The S&P/TSX Battery Metals Index was up just shy of 1% in early afternoon trading on June 7. There has been considerable attention paid to the rise of the electric vehicle (EV) market and the battery metals stocks that fuels the products in question. Today, I want to discuss what is a better buy in June: battery stocks or EV stocks? Let’s jump in.
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The case for red-hot lithium battery stocks in 2023
Spherical Insights recently valued the global lithium-ion battery market at US$65.9 billion in 2021. The same report projected that this market would reach US$273 billion by 2030. That would represent a compound annual growth rate (CAGR) of 19% over the forecast period.
Lithium Americas (TSX: LAC) is a Vancouver-based resource company that operates in the United States and Argentina. Shares of this battery stock have climbed 3% month over month at the time of this writing. The stock has surged 16% so far in 2023. Investors can see more of its recent performance with the interactive price chart below.
In the first quarter of fiscal 2023, Lithium Americas announced that mechanical construction was completed at its Argentina location to target its first lithium production in June 2023. This milestone is big for Lithium Americas, as it has survived because of its potential in recent years. Investors should soon have real results to sink their teeth into and fully justify the stock’s pricing.
Patriot Battery Metals (TSXV:PMET) is also based in Vancouver. This company is engaged in the identification, evaluation, acquisition, and exploration of mineral properties. Its shares have jumped 9.8% over the past month. The TSX Venture-listed stock has soared 168% in the year-to-date period. It is hard to argue against the explosiveness of lithium battery stocks so far in 2023.
Should you look to this EV stock instead?
Electric vehicles have slowly but steadily captured more of the overall automobile market over the past two decades. There were big expectations but on this young sector this decade, as a plethora of top automobile manufacturers have moved into the EV space. The International Energy Agency (IEA) predicted that battery manufacturing projects would more than cover the demand for EVs by 2030. EVs have seen their share of the overall car market move from 4% in 2020 to around 14% in 2022. That is a massive uptick in a few short years.
Lion Electric (TSX: LEV) is a Montreal-based company that designs, develops, manufactures, and distributes purpose-built all-electric medium and heavy-duty urban vehicles in North America. Shares of this EV stock has dropped 12% month over month at the time of this writing. That pushed the stock into negative territory so far in 2023.
The company released its first-quarter fiscal 2023 earnings on May 9. It delivered 220 vehicles in the quarter, which represented a 136-vehicle increase compared to the first quarter of fiscal 2022. Meanwhile, it reported revenue of $54.7 million — up from $32.1 million in the previous year. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) deepened its loss to $14.5 million after adjusting for certain non-cash items.
There are some definite positives to take from Lion Electric’s recent quarter. The company has recently vaulted back to profitability, and it is geared up for strong earnings growth going forward.
The verdict
EV stocks hold promise for the long term, but it is too hard to deny that battery stocks are having a moment in 2023. That is where I would seek out growth in this exciting sector in the middle of this year.
