Citi Bank predicts a surge in EV battery demand and reveals the top four stock picks, CNBC reports.
The top stock picks include Contemporary Amperex Technology Co (CATL), LG Energy Solution, Panasonic PCRFY, and Albemarle ALB, with potential upsides of 38%, 23%, 25%, and nearly 30% respectively.
The global electrification process is in its early stages, favoring battery makers, according to Citi. The bank believes the U.S. Inflation Reduction Act (I.R.A.) could significantly boost EV penetration in the U.S., despite restrictions on critical minerals and components.
“Assuming the battery capacity ramps up as planned in the U.S., there should be enough I.R.A.-compliant battery supply to meet the base case demand by 2026E,” Citi noted in a July 28 report. The bank also expects battery sector margins to be supported until 2024 due to component cost savings.
EV battery demand is projected to rise 22% YoY in 2023, with demand set to accelerate again in 2024 and 2025. Citi also highlighted China as the largest battery market, accounting for 58% of total demand this year.
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