an EV has increased 140% since 2011, with a fully charged EV now getting as much range as a gas car at 300-plus miles. Even further, gas cars aren’t increasing their driving ranges. EVs are, and rapidly – so by 2030, EVs will be able to drive significantly farther than gas cars.
- Costs are falling. EVs also used to be significantly limited by costs. That is, they have traditionally been far more expensive than gas cars. Again, though, this is no longer the case. Average EV prices have dropped 70% since 2010 and are now largely on par with gas cars. Economies of scale and technological improvements will unlock further cost reductions, and by 2030, EVs will be substantially cheaper than gas cars.
- Supply is pivoting. For years, auto industry incumbents were asleep at the wheel when it came to the EV revolution. Not anymore. Every major automaker in the world – from Ford to GM to Bentley – is making all-out blitz into the EV category, in what will amount to an unprecedented surge in EV supply over the next decade.
The future couldn’t be any clearer.
EVs are on the cusp of fundamentally disrupting the entire multi-trillion-dollar auto market.
It’s one of the biggest disruptions we have ever seen in the past 50 years – and, by extension, it’s one of the biggest investment opportunities we have ever seen in the past 50 years, too.
The right investments in the EV sector will score investors 10X, 20X, even 30X returns over the next few years.
Note the emphasis above…
The right investments.
That’s the thing about disruptive megatrends. You can’t just invest in the megatrend. Although the internet did turn into a globally ubiquitous, multi-trillion-dollar industry, most internet startups in the 1990s went under. Only a handful actually turned into enormous long-term winners.
The same will be true about the EV space.
It will turn into a globally ubiquitous, multi-trillion-dollar industry by 2030. But there are a lot of EV startups today, and the reality is most of them will fail.
Only a handful will succeed – but those that do, will generate Amazon-like returns.
So… with that in mind… let’s take a look at my 11 favorite electric vehicle stocks to buy for the next decade, each of which represents a right investment in one of the biggest disruptions of our lifetimes.
EV Stock #1: The Emerging Tesla of China
There’s no doubt that Tesla (TSLA) has experienced momentous success in the booming EV market.
But, with a $460 billion market cap, it’s fair to say that Tesla is already valued to be a dominant auto maker for many years to come.
In other words, if you’re looking for explosive gains in the EV market, it may be time to look for the next Tesla…
With that in mind, I’d like to introduce you to NIO (NIO).
Many consider NIO to be the “Tesla of China.” That’s accurate. NIO is dominating China’s luxury EV market today much like Tesla has dominated America’s luxury EV market over the past few years.
This dominance isn’t by mistake.
NIO makes the best electric cars in China, packaged with the most exclusive and desirable branding in the market. And thanks to a unique business model, it can sell those cars at great prices.
There’s no denying the robust performance and aesthetic of NIO’s e-SUVs. These are sleek looking, smartly designed luxury cars with tons of space, attractive interiors, omni-present software integration, and a large sky roof that gives the cars a modern, open-air feel.
NIO’s cars are only rivaled by Tesla in terms of range (350-plus miles of driving range, significantly better than every other EV in the world except for Tesla’s long-range models, which are comparable) and pick-up power (0-to-60 miles per hour time of 4.5 seconds, again miles better than every other EV in the world except for Tesla’s models, which are comparable).
So, when it comes to EVs, NIO and Tesla make the best cars in the world, without any close competition.
Meanwhile, NIO has followed in Tesla’s stateside-footsteps, fostering excellent, exclusive brand equity in China, primarily through the creation of swanky NIO clubhouses for car-owners. In so doing, NIO has cemented itself as the “cool” brand in China’s EV market.
Perhaps most importantly, thanks to its unique battery-swapping model that removes the cost of battery ownership for the consumer, NIO is selling its premium EVs for anywhere between $50,000 and $80,000. That’s a great price for a high-performance luxury e-SUV like this. For comparison, Tesla’s Model X is selling for over $100,000 in China.
It doesn’t take a rocket scientist to connect these dots.
By selling the best premium e-SUVs in the market, under a great brand, and at great prices, NIO will drive to a leadership position in China’s premium EV market over the next decade — which, of course, is great news for NIO stock, because China is the largest auto market in the world.
But NIO also has an incredible opportunity to leverage its leading tech, strong brand, and genius business model to replicate its core China success on a global scale.
Ultimately, that means NIO is a Tesla 2.0 in the making.
Tesla is a $460 billion and “getting-bigger-everyday” company. NIO’s market cap is $60 billion. Clearly, there’s a ton of upside potential left in this emerging EV maker.
EV Stock #2: The Leader in a New Class of 3-Wheel EVs
Every small car that has ever launched in the U.S. to-date has been a failure.
Suzuki in the early 2010s. The Toyota Scion iQ in 2015. Mercedes’ mini-Smart Car in 2019.
None of them sold more than a few hundred units. None of them are still for sale in the U.S. today.
The blunt reality: small cars don’t sell well in the U.S.
Actually… let me rephrase that… small cars haven’t sold well in the U.S.
America’s relationship with cars is changing. And that’s mostly because who is buying cars is going to change over the next decade.
The U.S. auto market has historically been driven by older folks and families, who live in spacious suburban neighborhoods, with sizable incomes and good credit.
That crowd likes bigger cars and can afford nicer cars.
But, in the 2020s, the U.S. auto market will increasingly be driven by an entirely different demographic: young, single folks, who live in jam-packed cities, with lower incomes and worse credit.
Long story short, due to the widespread availability of shared mobility services, millennials have long shunned car ownership, with U.S. millennial car ownership rates at 80% today, versus 90%-plus for older demographics.
Covid-19 is changing that, because it has eroded the attractiveness of ride-hailing, and prompted these young, single folks, who before relied on Lyft and Uber rides, to finally get a car.
