With electric vehicles increasingly taking center stage in the automotive sector, lithium-ion batteries are at the heart of the tectonic shift from gas powered vehicles to EVs.
What few people know, however, is that approximately 95% of lithium-ion batteries end up in landfills. That massive market opportunity is what American Battery Technology Company (NASDAQ:ABML) is tackling. Specifically, it’s aiming to reduce waste by recycling lithium-ion batteries.
The mission is noble but is American Battery Technology a good buy?
Massive Market Opportunity
The reuse of critical battery materials like lithium, cobalt, and nickel is crucial to the long-term sustainability of the EV market and that’s where American Battery Technology is making waves by recycling batteries that can be used again and again.
The battery lifecycle loop is currently open in the sense that when batteries hit landfills they are no longer useful. While new entrants like Tesla grab headlines for their giga-factories and EV production, American Battery Technology Company is focused on closing the loop in the battery lifecycle so they can be re-used over and over.
And the company appears to have strong tailwinds to support its growth. The global battery recycling market size is expected to hit $136 billion by 2027, according to MarketsandMarkets. ABTC stands to accelerate revenue growth by capturing a share of this market.
Strategic Partnerships Establish a Moat
Management has been strategic in partnering with mining companies that focus on ethical and sustainable extraction of minerals like lithium, cobalt, and nickel. Such alliances not only ensure a consistent supply chain but also align with the company’s environmentally responsible ethos.
As both consumers and governments place higher scrutiny on the ethical implications of mineral sourcing for batteries, forging these relationships could prove to be highly valuable over the long-term.
As legislation around responsible sourcing tightens globally, ABTC widens its moat through these contracts. And with demand for ethically sourced minerals expected to rise at an annual rate of 6.8% through 2030, American Battery is hitting the perfect window to capitalize on the emerging trend.
Proprietary Technology Offers Revenue Potential
To further distinguish itself from competitors, American Battery has invested significantly in R&D, which has resulted in patented technologies for the extraction and recycling process of lithium-ion batteries.
The company holds several patents that make its recycling process more efficient and less harmful to the environment compared to traditional methods.
These patents have the potential to provide licensing revenue streams in the future as well as to act as a defense against competitive threats.
Close to the Largest EV Market
What few investors have paid attention to so far is how strategically the firm is located near the largest electric vehicle (EV) market in the United States, which is California.
This proximity provides logistic advantages and lowers transportation costs, especially as California continues to lead in the adoption of electric vehicles and the infrastructure to support them.
According to a study by the International Council on Clean Transportation, California has set a target by 2035 that all car sales will be electric. This kind of secular force should act as a catalyst for the battery recycling firm too.
Is American Battery Technology a Good Investment?
Recycling lithium-ion batteries is a must for the environment long-term if EV adoption balloons as is forecast and American Battery Technology Company appears to be in the right place at the right time to capitalize on the burgeoning trend.
The firm’s unique focus on battery recycling sets it apart from other companies in the battery and renewable energy sector. Moreover, it has displayed promising revenue growth and has solid gross margins, though it remains unprofitable. Its recent NASDAQ listing shows a commitment to new shareholders, too.
So, is American Battery Technology a good investment? Recycling lithium-ion batteries is crucial to EV adoption, and ABTC is making tremendous strides to cement itself as a key player, making it a good investment opportunity at this time for investors who can stomach a volatile ride for potentially lucrative gains.
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.