As the hype around 'solid-state' EV batteries grows, UBS reveals the global stocks to cash in

Published Tue, Nov 21 20237:43 PM EST

UBS has identified the stocks set to benefit from the growth of next-generation "solid-state" battery electric vehicles. Solid-state batteries are viewed as a potential breakthrough technology because they can store more energy than lithium-ion batteries and charge faster. While researchers have known about the technology for decades, commercialization on a large scale has not yet proved possible. That could be about to change, however. Toyota earlier this year said its work on solid-state batteries could allow its electric vehicles to travel up to 1,000 kilometers on a single charge when they debut between 2027 and 2028. Shares of the Japanese automaker soared on the news. Toyota's targets for solid-state batteries are about double the capacity of the longest-range Tesla vehicles. UBS analysts say Toyota is one of the few car companies with the capability to build a "vertically integrated model" for EVs, including advanced battery technology. The automaker's planned transition to solid-state batteries for its EVs by the late 2020s makes the company's stock an attractive investment, according to the investment bank. In addition, as other Japanese automakers like Nissan and Honda also aim to mass produce solid-state batteries by around 2030, the analysts expect more companies along the supply chain to be identified. The table below shows some of the global stocks best positioned to capitalize on the shift to solid-state batteries, according to UBS: UBS named Toyota Industries , which has already partnered with Toyota Motor on developing lithium-ion batteries, as another stock that could benefit from the shift to solid-state batteries. Investors should take note that as the world's largest forklift manufacturer, shares of Toyota Industries are currently valued on its materials handling equipment business rather than its battery manufacturing division. UBS analysts led by Kohei Takahashi said in a note to clients on Oct. 31 that they expect Toyota Industries shares to rise by 12% to 13,400 Japanese yen ($90) over the next 12 months. Other Japanese companies cited by UBS as potential winners include Mitsui Mining & Smelting , which produces sulfide-based solid electrolytes, and cathode materials supplier Sumitomo Metal Mining . Analysts at Morgan Stanley also note that Mitsui's products are utilized in the manufacture of semiconductor chips typically used to run AI software. "Over the medium to long term, we will be keeping a close eye on whether there is a further expansion in sales of electrolytic copper foil and what occurs with HRDP (a special carrier used for mounting next-generation semiconductor chips) and solid state batteries for EVs," said Morgan Stanley analysts in a note to clients on Nov. 10. — CNBC's Michael Bloom contributed to this report.