A recent Capgemini survey found that 45% of individuals under the age of 35 are considering buying a car in the wake of the pandemic, with a majority of that intent coming from people who have never owned a car before.
But these young folks are still at the beginning of their careers. Living in cities. With unproven credit histories. And tons of student debt. Plus, they are also from the generation that is hyper-concerned with saving the environment.
So, they aren’t going to splurge on big new fancy Hummers.
They are going to buy small and cheap electric cars.
That’s great news for ElectraMeccanica (SOLO).
The Canadian-based EV maker is making the perfect car for this new generation of car buyers: a three-wheel, single-seat EV – dubbed SOLO – which retails for just $18,500.
At that price point, it’s cheaper than any other vehicle on the market. It’s zero-emission. It’s small enough that it can be parked anywhere. And one seat isn’t a significant limiting factor, since the most common use case of a car is to commute to and from work, and 80%-plus of those trips are done alone.
In other words, ElectraMeccanica is selling the perfect car (a small, cheap EV), to the perfect audience (price- and eco-sensitive young consumers living in cities), at the perfect time (when all those young consumers are looking to buy a car).
This growth story is just starting to come to life in 2020.
The company – which up until this year was just a concept and a website – has, in 2020, simultaneously scaled production at its Chinese factory to pump out 20,000 SOLO vehicles a year, and opened up multiple direct-to-consumer retail locations in busy malls in Los Angeles, San Diego, Portland, and Scottsdale.
Deliveries of these vehicles are expected to commence in late 2020…
Thus, for the first time in its history, ElectraMeccanica is ready to sell thousands of its next-gen urban mobility vehicles.
And that’s exactly what the company will do: Sell thousands upon thousands of Solo cars to young consumers over the next few years.
As the company does that, ElectraMeccanica stock appears ready to rip higher – especially since this is just a $500 million company today.
EV Stock #3: Wall Street’s Newest EV Stock That’s Stealing All the Hype
Did you notice how electric vehicle (EV) stocks – which have been red-hot for weeks – suddenly reversed course and dropped sharply Nov. 17?
Rivian (RIVN), which had yet to have a red day on Wall Street, dropped 15% on Nov. 17.
Lucid (LCID), which has more than doubled over the past month, shed 5% on Nov. 17.
Fisker (FSR) – up nearly 70% over the past month – plunged 10% Nov. 17.
The mainstream media chalked the drops up to a few analyst downgrades and some selling pressure after such enormous rallies.
But what if I told you that the real reason for the sudden reversal in red-hot EV stocks was something entirely different?
That, at the same time these stocks were plunging, a brand-new EV startup made its public debut and actually stole the show from these EV darlings?
Because that’s exactly what I think happened.
That’s why today we’re going to tell you all about Wall Street’s newest EV stock that soared more than 150% in its Wall Street debut, while other EV stocks struggled. It is one of the most unique and coolest EV startups in the world today, and if the company’s promising technology scales, this stock could be a huge long-term winner.
The company we’re talking about is Sono Group (SEV).
Sono Group is an electric vehicle startup that specializes in the unique category of solar-powered electric vehicles, or SEVs for short.
The company is essentially building a new concept electric vehicle that, instead of being outfitted with aluminum and paint, is covered in flexible solar panels that allow the car to charge itself as it drives, or while it parks, thereby boosting the driving range of the vehicle and reducing the need for charging stations everywhere.
The breakthrough innovation here is in Sono’s solar technology. Traditional solar technology relies on glass to cover the solar cells, but glass is heavy and inflexible – and therefore, cannot be wrapped around the frame of a vehicle.
Sono has developed proprietary polymer technology that is lightweight and allows for flexible surface integration. This unique technology is at the core of what enables Sono to make solar panels that are lightweight enough and flexible enough to be wrapped around a car.
Sono Group is pioneering this breakthrough concept of SEVs through its first car, the Sion. The Sion is an electric sedan which will be outfitted with 248 solar cells, which collectively will add about 70 miles of driving range to the car.
The Sion has received 14,000 reservations corresponding to a net sales volume of $340 million. Sono Group believes that its solar mobility technology can be integrated into more than just passenger cars, and in the future, plans to create SEVs across all transportation verticals.
The company just went public through a hugely successful initial public offering yesterday. On the heels of the massive pop, Sono Group is valued at $2.6 billion.
The EV sector is one of the hottest sectors on Wall Street today. It seems any and all pureplay EV stocks are benefitting from a massive investor buying spree. Sono Group’s enormously successful IPO shows that this stock is included in this “rising tide lifts all boats” dynamic. You could easily see this stock turn into the next Lucid or Rivian and start ripping higher in the near-term.
Long-term, the potential in the EV market is massive. We believe the rules of the auto industry will be rewritten over the next decade, and that by 2030, the car titans of old will be replaced by the car titans of new. To that extent, Sono Group is in the right market at the right time.
The concept of SEVs is intriguing. They aim to solve two major issues stagnating adoption of EVs: Range anxiety and charging infrastructure. They solve the latter very well. They solve the former inadequately, as 70 miles of added driving range isn’t that much. However, even with just 70 miles of added driving range, SEVs do have huge value-add applications in sunny parts of suburban and rural America and Europe.
Solar technology is not static. It’s very dynamic. And right now, scientists across the globe are working on multiple solar technology breakthroughs to dramatically improve the performance of solar cells. One such promising breakthrough is the inclusion of perovskites in solar cells. Perovskites are a very flexible material, and therefore, perovskites could be included in Sono Group’s solar mobility tech and significantly improve the performance of these SEVs.
At $2.6 billion, Sono Group is one of the cheaper pure-play EV startups with a multi-thousand-vehicle reservation book.
This is a pre-revenue company, and there remain some enormous execution risks when it comes taking the concept of SEVs, and turning it into a commercial reality.
