Lithium-ion batteries were first commercially used by Sony in early 1990 to power the Sony CCD-TR1 8 mm camcorder. Since then, lithium-ion batteries have powered everything from toys to pacemakers and iPhones to electric cars. Today, they control more than 90% of the global grid battery storage market.
The high ‘energy density’ of this battery chemistry allows more amount of energy to be stored in limited space. With lithium-ion batteries driving the clean energy revolution, demand for them is expected to increase multifold in the coming years.
Here’s an overview of the space and ETFs that offer a way to invest in lithium-ion batteries and the technology around it.
Data by WHO estimates that 91% of the world’s population lives in places where air quality exceeds its guideline limits, with road transport emission being a primary cause. Governments around the world are becoming more and more aware about the severity of the situation and are incentivizing adoption of electric vehicles (EVs) to reduce greenhouse gas emissions carbon. This is creating a strong shift away from conventional fossil-powered internal combustion vehicles towards electric counterparts.
Given its use cases and current trends, the global demand for lithium will continue to soar. The global lithium-ion battery market size is expected to reach $182.53 billion by 2030 from $48.19 billion in 2022, growing at a CAGR of 18.1% during the period.
ETFs offers a convenient mechanism to invest in this space across the globe. Here are 3 ETFs to add to your watchlist.
The Global X Lithium & Battery Tech ETF (LIT) is the oldest ETF operating in this space. Launched in 2010, LIT invests in the full lithium cycle, from mining and refining the metal to battery production. The fund tracks the Solactive Global Lithium Index, which represents the largest and most liquid lithium battery producing, mining and refining companies in the world. Among sectors, weightage is highest at 50% towards materials, followed by technology, industrials and consumer discretionary. Geographically, China gets the lion’s share with 49.7% allocation, followed by 16.9% in the U.S., 10.3% in South Korea, 9.2% in Japan, 5.8% in Australia and 4.9% in Chile. The ETF has $4.43 billion as assets under management and an expense ratio of 0.75%. Close to 60% of the current assets are held in the top ten stocks.
- Albemarle Corporation (ALB)
- EVE Energy Co Ltd
- BYD Co Ltd (BYDDY)
- Ganfeny Lithium Co Ltd
- Sociedad Quimica y Minera S.A. (SQM)
- Contemporary Amperex Technology Co Ltd
- Yunnan Energy New Material Co Ltd
- LG Chem Ltd
- Panasonic Holdings Corporation (PCRFF)
- TDK Corporation (TTDKF)
Amplify Lithium & Battery Technology ETF (BATT) is a four-year-old ETF tracking the EQM Lithium & Battery Technology Index. The EQM index is made up of companies generating significant revenue from the development, production and use of lithium battery technology, including: battery storage solutions, battery metals & materials and electric vehicles.
BATT holds a portfolio of around 90 stocks with a large cap tilt (70%), the remaining split almost equally between mid and small caps. The fund provides exposure across geographies with China (38%), the U.S. (18%) and Australia (11%) as the top allocations. BATT has $183.51 million in assets under management and an expense ratio of 0.59%. The top holdings constitute roughly 40% of the current portfolio.
- Contemporary Amperex Technology Co Ltd
- Tesla, Inc. (TSLA)
- BYD Co Ltd (BYDDY)
- BHP Group Limited (BHP)
- Glencore plc (GLCNF)
- Li Auto, Inc. (LI)
- NIO, Inc. (NIO)
- Rivian Automotive, Inc. (RIVN)
- Lucid Group, Inc. (LCID)
- LG Chem Ltd
Launched in February 2022, the WisdomTree Battery Value Chain & Innovation Fund (WBAT) is the newest in this segment. WBAT tracks the WisdomTree Battery Solutions Index, which is designed to track companies primarily involved in battery and energy storage solutions and innovation. The fund provides exposure to battery technologies and the megatrend of energy transformation across 20 countries. The highest allocations are towards China (29.68%), Japan (16.14%), the U.S. (13.09%) and Germany (8.36%), followed by South Korea, Australia and the Netherlands, among others. WBAT has an expense ratio of 0.45%. WBAT provides exposure to a mix of large, mid and small cap companies with the allocation to the top ten holdings currently limited at around 30% and the highest holding capped at under 4%.
- TDK Corporation (TTDKF)
- Alfen Beheer B.V.
- NARI Technology Co Ltd
- Camel Group Co Ltd
- Contemporary Amperex Technology Co Ltd
- BASF SE (BASFY)
- Umicore (UMICY)
- Solid Power, Inc.
- Ningbo Ronbay New Energy Technology Co Ltd
- Ganfeny Lithium Co Ltd
Disclaimer: The author has no position in any stocks mentioned. Investors should consider the above information not as a de facto recommendation, but as an idea for further consideration. The report has been carefully prepared, and any exclusions or errors in it are totally unintentional. Scheme data, returns, and details based on factsheets and respective websites as on July 21, 2022.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Prableen Bajpai
Prableen Bajpai is the founder of FinFix Research and Analytics which is an all women financial research and wealth management firm. She holds a bachelor (honours) and master’s degree in economics with a major in econometrics and macroeconomics. Prableen is a Chartered Financial Analyst (CFA, ICFAI) and a CFP®.
Read Prableen's Bio