Every day, we see new a new headline pop up from one of Tesla’s competitors challenging the Model S, Model X, and upcoming Model 3 electric vehicles.
In the past, it’s been companies like Nissan, Volkswagen, Ford, and Toyota that have come out with their own electric vehicles (EVs), though few can match the range and benefits of Tesla’s models.
More recently — this week, in fact — it was China’s NextEV, BMW, Mercedes-Benz, and even the start-up Uber that all came out swinging.
We can’t exactly blame them, because although EVs are still a niche market, they are growing in popularity as the technology gets better and the prices drop.
What we wouldn’t expect is competition from one of Tesla’s partners in business.
After all, who would possibly want to put such a profitable friendship in jeopardy?
Well, that’s exactly what Panasonic is doing…
Powerful Competition
Panasonic has been supplying Tesla with lithium-ion batteries for its EVs for years and has even helped supply Tesla’s Nevada-based Gigafactory with both funding and manpower.
However, it’s not the EV market in which Panasonic is challenging Tesla — it’s the home battery market.
You see, Tesla’s Powerwall systems were made to store back-up energy, usually from solar power, to cover energy needs when grid energy is expensive or renewable energies are unavailable.
Panasonic has been developing the same technology. The company claims its home battery systems can currently cover about 70% of one Japanese home’s energy needs, and it hopes the technology will some day entirely replace electric grids.
This comes just in time to profit from the global move toward clean energy storage.
But with global interest comes global competition…
Panasonic’s first target for its home batteries outside of Japan is Germany, a country on which Tesla has already set its sights as a major market for its Powerwall technology.
Of course, Germany is an extremely viable option due to its incentives; German utilities get government funding for integrating renewable energy sources into the national grids.
That kind of government support encourages more solar and wind integration. The growing use of these technologies means there will need to be some influx of energy storage technologies to cover the down times.
After all, renewables are still intermittent; the sun isn’t always up, and the wind isn’t always blowing. Even the impressive 78% renewable energy that Germany reached this year isn’t anywhere near normal or sustainable just yet.
But as it stands, Tesla doesn’t seem to be taking any action against Panasonic. And there’s a good chance it won’t. Understand that the use of home batteries will grow in use and drop in price just as the use of renewable energies has.
That means if Panasonic’s batteries become more ubiquitous in Europe in the coming years, there will be even more of a market for Tesla’s Powerwall systems, which can be developed to have a higher energy capacity and will most certainly become more affordable.
On that note, however, these two aren’t the only companies in the home energy storage business…
Will the Market Share?
Panasonic faces direct competition from South Korean LG Chem, which provides the batteries for German BMW and Volkswagen EVs, along with those of American companies General Motors and Ford.
German companies that are already familiar with LG’s battery business may prefer to stick with what they know.
But it all comes down to marketing efforts.
You see, Panasonic already sells about 39% of the world’s batteries, according to research firm Lux. The company’s association with Tesla will only serve to increase its popularity, which can sometimes be the difference between a booming business and bankruptcy.
Lux estimates that at this rate of growth, and assuming its continued business with Tesla, Panasonic could account for a full 50% of the lithium battery market by 2020.
Regardless of who the market majority goes to, the global market is expected to be worth around $30 billion annually in less than a decade.
We’ve seen markets crash and recover in less time than that.
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Cash for Competition
What individual investors like us have to realize, however, is that we’re in the infant stages of this market boom. The technology is still being developed, and though many developments have been made very quickly, we are nowhere near the peak.
All this competition will be coming to a head in the next few years, and any new technological innovation could quickly set one competitor ahead of the rest.
But there is still time to buy into the market at a bargain. I’m talking about young, ground-floor opportunities in companies with massive potential both in the EV and lithium battery storage markets.
And let’s never forget the key here: supply.
Remember, the first Gigafactory ALONE will need several suppliers to cover its annual 15,000 tons of lithium requirement, and Panasonic already has plans to build yet another such factory in Japan when Nevada’s is finished.
So you can bet the smart money will be jockeying for a position on the supply side of the equation.
Thing is, my readers have not only made huge gains investing in the lithium players that are still flying under Wall Street’s radar, but we also know the first round of profits aren’t even over yet!
Make no mistake: This is just the beginning.
Stay tuned.
Until next time,
Keith Kohl
Check us out on YouTube!A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.
For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.
Keith’s keen trading acumen and investment research also extend all the way into the complex biotech sector, where he and his readers take advantage of the newest and most groundbreaking medical therapies being developed by nearly 1,000 biotech companies. His network includes hundreds of experts, from M.D.s and Ph.D.s to lab scientists grinding out the latest medical technology and treatments. You can join his vast investment community and target the most profitable biotech stocks in Keith’s Topline Trader advisory newsletter.
