What happened
Shares of Solid Power (SLDP +2.56%) were trading higher on Tuesday afternoon. A Wall Street analyst initiated coverage of the Colorado-based start-up, which is developing advanced solid-state batteries for electric vehicles (EVs), with a bullish note.
As of 1:15 p.m. ET, Solid Power's shares were up about 11.5% from Monday's closing price.
So what
Needham analyst Vikram Bagri initiated coverage of Solid Power with a buy rating and a price target of $13, which represents a premium of about 55% from current levels.
Bagri wrote that Solid Power's shares offer a relatively early opportunity to invest in EV battery production, an industry that he and many others expect to represent a total addressable market of around $300 billion by 2035.
Solid Power said in December that it had begun pilot production of its 20 amp-hour (Ah) battery, a key milestone. Image source: Solid Power.
Bagri thinks that Solid Power's approach, developing three battery designs that will be commercialized on staggered timelines, puts it in a good position to capture medium- and long-term opportunities as EV production grows.
That's probably helping to push the stock higher today.
Now what
I think Bagri's points are good ones. As it happens, I'm also bullish on Solid Power, which is backed by BMW (BMWYY +0.00%) and Ford Motor Company (F +0.33%) and which is closer to large-scale production than some of the other investor favorites in this space, notably QuantumScape.
Unlike QuantumScape's cells, Solid Power's batteries can be made on existing lithium-ion battery manufacturing equipment with relatively minor modifications. Rather than building its own network of factories, Solid Power plans to license its technology and processes to existing EV battery manufacturers. This "asset light" business model could pay off nicely if the company can deliver its batteries as expected.
EV investors can look forward to Solid Power's first earnings report as a public company, likely in February.
