Stellantis and CATL plan new EV battery factory in Europe

Stellantis (NYSE:) has announced a partnership with Contemporary Amperex Technology Co. Limited (CATL) to establish an electric vehicle (EV) battery site in Europe. The collaboration, formalized through a non-binding Memorandum of Understanding, aims to enhance the localization of lithium iron phosphate cells for Stellantis’ European EV operations.

According to a recent Goldman Sachs (NYSE:) report, the EV industry is poised for a significant cost reduction in battery production. By 2025, the price of EV batteries is expected to drop by about 40% due to decreases in cathode material costs, particularly lithium oxide prices. This price decline is anticipated to make EVs as affordable as traditional gas-powered vehicles, potentially increasing consumer adoption and widening the market for electric vehicle batteries.

The expected reduction could see the cost of a standard 60 kWh battery pack fall from its current $9,900-$10,000 range to approximately $5,900 within the next two years. This forecast opens up new investment opportunities in the energy storage sector and companies focusing on battery cell production like Envicool. Nonetheless, investors are urged to exercise caution with investments in firms such as QuantumScape, which may face free cash flow challenges that could affect their financial health.

This strategic move by Stellantis and CATL underscores a broader industry trend towards electrification and the growing importance of securing robust supply chains for critical components like EV batteries in Europe. The partnership is not only a significant step towards Stellantis’ commitment to electrification but also reflects the industry’s confidence in the future of electric mobility.

InvestingPro Insights

Stellantis’ partnership with CATL not only reflects a strategic move in the electric vehicle industry but also aligns with the company’s strong financial metrics and market performance. InvestingPro data highlights a robust financial position for Stellantis, with a market capitalization of $61.83 billion and an attractive P/E ratio of just 2.95, which further adjusts to an even more compelling 2.77 for the last twelve months as of Q2 2023.

InvestingPro Tips suggest that Stellantis is a prominent player in the Automobiles industry, with a perfect Piotroski Score of 9, indicating a very healthy financial state. The company is also recognized for yielding a high return on invested capital and operating with a high return on assets of 10.37% for the same period. These factors are essential for investors considering the future of electric mobility and the role Stellantis plays in it.

Moreover, the company’s strategic initiatives are backed by solid financials, including a strong free cash flow yield and a significant dividend yield of 7.22% as of the latest data. With revenue growth of over 15% in the last twelve months leading up to Q2 2023, Stellantis is well-positioned to capitalize on the expanding EV market.

For investors looking for more in-depth analysis and additional insights, InvestingPro offers a range of tips, with 15 more listed for Stellantis. Subscribers can take advantage of the special Black Friday sale, currently offering up to a 55% discount on the InvestingPro service, to access these valuable investment tips and data points.

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