5 Solid-state Battery Stocks to Buy Now

Solid-state batteries (SSBs) are the next generation of batteries that will power electric vehicles and other high-energy devices.

Safer, more efficient and faster-charging than lithium-ion batteries, SSBs are critical for facilitating the transition away from fossil fuels.

Here are five of the top solid-state battery stocks that could take advantage of the coming wave from gasoline to electric powered vehicles.

QuantumScape

Arguably the most interesting company in the up-and-coming SSB field is QuantumScape (NYSE:QS).

The company claims its solid lithium metal batteries have the potential to increase EV ranges by up to 80 percent. Due to the faster charging capabilities of SSBs, QuantumScape’s batteries could also charge up to 80 percent in as little as 15 minutes.

Looking at the company’s financial metrics, QuantumScape clearly trades at a premium that is based on the potential of its technology. It generates a negative return on equity and has lost nearly $412 million in the past 12 months.

Due to the fact that its batteries are still in a pre-commercial stage, QuantumScape also has no current revenues.

Institutional investors appear to be betting on QuantumScape as a potential success story. Over 27 percent of the company is currently owned by institutional investors, and institutional buying has outpaced selling by over 50 percent during the last 12 months.

Still, QuantumScape is a classic high-risk, high-return play. With the company in such an early stage and pouring cash into research and development, investors could have a long wait before revenues, let alone profits, begin coming in.

However, a number of leading automakers, including Volkswagen, have shown interest in the company’s batteries. If QuantumScape can manufacture its batteries at scale, it could emerge as a dominant company within the SSB industry.

It should also be noted that QuantumScape is still coming down from a massive surge associated with EV hype. Shares briefly topped $100 before plummeting to their current price of about $7.

With high-growth stocks losing ground as interest rates climb, there’s little certainty that QuantumScape shares have bottomed out. Given this fact, investors may want to hold off on QuantumScape in order to potentially take advantage of lower prices in the near future.

Toyota

Already a major player in the automotive market, Toyota (NYSE:TM) looks increasingly attractive as a mover in the SSB market.

Earlier this year, the company announced a breakthrough in SSB technology that could improve driving ranges by 20 percent while reducing charging times to as little as 10 minutes.

Toyota is also keeping pace with technologies used by the leading EV manufacturers. For example, the company is exploring the much-lauded gigacasting process pioneered by Tesla for use in its own range of vehicles.

In addition to its SSB appeal, Toyota is also a mature, dominant company that appears to be attractively valued. At just 11.2 times forward earnings and 0.6 times earnings growth, Toyota shows strong signs of undervaluation.

Even after rising 38.5 percent YTD, Toyota could still have considerable room to run before reaching its fair value, especially considering that analysts projects Toyota’s earnings to grow at a compounded rate of over 20 percent during the next five years.

A final plus to Toyota is the tailwind it could receive from a revitalization of the Japanese economy. Japan’s annualized growth has risen to 6 percent. Much of this growth is attributable to an improving export market for Japanese goods, but consumer demand in the country will also likely see a boost.

Given that Toyota enjoys a market share of over 50 percent in Japan, the company stands to see considerable benefit from greater consumer demand within its domestic market.

Solid Power

Solid Power (NASDAQ:SLDP), like QuantumScape, is a company whose major focus is on the development of solid-state batteries.

It is developing unique sulfide-based SSBs that it projects will be 15-35 percent cheaper than existing lithium-ion batteries.

Perhaps more importantly, the SSBs under development at Solid Power can be made using the processes now widely used in the production of lithium-ion batteries.

This crossover between the two technologies may give Solid Power an edge when it comes to scaling production and managing costs.

While Solid Power’s technology is certainly promising, investors should be aware that the stock is likely a very high-risk investment.

With a net margin of -281 percent and losses expected to widen from $0.40 to $0.50 per share in the coming 12 months, Solid Power is a very long way from achieving profitability.

While the company is sitting on a stockpile of over $220 million in cash and short-term investments, its current revenue is just $15.7 million. As such, the company will likely be financing its activities by drawing down cash for the foreseeable future.

One factors that could make Solid Power worth the risk, however, include the fact that it is partnered with both Ford and BMW. These two automotive giants are both exploring solid-state batteries in order to remain competitive in the EV race.

If Solid Power’s battery solutions are ultimately commercialized and distributed to the two auto majors, the company could achieve extremely rapid growth.

Nissan

Toyota isn’t the only auto major that could propel itself forward with SSB research.

Working with scientists from Oxford University, Nissan (OTC:NSANY) has been researching a line of solid-state batteries with no liquid electrolytes whatsoever.

A pilot production line for Nissan’s SSBs will open at one of its legacy plants next near, and the company expects the batteries to be a regular part of its vehicles by 2028.

In addition to technological improvements, Nissan is already a major player in the EV market. Management forecasts 40 percent of its sales to come from EVs by 2030, a reflection of its successes with early models like the Leaf.

This may give the company a slight edge against Toyota in marketing its electric vehicles. Up until its SSB breakthrough earlier this year, Toyota had been famously skeptical of the hype surrounding electric vehicles. As such, Toyota has much less brand awareness than Nissan among EV buyers.

Despite the promise of Nissan’s SSB advances, the company may not offer the same value as Toyota. Nissan’s net margin is currently just 2.5 percent, resulting in thin profitability.

The stock does, however, offer a very low forward P/E ratio of just 6.9. On the downside, Nissan carries a slightly high debt-to-equity ratio of 0.74.

Ilika

Ilika (LON:IKA) is a diversified SSB company exploring the technology for both transportation and healthcare uses. The company’s EV battery cell, dubbed the Goliath, is currently being planned for large-scale production. A much smaller version, called Stereax, is designed to be used in implanted medical devices.

Ilika is likely the highest-risk SSB stock for investors to explore at the moment. Because of its nascent stage, Ilika has less than $1 million in annual sales.

Total losses still eclipse revenues, and it is very difficult to tell if or when Ilika could achieve appreciable growth or begin moving toward profitability.

With a return on equity of -26 percent, Ilika will have a long road to paring its losses and eventually generating earnings.

On the positive side, Ilika is currently a tiny company with a market cap of well under $100 million. This provides investors with a very low buy-in point and creates the opportunity for high returns if and when the company’s batteries reach commercial production.

Ilika’s healthcare potential could also be attractive, as it is one of the few companies working on solid-state batteries for small-scale applications.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.