Without some major technological improvements in the solar mobility tech stack, we believe the Sion will struggle to expand beyond a few niche markets.
Beware the momentum trade here. Momentum is Sono Group’s friend. For now. That could change at any moment.
The Sion retails for about $30,000.
In our opinion, a best-case outcome for the Sion is to replace the Prius. We believe the market for Prius-like vehicles measures around 500,000 vehicles per year (a conservative estimate).
At those volumes, Sono Group would be bringing in $15 billion in sales per year from the Sion alone.
A 2X sales multiple on that implies a potential future valuation of $30 billion.
The EV sector is red-hot today, and for good reason. But the multi-trillion-dollar electric shift in the automotive industry will not lead to just one or two new titans in the auto industry – it will entirely reorder the automotive industry hierarchy. Tesla, Rivian, Lucid, and many more, will be huge long-term winners. Sono Group – with its unique SEV technology – has a chance to join the Mt. Rushmore of EVs.
EV Stock #4: A Tiny EV Battery Tech Company With a Huge Tesla Connection
One of the most important questions you can ask in this world is: How?
So, when you hear Tesla, Ford, GM, and Volkswagen execs all talking about a world where we have EVs that can be driven cross-country without needing a charge, don’t need to be upgraded ever, will cost less than $20,000, and will be safer than any gas-powered car… you should be asking: How on Earth is any of that possible?
After all, today’s EVs can barely go a few hundred miles on one charge, need to be replaced often, cost $50,000 and up, and blow up in flames when they crash.
How are we going to from that to the future that EV enthusiasts are talking about?
The answer is actually pretty simple: The battery.
When it comes to EVs, it’s all about the battery.
The battery is, after all, the “engine” of an electric vehicle. It is what makes the car go. The better the battery, the better the electric vehicle.
What determines the driving range of an EV? The battery. What determines the life span of an EV? The battery. What determines the cost of an EV? The battery. What determines the safety of an EV? The battery.
Get the point?
The battery determines everything about an EV – and therefore, the key to unlocking a new generation of EVs that drive thousands of miles, last dozens of years, cost less than $20,000, have unmatched safety, and ultimately save our planet from global climate change, lies in… you guessed it… creating a new generation of breakthrough battery systems.
It’s no wonder that billions of dollars have been invested in trying to figure out how to create the world’s best battery.
Nothing is off limits – scientists are literally changing everything they can think of…
Some of these changes – like the switch to solid-state batteries – are getting lots of mainstream attention. Others are not – but are still very important.
Today, we are going to tell you about one of these other potentially game-changing battery technology breakthroughs, and the small tech company on the forefront of commercializing this breakthrough. Here’s a bonus about this company: It’s on Tesla’s radar, too, and we think this company could end up getting acquired by the EV giant for a huge premium in the near future.
Lithium-ion batteries are comprised of an anode, a cathode, and an electrolyte solution between the two. Batteries work by promoting the flow of ions between the anode and cathode through the electrolyte.
Typically, graphite is used to make the anode of the battery. That’s because graphite is ample, cheap, and easy-to-use.
For years, it’s worked very well as the gold standard anode material – but as batteries are pushing the limits of their physical performance, graphite’s shortcomings have become a huge hinderance.
Specifically, due to certain physical properties of graphite, anodes made of graphite need six atoms of carbon to store just one lithium ion – meaning you need a lot of graphite anode material to store just one tiny charge. Innately, this means that the energy density of batteries with graphite anodes is low.
Also, most of the graphite in the world is sourced from China, exposing EV and battery makers to huge geopolitical risks which could result in significant supply chain disruptions.
In other words, as the EV world progresses over the next few years, battery makers are going to need a better solution than traditional graphite for anodes. They’re going to require a more energy-dense material that is preferably sourced domestically.
A small, $700 million tech company by the name of Novonix (NVNXF) has the solution.
At its core, Novonix is an Australian battery technology company that develops and supplies lithium-ion battery materials into the EV industry. The exciting thing about this company is its proprietary Dry Particle Micro Granulation (DPMG) technology for producing synthetic graphite materials for battery anodes.
Long story short, the status quo process for synthetic graphite manufacturing is something called Continuous Stirred Tank Reactor (CSTR). It’s a complex process, that’s very costly, and which produces a lot of environmental waste. These shortcomings are why synthetic graphite hasn’t really taken off in the EV industry, despite the supply chain risks inherent to sourcing natural graphite from China.
Novonix’s DPMG technological process, however, addresses these shortcomings. The process is much simpler than CSTR. It’s cheaper. It’s cleaner. And it has very little waste.
Not to mention, Novonix synthetic graphite has improved Columbic efficiency relative to traditional synthetic graphite and natural graphite. It also has significantly improved capacity retention.
In other words, Novonix has engineered a way to make better synthetic graphite, for cheaper, faster, and with less waste.
It’s the dream synthetic graphite manufacturing process.
The bull thesis, of course, is that Novonix will leverage this proprietary, superior synthetic graphite manufacturing process to turn into the unrivaled supplier of domestically sourced, premium synthetic graphite into the EV industry. As EVs become ubiquitous over the next decade, demand for synthetic graphite will soar, and Novonix’s sales, profits, and stock price will all skyrocket.
That’s one way this story plays out. But there’s also another “exit” strategy here… one which may result in a far quicker “payday” … and that’s via a Tesla acquisition.
Here’s that story.
About a decade ago, professors Jeff Dahn and Chris Burns started a battery research group at Dalhousie University in Canada. In 2013, Burns spun out of that research group to start Novonix (he is now the CEO of Novonix). Three years later, Dahn’s research group – still at Dalhousie University – scored a five-year exclusive research partnership with Tesla.
Since then, Tesla and Dahn have worked very closely together, and Dahn has turned into a celebrity of sorts in the battery field, co-authoring over 730 papers, holding some 73 patents, and being credited as one of the most influential brains behind Tesla’s leading battery technology.
