While automakers have been investing more in EV batteries production, Bernstein believes that pure-play stocks of EV batteries will still be the dominant. “Vertical Integration by Auto OEMs” [original equipment manufacturer]The risk of upstream battery production poses a threat to pure-play battery manufacturers and is being discussed more frequently due to some industry investments,” Bernstein analysts led by Neil Beveridge stated on May 12 by Bernstein. “Tesla is the greatest threat to pure play batteries makers due their large investment in technology,” he said. Bernstein believes that there will be some market leaders in pure-play lithium battery manufacturers despite this. “Battery producers such as CATL [Contemporary Amperex Technology]LGES and other information [LG Energy Solutions]Beveridge stated that CATL will be the most dominant player in the industry’s battery market by market share. CATL is the largest, accounting for around 30% of the total market. Beveridge stated that CATL is unique because it has strong relationships with both Chinese and international auto companies. He added that CATL has the best customer list among all battery suppliers. A price target for 600 Chinese yuan (or $88.90 on CATL) has been set by the bank. That’s 44% higher than the May 23rd price of 416.70 Chinese dollars. Bernstein also likes Samsung SDI . According to the bank, Samsung SDI was the most advanced of all the Korean battery producers. It has begun construction on an all-solid battery production pilot (sulfidebased) in March. Mass production is planned for 2027. It has set a price target for the bank at 816,000 Korean won (or $643.60). This implies a potential upside greater than 33% of its current price of around 6111,000 Korean won. While LGES is rated underperform, CATL and Samsung SDI are rated outperform by the bank. According to the bank, battery production plans This push is aimed at reducing battery costs — which now account for 30% to 40% of the total cost of manufacturing an EV — as well as securing a stable supply of batteries necessary for future vehicle production. Bernstein estimates the market for lithium-ion batteries will be worth between $650 billion and $750 billion annually by 2050 — possibly more if raw material prices continue to inflate. According to the bank, automakers will have a greater share in global battery production than they do today (from 10% to 27% by 2030). Bernstein identifies three possible business models in battery manufacturing. Vertically integrated models are where the automakers produce and sell their own batteries. BYD, Ford, General Motors, and Tesla will all produce more than half their batteries by 2025. Stellantis, Volkswagen, and Stellantis, however, are likely to supply a quarter. The second — and most dominant — model is the one in which a pure-play battery maker supplies a battery to an automaker. Joint venture is the third type. The joint venture model is where a battery manufacturer and an OEM or first equipment manufacturer form a partnership to supply batteries to the OEM.
A charging station for electric vehicles in Stoke-on-Trent (England).
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Although automakers are investing in EV battery manufacturing, Bernstein predicts that these pure-play batteries will remain the most important.
