Investing in Electric Vehicle (EV) Battery Stocks

The automotive industry is going electric. Every major automaker is actively developing or already selling electric vehicles (EVs).

Tesla (TSLA 0.15%) is the industry pioneer. Rivian (RIVN -4.7%) shipped its first truck in 2021 and is ramping up production as quickly as it can. And Ford (F 0.41%), General Motors (GM 3.4%), Volkswagen (VWAGY 3.3%), Daimler (DAI 3.6%), and other carmakers have been working to produce more EVs and make them profitable.

One of the biggest challenges for automakers in the shift to EVs is profitability. Both Ford and GM cut back on production in 2024 since they couldn't get their electric vehicle prices down far enough to stimulate more demand. One of the biggest costs for EVs is the battery, and Ford said it's pushing back the production of its F-150 Lightning to 2027 to take advantage of lower-cost battery technology.

There's a clear demand for electric vehicles at the right price point. Investors who want to get ahead of that demand can do so by looking at the companies producing EV batteries, the most important and costly components of EVs. If electric vehicle production significantly increases over the next decade, the demand for EV batteries will skyrocket similarly.

Major producers are investing heavily to meet the demand for higher-capacity and lower-cost batteries. Battery technology start-ups, some of which are going public via special purpose acquisition company (SPAC) mergers, are developing new energy storage systems that could revolutionize the industry. It's an exciting time to consider investing in EV battery stocks.

The 7 best

7 Best electric vehicle battery stocks in 2025

These are the top EV battery stocks for investors to consider:

1. Toyota Motor

Toyota is already one of the leading car manufacturers in the world, but it trails the competition when it comes to electric vehicles. The Japanese company's plan to catch up involves in-house battery manufacturing and technology development.

It acquired its battery joint venture with Panasonic in early 2024, now called Toyota Battery, and plans to ramp up fully electric vehicle production to 1 million units by 2030. The company is developing solid-state battery technology, which it plans to start producing in 2026. Solid-state batteries could provide owners with several benefits, including extended range and faster charging.

It's a challenge many smaller companies are working on. However, Toyota has the advantage of a well-established and profitable auto manufacturing business to support the cash drag of the development process. If Toyota becomes a full-fledged EV battery manufacturer, it's well positioned to make it a profitable endeavor through integration with its popular vehicles.

2. BYD

BYD is an integrated EV company based in China and one of the world's most valuable automakers. It manufactures and sells hybrid and battery-powered cars, buses, trucks, and monorails. It also builds the batteries, semiconductors, and other components used in its EVs.

One factor that makes BYD stand out in the EV industry is that Warren Buffett is a major shareholder. His Berkshire Hathaway (BRK.A -0.71%)(BRK.B -0.47%) first bought shares of the battery and EV company in 2008. Buffett trimmed Berkshire's stake in BYD in late 2022 and early 2023 after seeing a significant appreciation in the share price.

BYD's EVs are top sellers in China. The company sells five of the top 15 new energy vehicles in the country, where it ranks as the leading overall brand.

BYD is the leading global manufacturer of battery electric vehicles and plug-in hybrids by a wide margin, consistently selling more than double the number of its closest competitor. As a fully integrated EV company, its battery business is benefiting from the brisk sales pace.

3. Albemarle

Albemarle is one of the world's top lithium producers -- a key ingredient in most EV batteries. The mining and base materials company has narrowed its focus on lithium in recent years.

Lithium prices are cyclical, which can lead to periods of strong revenue and profit growth and periods of cutting back on spending. Amid low lithium prices in 2024, Albemarle had to cut back on overhead and its capital expenditures to account for the market weakness. The moves will put the business on much better financial footing while enabling it to ramp back up when prices climb again.

Given the expected boom in EV sales over the next decade, Albemarle could have plenty of tailwinds to keep its overall trajectory headed higher for years to come. The company has assets in Chile and Australia that can produce lithium more cheaply than competitors, allowing it to remain profitable in tough times and competitive when prices rise.