In any event, in January of this year, Tesla extended its exclusive research partnership with Tesla for another five years. Around the same time, Dahn announced that he would be joining his former colleague Chris Burns and Novonix as the company’s Chief Scientific Officer in July 2021.
Meanwhile, in the background of all this, Tesla has been promising a million-mile battery and cancelled its ultra-long-range Model S Plaid+ car.
We may be grasping at straws here, but it increasingly looks to us like Tesla is desperately looking for its next big battery breakthrough, and that both the company and one of its longtime battery tech leaders (Dahn) believe that Novonix could hold the technological keys to that breakthrough with its proprietary DPMG synthetic graphite manufacturing process.
Does that mean Tesla will become a huge Novonix customer soon? Or that Tesla may outright acquire the company?
We view both scenarios as very likely – and therefore, we think that there are many paths to huge gains for shareholders in Novonix stock.
That’s why, if you’re bullish on EVs, you should consider taking a position in Novonix stock today.
EV Stock #5: A Hidden Gem That Will be the EV Market’s Biggest Winner in the 2020s
Over the next 20 years, electric vehicles are going to take over the world.
We all know this. Every investor, analyst, and financial media personality understands the enormous disruption coming to the multi-trillion-dollar mobility industry – and they all see it as the “investment opportunity of a lifetime.”
Make no mistake. It is – but because everyone already knows this, everyone has already rushed into electric vehicle stocks, and the big money has already been made.
Just look at the market caps of the leading EV makers in the world.
Tesla: $680 billion.
NIO: $65 billion.
Volkswagen: $150 billion.
Look. I’m not saying that these stocks aren’t great long-term investments. They are – but they aren’t 10X investment opportunities anymore. After all, if Tesla were to rise 10X from here, it’d be a $7 TRILLION company… which, if Tesla were a country, would make it the third most economically valuable country in the world.
That’s not happening…
So, if you’re looking for potential 10X investment opportunities in the EV Revolution, you need to forget the EV makers and look at what I like to call the “derivative plays.”
The EV Revolution will be so big and widespread that it will have multiple, major first- and second-order derivative impacts on the world.
Think charging station operators. All those EVs aren’t going to work unless we have charging stations everywhere.
Or think battery makers. All those EVs need batteries to power them.
It is in these EV derivative markets that you will find potential 10X investment opportunities.
And today, we will tell you about a hidden gem in one of these EV derivative markets. It’s a company that could, by 2030, be one of the most important players in the broader EV ecosystem – yet which no one is talking about today, and which features an exceptionally discounted valuation. If things go as planned, this tiny stock could be an enormous winner in the 2020s.
One very attractive, very important, yet totally under-the-radar EV derivative market is lithium-ion battery recycling.
You have to remember… lithium-ion batteries power EVs. So, as the number of EVs in the world goes from a few million today, to hundreds of millions by 2030, the number of lithium-ion batteries in the world will increase by many multiples, too.
This creates a waste problem.
Lithium-ion batteries are not infinite power sources. They have shelf lives. They’re made, they’re used, and then they’re discarded. If this pattern continues, then by 2030, you’ll have hundreds of millions of lithium-ion batteries sitting around in wastelands across the globe, adding to the world’s already enormous “trash” problem.
Not to mention, there will be significant stress on supply chains to produce enough lithium, cobalt, and nickel to sustain robust production of new batteries every single year.
The solution? Battery recycling.
As it turns out, you can recycle lithium-ion batteries, by mechanically breaking them down and chemically separating out the useful materials – like lithium, cobalt, and nickel – which can then be used to create new batteries.
Battery recycling is the future, since it provides an economically sensible and ecologically sensitive way to power the EV Revolution. Pretty much every major market research firm sees the lithium-ion battery recycling market growing by at least 10-fold over the next decade.
There’s just one tiny problem… and that’s that the science behind recycling lithium-ion batteries is very complex, and no one has yet figured out an efficient way to recycle batteries at a large enough scale to impact the industry.
Until now. One tiny company by the name of Li-Cycle (LICY), which merged with the SPAC, Peridot Acquisition Corp. (PDAC), appears to have cracked the lithium-ion battery recycling code.
Li-Cycle is a $1.7 billion battery recycling company in North America that – thanks to its proprietary, breakthrough “Spokes-and-Hubs” technology process for battery recycling – projects as the unrivaled leader in the EV battery recycling market by 2030.
There are really two big breakthroughs here…
The first breakthrough is in the Spokes part of the process. In this segment, Li-Cycle takes lithium-ion batteries and mechanically processes them into “black mass,” which essentially is just a bunch of shredded lithium, nickel, cobalt, and other metals. The breakthrough here is Li-Cycle’s all-in-one mechanical processing functionality.
Specifically, because mechanically processing lithium-ion batteries and producing black mass is such a complex process, most other recyclers have tailored their processes to specific battery types, and therefore, they have niche end-market applications. Li-Cycle, however, has developed a proprietary method to efficiently produce black mass from any battery type – and it’s the only recycler in the world that has figured out how to do this.
The second breakthrough is in the Hubs part of the process. In this segment, Li-Cycle chemically separates the black mass to produce end-use lithium, cobalt, and nickel products, which are then sold back to battery makers to create new batteries. The breakthrough here is Li-Cycle’s ultra-effective, zero-waste hydrometallurgical process.
Specifically, there are two ways you can turn black mass into usable metal parts. One is through a pyrometallurgical process that involves smelting or burning, and which – while effective – consumes a ton of energy and emits lots of gas.
The other is through a water-based hydrometallurgical process, which is very energy-efficient and emits no gas. Historically, though, hydrometallurgy has not been very efficient (it only recovers about 50% of the battery metals) and produces tons of wastewater – two shortcomings which have limited adoption of the promising tech.
