The prices of oil are only increasing along with the prices of gasoline and diesel. Is lithium battery the solution? The increasing prices can be the reason for the high inflation rates and the main driver for promoting electric vehicles. Electric vehicles don’t necessarily put an end to our energy usage. However, it will change the focus from oil to lithium batteries. As predicted by Elon Musk, “Lithium batteries are the new oil.”
The Canaccord analyst George Gianarikas agrees with Musk. He notes, “We see multiple parallels between the communication revolution of the late 1990s to 2000s and today’s energy systems revolution. As lithium batteries are the new crude, we see the pioneering, invention, and exploration of new battery technologies as modern wildcatting – high – reward endeavours but not without risk.”
The analyst, Gianarikas, doesn’t only provide an overview of the industry. Instead, he delves deeper and specifically selects two lithium battery stocks that he believes are highly likely to succeed in the rapidly growing industry.
Let’s take a look at these two stocks:
Enovix Corporation is the first one. This is a lithium battery stock. The Enovix corporation combines silicon anodes, 3D architecture, and anti-swelling constraints to develop the best possible result. Their goal is to develop high-end applications, such as consumer EVs and other mobile computing devices, with increased energy density.
The concept is based on silicon anodes, which have the capacity to double the battery’s energy storage capacity over the graphite anode technology. Enovix’s battery design’s high energy density has impacted the company’s development efforts because it has forced them to address architectural restrictions, charge efficiency, cycle swelling, and cycle life concerns.
Enovix has still not gained the trust and support of customers as it has yet to be regularly produced. The company did manage to create batteries in the most recent reported quarter, 3Q22. However, they were sample goods rather than normal sales, which did not generate income.
Gianarikas’s view on this stock goes as follows. “Enovix is bringing a groundbreaking architecture to battery and design and manufacturing that has the potential to revolutionize the sector. The company has also amassed a strong sales funnel, endorsement from hefty industry participants (e.g Samsung), and seasoned leadership… the company must now prove it can manufacture its cells at scale and profitably. We have confidence it can and that this process will result in strong equity returns for shareholders.”
Dragonfly Energy Holdings (DFLI)
The second stock Dragonfly is a company focused on solving intermittency in renewable energy. The primary sources of renewable power are wind and solar. The company is approaching it logically by utilizing better battery technology for more intelligent and effective energy storage. Based on a unique and patented solid-state battery cell design, Dragonfly’s storage technology. In December, Dragonfly announced they would be taking a step closer to the manufacturing of solid-state battery cells, where they introduced a new patent grant by the US Patent and Trademark Office. This opens the door for production in the public realm by assisting in the protection of Dragonfly’s intellectual property.
In addition, Dragonfly is in the process of preparing a line-up of products. They have ten lithium battery models ready to be produced in addition to an advanced regulator alternator. The battery range, which contains lithium-ion deep cycle batteries, are designed for 12-volt, 24-volt, and 48-volt systems. They can take the place of conventional, highly toxic lead-acid batteries. Like Enovix, Dragonfly is also speculative as it is new to the market.
On Dragonfly, Gianarikas writes “Dragonly has created a strong niche leading traditional lead-acid markets into the li-ion age with its premium offering. We expect the company to continue gaining traction in RVs and penetrate additional markets – including marine – to supplement growth. Longer term, Dragonfly’s solid-state efforts add optionality to the equity as the company looks to develop into a vertically integrated leader in energy storage markets. Dragonfly must now prove it can sustain its premium pricing, penetrate new verticals, and make its solid-state offering a reality.”