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Investments in the electrification of cars keep coming … as does progress toward creating a cost-effective solid-state battery
Yesterday brought news that luxury carmaker, Daimler, has invested $100 million in a private California-based battery company, launched by a former Tesla engineer.
The move comes as Daimler continues its push into the electric car market, which regular Digest readers recognize as one of the biggest investment opportunities of the next 25 years.
While this $100M investment is evidence of the race for next-generation battery technology, its size is nothing compared to what we've seen from Daimler in recent months.
For example, in December, the carmaker announced it would be buying over $20 billion in battery cells to support its electric vehicle plans. It's part of what Daimler's Chairman, Dieter Zetsche, calls the company's " electric offensive ".
***Daimler is hardly alone in its efforts to electrify its auto fleet
Reuters reports that global automakers are planning to spend an unprecedented amount on the electric vehicle market over the next five to 10 years.
That figure? $300 billion. For context, $300 billion is greater than the entire economy of Egypt or Chile.
And of that $300 billion, a massive chunk is going directly into next-generation battery research. Here are just a few examples:
Volkswagen/Audi/Porsche - out of $91B going to electric vehicles, batteries alone will see $57B of that. For Daimler, batteries will get $30B out of a total spend of $42B. And all of Toyota's $13.5B is earmarked for batteries. Click here to see the entire list.
***Why are batteries receiving so much of the investment allocation?
Because longer-lasting, more efficient batteries are the key to tomorrow's electric car adoption.
You see, so far, automakers haven't been able to mass-produce electric cars profitably. At the moment, there are lots of government subsidies. The lack of profitability is mostly because of the prohibitive cost of the battery packs, which make up between 30% and 50% of the cost of an electric vehicle.
For context, a 500 km-range battery costs around $20,000. Plus, you have to add another $2,000 for the electric motor and inverter. Compare that with a gasoline engine that costs around $5,000.
Given this battery cost issue, automakers are scrambling to be the first to solve this problem - which is why we're seeing companies like Daimler allocating billions toward battery technology.
***And the battery which holds the most promise is the solid-state battery
Solid-state is considered the holy grail. It's a superior, safer technology. And its investment potential is massive.
For more on that, I'm going to turn to Matt McCall. In his newsletter, Investment Opportunities , Matt tracks the trends that are reshaping our world - and creating massive investment wealth in the process.
***In recent months, we've seen advances toward solid-state breakthroughs
In our March 4th Digest , we reported on a small, private company that was making significant headway with battery technology. Yesterday's Daimler investment is another step in this direction.
The recipient of Daimler's $100 million is Sila Nanotechnologies, one of California's first "tech unicorns" focused on improving battery chemistry. (A "unicorn" is a private company with a valuation of $1 billion or greater.)
Sila's technology replaces the graphite in a battery's anode with its own silicon-based material. The company claims this improves density (moving us closer to solid-state) by 20%.
When we'll completely crack the solid-state problem isn't clear, but according to Matt, it's a matter of "when" not "if."
If you want more access to Matt and hisinvestment researchon batteries, he's created a free video presentation to help investors better understand how to position themselves. Click here to watch .
We'll continue to keep you updated.
Have a good evening,
The post The "Electric Offensive" Keeps Coming appeared first on InvestorPlace .
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