But Li-Cycle has developed a proprietary hydrometallurgical process that recovers about 95% of the battery metals and which reuses its own water. This is, by far, the best chemical processing technique in the market today.
In other words, Li-Cycle is a battery recycling company that has developed two breakthrough technological processes – one mechanical, and one chemical – which will enable it to be the world’s most efficient, cheapest, and cleanest battery recycler.
To be sure, Li-Cycle is in the very early stages of its growth narrative. The company has only built two Spokes facilities, and is currently in the process of building its first Hubs facility.
But the early-stage nature of this company is reflected in the valuation of just $1.7 billion. And, if management can execute and successfully commercialize the company’s breakthrough technology processes, then this will one day be the $20+ BILLION giant of the EV battery recycling market.
That’s why you should consider taking a position in Li-Cycle stock today.
EV Stock #6: Don’t Overlook This Small Electric Bus Maker With Big Potential
Every year, about 10 million medium-to-heavy duty commercial busses, trucks and vans are sold to fleet operators across the world.
Very few of them are electric.
In fact, according to Bloomberg NEF, just about 3,600 electric medium- and heavy-duty commercial vehicles (CVs) and busses were sold in the U.S. in 2020, which equates to penetration rate of less than 0.1%.
Clearly, there’s a huge opportunity here.
After all, the whole “vehicle electrification” trend isn’t going to skip over the commercial vehicle market. Just as every passenger car will get electrified over the next two decades, so too will every commercial vehicle.
This isn’t a matter of “if” – it’s a matter of “when.”
And “when” is right now…
As part of its trillion-dollar infrastructure package, President Joe Biden’s administration wants to allocate $7.5 billion toward electrifying America’s busses. Assuming an average price of $100,000, that $7.5 billion is enough to buy 75,000 electric buses.
There are only 400,000 school buses in operation today in the U.S.
In other words, the new infrastructure bill is a huge first step toward electrifying America’s bus fleet. By 2030, most of the buses in America may very well be electric.
We’re not alone in this thinking.
Bloomberg NEF sees the number of electric buses sold in the U.S. rising by nearly 7,000% to over 250,000 vehicles by 2030.
That’s enormous growth.
So, don’t sleep on the electric commercial vehicle market. It may not be as “sexy” as the passenger car market. But the electrification wave across commercial transportation will be one of the most profitable hypergrowth markets of the 2020s.
So how do you play this electric bus market? It’s by buying the electric bus maker that’s dominating this market in Canada, and which has a chance to leverage its early success in Canada to turn into a global electric bus maker worth many multiples of its current valuation.
There is no shortage of electric bus makers in North America. But in the Canadian market, there is one electric bus maker that rules supreme, and that’s Lion Electric (LEV).
Lion Electric was founded in 2008 and is headquartered in Quebec. The company started producing medium- and heavy-duty EVs in 2016. It has found a niche in the electric bus market, where the company has designed a very high-quality and unique electric bus with a fully composite body, advanced charging capabilities, and a noise generator to alert pedestrians when the bus is approaching.
It’s a solid product.
But there are lots of electric bus makers out there with solid products. So… what differentiates Lion Electric?
The company’s manufacturing capabilities.
Long story short, Lion Electric is a favorite of the Canadian government. In March, Prime Minister Justin Trudeau and the Premier of Quebec – Francois Legault – poured $100 million into Lion Electric for the construction of a highly automated battery-pack assembly plant in Canada.
That facility is expected to pair with the company’s 900,000 square-foot U.S. production plant in Illinois to produce about 20,000 high-quality electric busses per year.
In this market, that’s a big differentiator.
Most other electric bus makers are still in the “drawing board” and “concept” phases. Some have rolled out a few prototypes. Very few are driving those prototypes. And even fewer have secured robust manufacturing capabilities, let alone on the order of making tens of thousands of busses a year.
In other words, an inability to produce enough electric buses to meet the demand of huge fleet operators will short-circuit most companies in this space.
But not Lion Electric – they’re ready to meet that demand.
It’s no wonder that Lion Electric’s vehicle order book stood at 817 vehicles as of May 2021, or that the company is delivering 260 of those buses to First Student over the next 12 months (after which, First Student will be the largest operator of zero-emission school buses in North America), or that Lion delivered six trucks to Amazon very recently (and has another 2,500 vehicle deliveries planned for the e-commerce giant by 2025).
This company is executing where other electric bus makers are failing, and it’s showing in the order volumes.
If Lion Electric can keep this execution up – which we believe is doable – then you’re talking about a stock that could easily soar 10X, since the market cap today is less than $3 billion.
So, if you’re bullish on the electric bus market, you should consider taking a position in Lion Electric stock today.
EV Stock #7: A Tiny Lithium Mining Stock with Huge Upside Potential in the EV Revolution
What do all electric vehicles have in common?
They run on lithium-ion batteries.
Sure, there are ongoing efforts to turn those lithium-ion batteries into lithium solid-state batteries, because going from liquid battery chemistry to solid-state battery chemistry could be the key to making a million-mile electric car one day.
But… note the consistent use of lithium.
Regardless of what electric vehicle (EV) batteries look like in the future – liquid batteries or solid-state batteries – they will be built using lithium.
Of course, that means that as the EV megatrend disrupts the global auto market over the next decade, demand for lithium will explode higher.
Indeed, as EVs project to scale from ~2% global auto market penetration in 2019 to 70%-plus penetration by 2040, global lithium demand is expected to rise by over 20% per year for the next 20 years, according to Benchmark Mineral Intelligence.
That means lithium demand is projected to soar nearly 4,500% over the next two decades – which, in turn, means that one of the best ways to play the EV revolution is to through lithium mining stocks.
To understand why, let’s rewind back to the California Gold Rush. Back then, very few miners actually found gold. Most ended up broke. But the folks who sold picks, shovels, and other essentials to those miners ended up making out like bandits.
