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The Future of Energy Storage: Top 3 Canadian Battery Innovators

A lake in the shape of a solar, wind and energy storage system in the middle of a lush forest as a metaphor for the concept of clean and organic renewable energy.
Source: Getty Images

Written by Brian Paradza, CFA at The Motley Fool Canada

The global push for electric vehicles to replace gas-fuelled engines and rapid growth in renewable energy generation plants are driving forces towards a larger and thriving battery and energy storage market. Companies are jostling to develop the most efficient, reliable, safest, cost-effective, and loved battery. The winner could generate life-changing returns for investors. Growth stock investors can scoop up the top Canadian battery innovators and profit as the energy storage market grows exponentially this decade.

Big money is flowing to battery innovators as power grids turn green. In a May announcement, the Independent Electricity System Operator (IESO) issued contracts for seven new energy storage projects in Ontario with a total storage capacity of 739 megawatts. This is the largest single energy storage procurement in Canada to date. Renewable energy plants require energy storage to smooth out electricity supply when wind and sunlight levels decrease.

The future of energy storage is only brighter. Research firm Acumen Research and Consulting recently projected a 9% compound annual growth rate in the Global Advanced Energy Storage System Market size from US$19 billion in 2022 to more than US$48.5 billion by 2032.

Let’s take a look at three top innovative Canadian battery stocks to buy today.

Tesla

Electric vehicle (EV) stock and industry pioneer Tesla (NASDAQ:TSLA) is included in the list of Canadian battery innovators that should benefit from a growing energy storage market for three reasons.

Tesla has a significant investment in high-speed battery production technology in Canada post its 2019 acquisition of Hibar Systems (renamed Tesla Toronto Automation). It recently opened a new factory to manufacture battery equipment in Ontario as it ramps up production of longer-range and cheaper 4680 battery cells. Canada has a key role in Tesla’s network of gigafactories.

Further, Tesla acquired a Canadian battery start-up Springpower International in 2021, a small, innovative company with patents for developing silicon-based anodes for lithium-ion batteries. What comes off the acquired intellectual property remains to be seen. However, Tesla might enhance the efficiency, cost, and energy density of its battery energy storage system one day.

Most noteworthy, Canadian investors can buy Tesla stock in Canadian dollars through Tesla Canadian Depositary Receipts (CDRs) on CBOE Canada (formerly NEO Exchange). Tesla stock CDRs have gained 48% in value so far this year. They are hedged for foreign currency risk. Investors do not need to worry about currency conversion costs or currency risks.

Lion Electric

Lion Electric (TSX:LEV) is a Canadian EV bus manufacturer that developed its own battery technology. The $593 million company is a penny stock that may gain more market traction if its proprietary battery systems (a vital component of a daily-commuting commercial vehicle) are more efficient, more reliable, and basically superior to competing offerings.

In a potential show of high execution confidence, insiders at Lion Electric are loading up on their employer’s stock. Insiders acquired more than 1.9 million Lion Electric shares on the market during the past six months. Perhaps they gave a strong Buy signal to the market.

The company officially inaugurated its Mirabel battery manufacturing factory for lithium batteries for medium- and heavy-duty vehicles recently. Production ramp-ups will follow once certifications are received for the battery packs this quarter.

Lion Electric is a speculative play with a poor liquidity position. However, the penny stock could skyrocket as the company grows production, meets growing customer demand for its battery-powered trucks and buses, and starts generating profits.

Electrovaya

Electrovaya (TSX:EFL) is another Canadian penny stock that could generate sizeable returns for investors as the energy storage market grows. The $165 million company develops and manufactures portable lithium batteries and battery management systems for power grids, EVs, warehousing, medical and mobile devices.

The company is designing a new generation solid-state lithium battery offering higher energy density and lower costs. Its ambitious target is to “double, if not triple” the volumetric energy density of its battery cells, compared to conventional lithium-ion technology. Multi-layer cells have reportedly been produced, and a prototype production line may be in place later this year.

Electrovaya’s latest Infinity line of lithium batteries recently saw a 10% increase in energy density. They may receive good customer approvals as they ship out of a new gigafactory in New York by 2024.

Quarterly revenue surged 144% year over year during the first three months of 2023, powering the company to its first profitable quarter. Insiders are actively buying Electrovaya stock.

The post The Future of Energy Storage: Top 3 Canadian Battery Innovators appeared first on The Motley Fool Canada.

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Fool contributor Brian Paradza has no positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Electrovaya. The Motley Fool recommends Tesla. The Motley Fool has a disclosure policy.

2023