The S&P/TSX Composite Index increased 49 points on Wednesday, July 5. Meanwhile, the S&P/TSX Battery Metals Index rose 1.87% in the same trading session. The Battery Metals Index has soared over 50% in the year-over-year period. Today, I want to explore whether Canadian investors should bet on battery stocks or electric vehicle (EV) stocks as we get into the second half of 2023.
These markets are both positioned to post strong growth in the years ahead. Of course, the battery metals space is heavily dependent on increased demand for EVs. Fortune Business Insights valued the global lithium mining market at US$343 million in 2021. The same report projected that this market would deliver a compound annual growth rate (CAGR) of 6% from 2021 through to 2028, capping out at a market value of US$516 million.
Meanwhile, Fortune Business Insights forecasts that the global electric vehicle market will post a CAGR of 23% from 2022 through to 2032. It projects that the global EV market will rise from US$205 billion in 2022 to US$1.71 trillion by the end of the forecast period.
Why battery stocks have erupted in recent months
Lithium Americas (TSX:LAC) is a Vancouver-based resource company that operates in the United States and Argentina. In June, it reported that it began its first official lithium production at its Cauchari-Olaroz location. The initial production is less than battery quality, but it is a promising first step for this company.
Shares of this battery stock have dropped 2% month over month as of close on July 4. Lithium Americas stock has still climbed 12% so far in 2023. The stock is up 6% in the year-over-year period.
This company is targeting production at its U.S.-based Thacker Pass location in 2026. Lithium Americas is still in its infancy as far as production is concerned, but there is no denying its massive growth potential. Investors can still get in early on this promising battery stock.
Patriot Battery Metals is another Vancouver-based company that is engaged in the identification, evaluation, acquisition, and exploration of mineral properties. This battery stock has soared 180% so far in 2023. Its shares have erupted 496% year over year. This illustrates the explosive potential of battery stocks in the current market.
Here are two EV stocks that are worth your attention in July
Lion Electric (TSX:LEV) is a Montreal-based company that designs, develops, manufactures, and distributes purpose-built all-electric medium- and heavy-duty urban vehicles in North America. Shares of this EV stock have jumped 5.5% month over month as of close on July 4. The stock is still down 9.2% in the year-to-date period.
Investors got to see Lion Electric’s first-quarter fiscal 2023 earnings on May 9. Lion Electric delivered 220 vehicles in the first quarter — up from 84 vehicles delivered in the first quarter of fiscal 2022. Meanwhile, revenue rose to $54.7 million compared to $32.1 million in the previous year. This company is well positioned for strong earnings growth going forward. Better yet, it recently achieved profitability.
Which is the better buy today?
I like Lion Electric and stocks that have a connection to the EV market, like Magna International. However, I’m looking to chase big growth, as these markets take off in the years ahead. That is why I’m looking to target Lithium Americas and other exciting battery stocks in early July 2023.
