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Why and Where to Buy Lithium Iron Phosphate Battery Stocks

Ruchi Gupta - Author
By

Aug. 26 2022, Published 8:34 a.m. ET

The shift to renewable energy resources and EVs (electric vehicles) is going to drive huge demand for batteries. Lithium-based batteries have become popular for renewable energy storage and EV power. The lithium iron phosphate battery (LFP battery) type is particularly becoming a favorite in the battery market. As a result, investors are eager to get exposure to lithium iron phosphate battery stocks.

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There's a rush to curb climate change by shifting from oil energy to renewable solar and wind power. The problem is that solar and wind power is intermittent, meaning a way to store the energy for later use is needed. Batteries are used to store that energy, which can be used to power homes, factories, and EVs.

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Are lithium iron phosphate batteries better than lithium-ion batteries?

Lithium-ion and lithium iron phosphate batteries (LFP batteries) are both based on the lithium metal. The difference is that while lithium iron phosphate batteries use iron-based cathodes, the lithium-ion variety have nickel or cobalt in their construction.

The sourcing of cobalt and nickel for batteries can be a great challenge, which partially explains why LFP batteries are gaining attention in energy storage and EVs. Moreover, LFP batteries have other advantages: they’re more durable and pose less risk of fire than the lithium-ion type.

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What are the best lithium iron phosphate battery stocks to buy now?

Tesla CEO Elon Musk is a big fan of LFP batteries. Ford, Volkswagen, and Stellantis (STLA) are adopting lithium iron phosphate batteries, too. The global LFP battery market is forecast to grow to almost $50 billion by 2028, from just over $10 billion in 2021. There aren't many lithium iron phosphate battery stocks to buy now, but these are the best:

  • Tesla (TSLA) – Many investors only know Tesla a maker of EVs. However, the company also makes battery cells and builds battery products. Initially, Tesla relied on lithium ion batteries to power its cars, but now it’s shifting to the LFP battery variety. A series of stock splits have made TSLA stock more affordable for retail investors.

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  • BYD Company (BYDDY) – In addition to building vehicles, this Chinese company produces batteries, including LFP batteries. BYDDY stock trades on OTC markets for now.

  • Lithium Australia (LMMFF) – This Australian company has been in business since 2007. It makes EV batteries and it has expanded the business to include lithium iron phosphate batteries. LMMFF stock trades on OTC markets.

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What are some publicly traded lithium iron phosphate battery companies?

There's just a handful of LFP battery stocks that U.S. investors can access easily. Most LFP battery companies are Chinese, and many are private. Publicly traded lithium iron phosphate battery companies from China include Gotion High-Techa and CATL stock.

Taiwan’s Foxconn Technology has also ventured into the LFP battery business. Foxconn is a major manufacturing partner of Apple, which is believed to be preparing to enter the EV business.

For U.S. investors to buy foreign lithium iron phosphate battery stocks, they need to select brokers that offer access international markets. You can’t count on Robinhood or SoFi for this. Instead, you could try Interactive Brokers, Schwab, Fidelity, TradeStation, or Firstrade. Remember that there may be additional costs for trading international stocks, and you may not have the option to purchase fractional shares.

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