4. Panasonic

Japanese conglomerate Panasonic is a large producer of EV batteries and has been a partner and supplier of Tesla for many years. The two companies first entered into a supply agreement in 2009. Although Panasonic is no longer Tesla's exclusive battery supplier, the company continues to produce a high volume of batteries for the EV carmaker via their "gigafactory" joint venture.

Panasonic colocated its North American battery production facility in Nevada with Tesla's massive Gigafactory 1 and expanded there in 2021 by installing a new production line. In 2022, it started construction on another factory in Kansas, which is set to start production in 2025.

It's also adding production capacity at its Japanese EV battery factory. The company makes multiple types of EV batteries and is installing new production equipment to satisfy Tesla's demand for larger batteries.

Panasonic's supplier relationship with Tesla may not last forever. It's working to expand its supplier relationships, including a deal with Lucid (LCID 1.22%) at the end of 2022. It also inked deals with Subaru (FUJHY -1.56%) and Mazda (OTC:MZDAY) in 2024.

The battery maker remains well positioned to supply EV batteries to all the major automakers that have unveiled grand plans to produce EVs. While Panasonic isn't a pure-play EV battery company, it's likely to remain a leader in the sector.

5. QuantumScape

QuantumScape is developing solid-state battery technology to increase the range of EVs and enable them to recharge more quickly. The U.S. company is just beginning to test its battery technology at scale. It plans to start producing more than 200,000 batteries annually, although it currently doesn't generate any revenue.

QuantumScape is spending heavily to bring its technology to market. The company delivered its first prototype battery samples to EV automakers in 2022. Testing has gone well, with its auto manufacturing partners impressed with the performance. It's now working to develop processes and materials so it can manufacture its batteries at scale.

Although QuantumScape believes its balance sheet is strong enough to cover several more years of development and testing, investing in the company is risky. It's pre-revenue, and management doesn't expect to generate meaningful commercial sales until 2026.

Ultimately, if its technology fails or is a commercial flop, QuantumScape's stock could become worthless. Still, this is a promising EV battery company with immense growth potential if its research and development eventually come to fruition.

6. FREYR Battery

FREYR Battery is another early-stage development company working on battery technology and manufacturing processes. It also went public via a SPAC merger over the summer of 2021. It's trying to secure battery production capacity to become one of Europe's top battery companies for EVs and electric grid storage systems.

At the end of 2023, the company redomiciled to the U.S. from Luxembourg. The move shouldn't affect its European strategy, but it opens the door for it to receive more U.S. government incentives. Management says it could also lead to the stock's inclusion in more index funds.

Like the other start-ups on this list, though, FREYR's future viability is far from assured. It hasn't generated revenue yet and is incurring operating losses via its research and securing of battery manufacturing agreements. Management expects its first revenue in 2025. It's made moves to optimize its spending and liquidity to ensure enough cash runway through 2027.

7. Solid Power

Solid Power designs solid-state battery technology. Founded in 2011, it went public in December 2021 via a SPAC merger.

Unlike other solid-state battery competitors, such as QuantumScape, Solid Power intends to license its designs or sell its solid electrolyte for use in production at other battery manufacturers. Moreover, its technology is compatible with existing technologies, meaning its designs can get to market faster.

In 2024, Solid Power won a $50 million award from the U.S. Department of Energy to produce its electrolyte materials for solid-state batteries. The award should help bolster its cash runway, as its minimal revenue from partners started stalling in the latter half of 2024.

By 2026, the company plans to expand its electrolyte production capacity by 150% to 75 metric tons, and by 2028, it could produce 140 metric tons. Since it's backed by Ford and BMW, it should have customers lined up for its batteries if it can execute on its timeline. Still, there's a risk that its technology won't work as well as expected or that competitors will develop a better product in that time.

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Growth prospects

Fully charged growth prospects

Batteries are a crucial component of EVs. As sales accelerate, they will drive higher battery sales, benefiting the companies focused on making them. Forward-thinking investors might want to consider adding battery makers to their portfolio to potentially profit from this megatrend. Bear in mind, though, that these investments in an emerging technology will likely exhibit above-average volatility.

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