Decarbonization has become a global consensus that initiated the development rush of electric vehicles, and whoever excels in battery R&D becomes the king as electrification actuates demand for lithium batteries. The CTBC battery and energy storage ETF released by CTBC Investments was approved for public offering today, and will help investors in grasping the historical opportunity for future expansion in the demand for power consumption.
Chan Chia-feng, manager of the CTBC battery and energy storage ETF, commented that the increasing number of mature economies that have stipulated the schedule for banning fossil-fuel vehicles, as well as policy subsidization, have resulted in better-than-expected global EV sales. The global battery application scenario can be primarily divided into three major segments that are power batteries, energy storage batteries, and consumer batteries used by EVs, with power batteries currently occupying more than half of the ratio.
According to the statistics of EV-Sales, EV sales are expected to grow by 26.5% in 2022, while the demand for lithium batteries will increase by 47.6%, with the latter surpassing the former in terms of growth. Chan pointed out that the global battery demand will be shifting from smartphones and tablets in the 2000s to EVs and energy storage after 2020, with the demand of power expanding by a million fold.
As pointed out by Chan, global energy transformation has been shifting towards green energy, which unfortunately generates intermittent power as wind energy varies according to seasons and solar energy alters in accordance with changes in sunlight, thus the storage of renewable energy has become a key condition for the development of green energy, which can be seen from the US who started accelerating green energy establishment subsequent to the outbreak of coronavirus.
According to the monitoring report published earlier by the US Energy Storage Association, the energy storage market of the country saw a historical high in growth for energy storage systems during the third quarter, and another new high is also expected for the fourth quarter, which evidently denotes the gradual unfolding of the energy storage tendency. The market expects EVs to become the main investment for the next 10 years, and that makes battery and energy storage, which are the essential components for EVs, critical hotspots of this gold rush.
The ICE FactSet Battery and Energy Storage Technology Index, tracked by CTBC battery and energy storage ETF, comprises of constituent stocks from first and second largest lithium mine suppliers, as well as EV battery suppliers. According to the statistics of Bloomberg, the gross profit of upstream constituent stocks for batteries from the constituent stocks of the index is higher than that of EV auto manufacturers in the downstream demand end, which offers room for anticipation in upstream return on investment as EVs enter an era of ferocious competition.
(Cover photo source: shutterstock)