The investment implication? In burgeoning industries, one of the best and most surefire ways to capitalize on emerging megatrends – without risking everything – is to invest in the people selling the “picks and shovels” for that megatrend.
In the EV industry, the “picks and shovels” are the metals which make the batteries, the most important of which is lithium.
So, if you want to smartly invest in the EV Revolution, you should be taking a close look at lithium mining stocks.
Or, alternatively, you could just read this very entry.
Because, in the following paragraphs, we will tell you all about one of the best lithium mining companies in the market – a tiny mining firm that is sitting on what may be the world’s most valuable lithium deposit and whose stock is dramatically undervalued today.
When it comes to the lithium mining market, one company that sticks out from the pack is a tiny $340 million miner by the name of Neo Lithium (NTTHF).
That’s because Neo Lithium: 1) is sitting on what may be the world’s most valuable lithium deposit, 2) is on the cusp of commercializing that ultra-valuable deposit, and 3) has a stock price with huge room for gains in the event this company’s mine goes live within the next few years.
The first point is obviously the most important point, so let’s dissect it.
Most of the world’s lithium production (over 40%) and brine resources (over 90%) come from a tiny land mass in South America, located on the border of Chile and Argentina in what has become known as the “Lithium Triangle.”
Neo Lithium has secured a 99-year mining grant for a 350-square-kilometers slice of land in the southern end of the Emerald Triangle, which the company dubs the 3Q Project.
This piece of land has a ton of lithium reserves. Measured and indicated resources measure 4.0 mt, while inferred resources measure 3.0 mt and proven and probable reserves are at 1.3 mt.
That lithium is also high-grade lithium. That’s because 3Q has one of the lowest concentrations of magnesium and sulfate among any project worldwide, so it’s a ton of high-grade and low-impurity lithium. We’re talking battery-grade lithium carbonate with 99.8% purity.
Given all of this high-grade lithium, it’s no wonder that Neo Lithium has scored a strong strategic partnership with CATL – the world’s largest battery producer that makes EV batteries for BMW, Honda, Mercedes, Toyota, and even Tesla. More than a partnership, CATL actually invested C$8.5 million into Neo Lithium, taking an 8% equity stake in the company.
Having that support – and that vote of confidence – is immeasurable.
And it speaks to why Neo Lithium is one of the best lithium mining stocks today.
On an even brighter note, the stock is dramatically undervalued. The after-tax net present value of 3Q’s projected cash flows at an 8% discount rate is over $1.1 billion. The stock currently has a market cap of about 30% of that, at just $340 million.
In other words, if Neo Lithium executes, the potential upside in this tiny mining stock is significant.
So significant, in fact, that investors bullish on the EV Revolution may want to consider taking a position in Neo Lithium stock today.
EV Stock #8: The Unrivaled Leader in DC Fast Charging
You can’t mine gold without a pick or a shovel. So, during the California Gold Rush, the folks who sold picks and shovels to gold miners became fabulously wealthy.
Let’s extrapolate that story to the current electric vehicle “Gold Rush.”
You can’t drive an electric car without a charger. So, during the EV Gold Rush of the next decade, the companies that make EV chargers will become fabulously successful.
Longtime readers are well aware of this. That’s why we’ve highlighted so many EV charging stocks in these very issues. They are the building blocks of the electrification revolution.
But investing in EV charging stocks is a bit more complex than just investing blindly in any company that makes an EV charger.
To understand why, you have to understand how EV chargers actually work.
EV chargers plug into the grid, which provides AC power. That AC power is then pumped into the EV. Onboard every EV, there is an AC/DC converter which converts the AC power from the charger into usable DC power, which is then stored in the car’s battery.
Given this context, there are two types of chargers out there: AC chargers and DC chargers.
The difference is that AC chargers pump AC power into the car, which converts that power into DC power using its onboard converter. DC chargers have their own converter, so they pump DC power directly into the car and bypass the onboard converter. AC chargers are cheaper and slower. DC chargers are more expensive and faster.
The future of the EV charging landscape will be a mix of AC chargers throughout urban areas, and DC fast chargers on interstate highways.
So, the EV charging companies you want to invest in today for big long-term gains are the companies that are either really good at making and installing super-cheap AC chargers, or really good at making and installing super-high-performance DC chargers.
We will tell you about a company that falls in the latter category. Indeed, this company is actually the unrivaled leader in DC fast charging in America, and has enormous long-term potential. The stock has been beaten and bruised in recent months, and the time to buy and hold for the long haul is now.
There are a lot of EV charging companies out there. But there is only one EV charging company that rules supreme in the DC fast charging market in America, and that’s EVgo – which is going public through a SPAC merger with Climate Change Crisis Real Impact I Acquisition Corporation (CLII).
EVgo has been America’s leading DC fast charging company ever since it installed the country’s first urban fast charging station back in 2012. Since then, the company has expanded and built upon its early lead in fast charging, and today owns over 800 DC fast charging stations in the U.S. – good enough to give EVgo ~50% share of the U.S. DCFC market.
So, yes, EVgo is the giant in DC fast charging. No one else even challenges them.
Of course, the important question to ask now is: Well, is EVgo’s DCFC leadership sustainable?
The answer is a resounding “yes” – for a few reasons.
First, EVgo already operates a tough-to-replicate network of over 800 DCFC stations that sit on some pretty valuable real estate across 34 states and 68 metro areas. About 83% of Californians – and 41% of all Americans – live within 10 miles of an EVgo DCFC station. No one else can claim that, and it will take a lot of capex for anyone to rival that.
Second, EVgo has leveraged its leadership position to strike some advantageous partnerships with companies like Tesla and General Motors.
