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Highlights:
- A new report has claimed that geopolitical tensions and supply chain issues could hit the production of EV batteries.
- The report said that OEMs might face strong headwinds due to these issues.
While people are shifting from electric vehicles (EVs) faster than ever, the industry does have a fair share of challenges. The global chip shortage is already impacting production, and the present geopolitical tensions have worsened the situation. Amid the tensions and the fragile supply chain, EV adoption could slow down due to the impact on (EV) battery production's planned expansion.
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S&P Global Mobility issued the warning in its report on Monday. It said that original equipment manufacturers (OEMs) would see strong headwinds to their battery-electric and hybrid vehicle sales as they scramble for raw materials. Moreover, the rising cost of metals needed to make the batteries threaten OEMs' profits. These rising prices also increase the price of the EV.
The report added that the yearly market demand for lithium-ion batteries is expected to reach about 3.4 Terawatt hours (TWh) by the end of this decade.
Let's look at some stocks related to electric vehicles and see how they have been doing in the current situation.
Ceres Power Holdings Plc (LON: CWR)
The fuel cell maker has a focus on clean energy. It belongs to the FTSE AIM UK 50 Index and enjoys a market cap of £628.39 million. The stock has a negative EPS of -0.12, and the one-year return is -72.65%. CWR shares soared more than 5.50% and were trading at GBX 345.90 as of 10:57 am GMT+1 on Tuesday.
AFC Energy Plc (LON: AFC)
AFC Energy develops alkaline fuel cells for clean energy generation. It is a constituent of the FTSE AIM All-Share index and has a market cap of £156.16 million. The stock has a negative EPS of -0.01; over the past 12 months, the stock has tumbled over 63%. As of 11:01 am GMT+1 on 1 November, the stock was trading at GBX 22.14, up 4.24%.
Pod Point Group Holdings PLC (LON:PODP)
Pod Point Group Holdings offers EV charging solutions, providing development, installation, and operation of charging points. The market cap of the FTSE All-Share constituent is £76.98 million as of 1 November. The company's share price has depreciated by more than 80% on a year-to-date basis. The shares traded at GBX 49.42, down 1.16% as of 11:09 am GMT+1 on Tuesday.
Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.
