Electric Vehicles Battery Issues Continue Dear Reader, A few weeks ago, I wrote about how a new battery technology for electric vehicles (EVs) is poised to capture more market share. These lithium iron manganese phosphate (LMFP) batteries have approximately 26% higher energy density than lithium iron phosphate (LFP) batteries – and cost about 5% less to manufacture.
In today’s Market 360, we’ll investigate a few automakers’ EV battery struggles.
Then, I’ll dig into what they’re doing to overcome them.
Finally, EV stocks still have problematic fundamentals (to say the least). So, I’ll show you what I think investors should be buying instead.
Let’s take a look… Big Battery Problems Toyota Motor Corporation (TM) had its annual meeting last week, and the kooks showed up in force.
Many “Environmental, Social and Governance” (ESG) advocates were pushing to oust Toyota’s CEO, since the company is pushing hybrids and not making as many EVs as these advocates want.
However, Toyota was able to calmly inform its shareholders that there just aren’t enough batteries to make a full transition to EVs. In fact, there is a waiting list for Toyota’s redesigned Prius (which is utilizing a bigger battery pack) due to the battery shortage.
Toyota will be the first company to launch a hybrid vehicle with a solid-state battery. It wants to “stress test” the solid-state battery, which traditionally does not cycle as much as lithium-ion batteries. I should add that although Toyota utilizes lithium-ion batteries in the Prius, the company is shoring up its supply of iron-phosphate (LPF) batteries to boost its battery supply for other hybrid and EV models.
Meanwhile, Jaguar Land Rover, owned by Tata Motors, is recalling more than 6,000 I-Pace EVs in the U.S. due the risk of battery fires. LG Energy Solution has advised that the I-Paces be parked outside due to the risk of battery fires.
This situation is almost identical to the problem with first-generation Chevy Bolts, where all the battery packs were replaced by LG Energy Solution. This is just one reason that auto manufacturers are increasingly switching to LFP batteries, even though they are heavier and less energy dense.
The simple fact of the matter is that LFP batteries are cheaper, more reliable and do not catch on fire.
It is important to note that LG Energy Solution has changed its battery chemistry on its second-generation lithium-ion batteries to utilize more nickel and less cobalt. This switch to the new lithium-ion battery chemistry is why General Motors Company (GM) has been slow to throttle up its EV production, since LG Energy Solution is its primary battery supplier. Volkswagen Group (VWAGY), which includes Audi and Porsche and other auto manufacturers, is also switching to LG Energy Solution’s new lithium-ion battery chemistry.
The fact of the matter is that all the EVs with LG Energy Solution’s first-generation lithium-ion batteries are depreciating fast due to reliability issues. As an example, I had an Audi e-tron that needed a couple of its LG first-generation lithium-ion battery packs replaced after 23,000 miles. It will be interesting if LPF batteries eventually replace lithium-ion batteries in EVs in the upcoming years due to reliability and fire-risk issues.
I should add that Stellantis NV (STLA), the owner of the Chrysler, Dodge, Jeep and Ram vehicle brands, is now restricting the sale of gasoline vehicles in California and 13 other states to comply with stricter emission standards. Customers in these 14 states can still order the restricted gasoline vehicles, but Stellantis is restricting the allocations available, so customers may have to wait to receive certain brands.
In the past, Stellantis paid Tesla, Inc. (TSLA) over $2 billion for emission credits, so it could sell its gasoline and diesel vehicles. However, Stellantis now has its own EVs, so it is no longer buying Tesla emission credits.
So, it will be interesting to see how legacy automakers make a transition to EVs… and which ones will be the winners and losers. Stay Focused On Fundamentals Rather than jump on EV stocks right now, focus on stocks with superior fundamentals. I’m talking about companies that can continue to grow their sales and earnings.
If you’re not sure where to look, then consider my Growth Investor stocks. My average Growth Investor stock is expected to post at least 100% annual earnings growth and continue to emerge as market leaders. Strong fundamentals are important as investors gear up for the second-quarter earnings announcement season, which will kick off in mid-July.
Plus, the average dividend for my Growth Investor stocks has risen 28.8%. This is indicative of the strong cash flow that my Growth Investor stocks are characterized by, as well as the fact that the average return on equity (ROE) is a whopping 66.2%.
Clearly, my Growth Investor Buy Lists are dominated by fundamentally superior stocks!
I will be adding two more fundamentally superior stocks in today’s Growth Investor Monthly Issue for July, as well as my latest Top Stocks list. To join me at Growth Investor – and gain full access to my latest issues and recommendations – click here. Sincerely, |
| Louis Navellier
Editor, Market 360
P.S. The InvestorPlace offices and Customer Service department will be closed on Monday, July 3, and Tuesday, July 4, for the Independence Day holiday. The U.S. stock market will be opened for a half day on July 3 and closed on July 4 for the holiday.
The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:
Volkswagen Group (VWAGY)
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