Tesla cars are not compatible with most non-Tesla EV chargers, but EVgo has struck a deal with Tesla to enable EVgo chargers to charge Tesla cars – making them the only non-Tesla DCFC that is able to do so. Meanwhile, GM has contracted EVgo to develop 2,750 EV chargers to be compatible with GM’s future EVs.
These partnerships flesh out the EVgo ecosystem and expand the company’s competitive moat.
Third, EVgo has the resources to keep building. Post-SPAC transaction, EVgo will receive $575 million in cash to help the company fund further DCFC site construction, which will only bolster the company’s first two competitive advantages.
Overall, then, EVgo is in a great position to not just maintain, but actually build upon its early DCFC market leadership position.
If so, then EVgo will emerge in the long run as one of the most valuable companies in the EV charging market.
Yet, the company is worth just $2.9 billion today… while the AC charging leader, ChargePoint, is worth nearly $6 billion.
Needless to say, the long-term upside potential here is compelling – compelling enough that you may want to add EVgo stock to your buy list today.
EV Stock #9: The One Company That Can Catch Up to Tesla
Thanks to its industry-leading technology, branding, and production capacity, the Tesla has seen its share of the global EV market expand from ~8% in 2017, to over 15% today.
At this point in time, it looks like no one can catch Tesla in the EV market.
Well… almost no one.
There is one company that can catch Tesla. One company that can rival Tesla’s EV battery technology… luxury branding… and mass production capacity. In fact, we think it’s the only company that has what it takes to truly rival Tesla for global EV market supremacy.
We believe this company is, for all intents and purposes, the “Tesla Killer.”
That company is Lucid Motors (LCID).
The story at Lucid Motors is pretty simple.
EVs are taking over the world. We all know this. Current EV penetration of annual new car sales hovers around 3%. Most automakers have targeted 30%+ EV penetration rates in their new car portfolios by 2030. Most governments are targeting 40%+ EV penetration rates by then. Consumers are on board with this, too, as 71% of consumers are considering buying an EV and over 40% are committed to making their next car purchase an EV.
The writing is on the wall. EVs will march from ~3% penetration today, to 35%+ penetration by 2030, and likely 50%-plus penetration by 2040.
Right now, Tesla is the undisputed king in this market. They were first-to-market, have the best technology, the most talented team, the biggest manufacturing capacity, so on and so forth – they basically have the best of everything, and as a result, are dominating the EV market without much competition.
But here’s the thing: Tesla cannot be king forever.
That’s not a knock against Tesla. We love the company. Rather, it’s an honest observation about society.
We live in a heterogeneous society, not a homogenous one. We each have own identities, and we enjoy celebrating our individuality. We don’t all live in the same houses. We don’t all wear the same clothes. We don’t all eat the same food, or work the same jobs.
And we sure as heck don’t drive the same cars.
Tesla cars emerged as the “coolest cars on the road” throughout the 2010s because there weren’t many on the roads. It’s simple supply-demand dynamics in a heterogenous society. We all want to be different, and therefore, we want what other folks don’t have – and throughout the 2010s, not many people had Tesla cars, so by virtue, a lot of people wanted Tesla cars.
Now, though, Tesla cars are everywhere. And if Tesla continues to execute and succeed in its mission of creating a $30,000 EV – which we believe they will – the roads are only going to get more and more packed with Tesla cars.
The more Tesla cars hit the road, the less “cool” they will be, and the lower aggregate consumer demand for the vehicles will go…
That’s especially true in the premium channel, where the buyers aren’t all that constrained by price and are very concerned about image. Those luxury car buyers aren’t going to want to buy a Tesla Model S, which looks just like the Tesla Model 3 that the just-out-of-college kid down the street bought last month (and let’s be honest, the Model 3 and Model S look very similar from 10 feet or more away).
They’re going to want something different, and if that something different is a bit more expensive, so be it – it’s the price luxury car buyers are willing to pay for status and differentiation.
In other words, as a result of the simple supply-demand dynamics in a capitalistic, heterogenous society, there exists an enormous opportunity for an EV maker not named Tesla to emerge over the next decade and, at the very least, challenge the king, or, at best, dethrone the king – and that auto maker will likely have to start in the premium channel, where Tesla’s brand equity is diluting most quickly at the current moment.
To be clear, the company that does this is going to have to be great. Because Tesla does have the “best of everything” in the EV industry right now, it’s not going to be challenged or dethroned by a just a random startup, or even a legacy auto company that has no idea how to make EVs.
The company that is going to challenge Tesla for EV market dominance in the 2020s is going to have to be a brand-new auto maker designed specifically to make EVs, and that auto maker is going to need to have it all: Tons of talent, great technology, enviable branding, and much more.
That company is Lucid Motors.
Lucid Motors is a pre-production luxury EV maker whose first car model, the Lucid Air, projects to set a new standard for luxury in EVs, with market-leading driving range, interior cabin space, horsepower, charging times, and acceleration.
The company plans to leverage the success of the Lucid Air as the “best EV in the world” to subsequently launch cheaper EV models with robust demand – much as Tesla did throughout the 2010s with the Model S/X and Model 3. Indeed, management’s long-term vision is for Lucid to follow the same playbook as Tesla, but to execute at a higher level with better technology, thereby enabling the company to one day be even bigger than Tesla, selling millions of technologically superior cars across all price-points
It’s a bold vision.
But we think it’s doable. Follow us here…
Four things made Tesla great:
- A super talented team.
- Superior EV technology.
- Awesome brand equity.
- A ton of financial resources.
Lucid Motors is the only EV startup in the world that has all four of those things, and arguably, Lucid actually beats Tesla in every single one of those categories.
All in all, then, Lucid Motors has all the necessary ingredients to challenge and potentially even dethrone Tesla in the EV market in the 2020s. Investing now could be like buying Tesla 10 years ago.
