Breaking News

These energy stocks will be big winners if electric vehicles dominate

Over the last year, electric-vehicle (EV) shares have risen as investors bet on the sector’s continued growth. And as the number of electric car purchases increases, a range of industries and businesses may gain. Lithium Americas (NYSE: LAC), Xcel Energy (NASDAQ: XEL),¬†and QuantumScape (NYSE: QS) leaped out to our Foolish participants as major possibilities as we scoured the sector for opportunities subsequent to EV production.

Lithium Americas (NYSE: LAC), Xcel Energy (NASDAQ: XEL), and QuantumScape (NYSE: QS) leaped out to our Foolish participants as major possibilities as we scoured the sector for opportunities subsequent to EV production.

The utility play

Xcel Energy’s Travis Hoium: If electric cars begin to expand and gradually dominate the car industry, energy demand will skyrocket. According to a study prepared for the Energy Department in 2019, an additional 14 gigawatts or even more of power production would be required by the year 2030 to maintain up with the rise of electric vehicles. This will almost double the amount of new power-generating capacity installed per year, possibly resulting in a rise in electricity demand that has been static for more than ten years.

Utility revenue development is being hampered by stagnant demand. Xcel’s income has risen at a cumulative annual rate of just over 1% over the last decade, but this is not precisely a growth portfolio. However, if electric vehicles dominate the transportation sector, the growth rate will shift. Any utility’s development could be boosted by electric cars alone, as well as Xcel Energy will be no exception. And, with shares priced at 22 times earnings as well as a payout yielding 2.8 percent, if Xcel’s growth trend increases as a result of electric cars, this stock may be a long-term winner.

Speculating on the future of batteries

Lithium Americas’ Howard Smith: There are many options for investors to gamble on electric cars’ growth. There is a great deal of confusion, like emerging technology, innovation, and consumer adoption theory. One tactic for investors is to bring together a portfolio of assets with a combination of risk and reward opportunities.

Investing in electric car battery production is at the high-risk edge of the continuum.  However, considering lithium-ion batteries continue a common option for EV manufacturers, lithium suppliers should be seen as part of a basket strategy. Lithium Americas does not yet have an operational mine, although it is working on two sites, one of which is located in the United States.

Taking out the disruptor

QuantumScape’s Jason Hall: I believe it would be a “then” rather than an “if” before electric cars become the norm, but this will take years due to high battery prices and insufficient availability. QuantumScape is trying to solve this challenge, and its technology has the potential to be the greatest disruptor in the car industry after Tesla.

What’s the catch? To do so, the business must offer a technology that no one else has been able to deliver at the cost and size necessary to supply the automotive industry. Without going into the nitty-gritty, solid-state batteries are smaller, more reliable, and recover even quicker than the liquid or even gel batteries we’re more acquainted with, like lithium-ion. What’s the catch? QuantumScape is already years away from releasing a commercially successful product but has yet to demonstrate that it will execute its commitments on a large scale. As a consequence, this is far from certain.

Leave a Reply

Your email address will not be published. Required fields are marked *