Recent developments in the energy storage field have come to the attention of investors. The sector is still speculative, as changing technology, access to materials and capital and the growing demand of each country will determine which companies will have the winning ingredients long term.
Europe, the U.S. and China have each made individual levels of commitment to the electrification of vehicles. China BAK (NASDAQ:CBAK), A123 (AONE), and Johnson Controls (NYSE:JCI) represent potential winners to supply the batteries needed for powering the electric vehicles coming online over the next few years.
China BAK Battery, Inc. (CBAK) has recently announced it has signed a contract to provide high-power batteries to Jilin Hi-tech Electric Vehicle Co., Ltd., one of the largest automobile manufacturers in China. As measured by production output, China BAK is one of the largest lithium-ion battery cell manufacturers in the world. The contract, valued at $1 million, will provide 20 buses with battery packs and battery management systems.
A123 Systems (AONE) announced a joint venture with SAIC Motor, China’s largest auto-maker by volume. The agreement offers AONE great exposure to the Chinese auto market, and gives SAIC 51% ownership and AONE 49%. This week Deutsche Bank upgraded A123 to Buy from Hold with a $17 price target.
Johnson Controls (JCI) based in Milwaukee produces lead-acid automotive batteries as well as lithium-ion technologies for hybrid vehicles. The company trades at about 13.4 times next year’s estimate, and has exceeded estimates the past three quarters.
At best, expect electric vehicles to be on the road by 2011-2013. The companies that can develop the right ingredients to provide needed energy storage represent potential investment opportunity in this movement.