EV Stock #10: The Luxury Design King Pioneering an Affordable, Sustainable EV
Auto enthusiasts will have heard the name Henrik Fisker before.
He is a legend of unparalleled reputation in the auto market, mostly because he was the design brain behind many of the luxury automobile world’s most iconic vehicles, such as the Aston Martin DB9, the Aston Martin Vantage, the BMW Z8, and the BMW X5.
So when Fisker designs a car, the world pays attention.
Today, Fisker – through his new enterprise, Fisker Inc (FSR) – has allocated all his time and efforts to designing an ultra-stylish, ultra-affordable, and ultra-sustainable luxury eSUV: the Fisker Ocean.
This new car, set to start deliveries in the fourth quarter of 2022, is no joke.
Many industry insiders actually call it the “Tesla Killer.”
That’s because the Ocean is a legitimate rival to Tesla’s Model X and Y in terms of performance, design, and features.
It offers best-in-market driving range at up to 300 miles (which is largely consistent with base versions of the Model X and Y).
It also offers four-wheel drive for off-roading, lots of horsepower, a sub 3 second 0-to-60 miles-per-hour get-up, a large digital display screen equipped with a state-of-the-art in-vehicle software platform, and a very aesthetic, futuristic exterior design (all of these features are comparable to the Tesla Model X and Y).
Sure, it’s smaller in terms of cargo space (45 cubic feet with seats down, versus 60-plus cubic feet for the X and Y) and seating space (it’s a 5-seater, versus options for 7-seater in the X and Y).
But the Ocean makes up for those shortcomings via a built-in solar panel roof (which will enable for auto-recharging while driving, and therefore, result in longer driving ranges) and a fully “vegan” interior (the entire interior is made from recyclable materials).
So… on a technical specs and aesthetics basis… the Ocean is close to rivaling Tesla’s Model X and Model Y.
Yet the Ocean will retail for just $37,500 – well below the $50,000 base price for the Model Y, and $80,000 base price for the Model X.
After tax credits, that retail price falls to about $30,000 – putting it on par with most mid-size, gas-powered luxury SUVs out there (and below many of them).
I don’t need to tell you that there’s a lot of demand at the convergence of luxury, sustainability, and affordability. At this convergence, Fisker stands alone with its Ocean SUV.
To that end, if Fisker can execute on manufacturing the Ocean at scale, this company will sell a lot of Ocean cars over the next five years – and the company will be worth a lot more than its current $4 billion implied market cap.
Of course, that’s a huge “if.” There’s a lot of execution risk when it comes to scaling manufacturing for a new car.
Plus, as some of you may know, this is not Henrik Fisker’s first foray into the EV space. His first car – the electric sports car Karma, which counted Justin Bieber and Al Gore as customers – ended up being a flop after the company’s battery supplier went under.
But that’s why Fisker is aiming to outsource all of the manufacturing this time around, through Volkswagen – the world’s largest automobile maker. In so doing, Fisker is significantly reducing execution risk, capital requirements, manufacturing costs, and speed-to-market.
The partnership will also allow Fisker to hyper-focus on design and software – two components that will help the company establish and sustain competitive advantages.
Net net, Fisker has all the right components to turn into a very strong player in the booming EV market over the next few years.
EV Stock #11: A Disruptive Battery Stock to Play the Leap into Solid-State Batteries
Batteries power EVs – and these batteries on the cusp of making an enormous “leap.”
The leap is from liquid batteries (which have a solid cathode, a solid anode, and a liquid electrolyte solution connecting the two) to solid-state batteries (which replace the liquid electrolyte solution with a solid).
Turning batteries into “solids” makes them more compact, smaller, with zero wasted space and more efficiency – meaning this new generation of solid-state batteries lasts far longer and charges far faster.
At the epicenter of this shift is a small company by the name of QuantumScape (QS).
QuantumScape is the highest quality pure play on the solid-state EV battery megatrend.
The bull thesis really boils down to three things:
First, QuantumScape has the best technology in the solid-state battery game.
Specifically, adoption of solid-state batteries has been essentially non-existent to-date for two big reasons: they are exceptionally expensive to make, and they tend to short-circuit because of something called “dendrites,” which form in the solid electrolyte substance over time.
QuantumScape’s technology has addressed both of these shortcomings.
The company has employed an anode-less battery cell design, which eliminates anode manufacturing costs and brings QuantumScape’s all-in battery costs to 17% lower than all-in costs for traditional lithium-ion batteries.
Meanwhile, the company’s proprietary design includes a ceramic electrolyte with high dendritic resistance – and therefore, QuantumScape’s batteries don’t have dendrite problems.
Thus, QuantumScape is positioned to create a new class of EV batteries that are cheaper, last longer, and charge faster.
Second, QuantumScape has all the intangibles – a talented management team, big partnerships, and seasoned investors.
The management team – headed by the former founder of Infinera and a Stanford grad – is essentially a handpicked team of the best-of-the-best of Stanford and Berkeley physics grads. Indeed, the company’s Chief Scientific Officer is the Chair of Mechanical Engineering at Stanford.
Volkswagen – the world’s largest auto maker who is committed to electrifying its vehicle portfolio – has poured $100 million into QuantumScape and is committed to using the company’s solid-state batteries in its cars by 2025.
Meanwhile, QuantumScape’s list of early investors includes Bill Gates. Yes. That Bill Gates.
Third, QuantumScape has tons of cash to execute on its long-haul growth strategy.
Through the SPAC deal, QuantumScape will receive more than $1 billion in cash and funding commitments. Volkswagen also has a lot of cash to throw at the company. So does Bill Gates.
In sum, then, QuantumScape has sufficient resources to not worry about cash burn today and instead focus on the company’s long-term goal of becoming a ubiquitous, best-in-breed supplier of solid-state batteries into the EV industry.
If management does execute on that ambitious goal, the potential upside for QuantumScape stock is enormous.