EV battery maker Freyr set for major global expansion
- Lithium-ion battery maker Freyr is opening a huge plant in Norway, and analysts are taking notice, raising the price target
- The company is also looking to expand into the United States and Japan.
- Freyr has already entered into a partnership with Volkswagen to develop lithium battery technology for electric vehicles
Manufacturer of clean technology batteries Freyr (NYSE:FREY) turns out to be a success on several levels. The stock looks set to make more gains as the company steps up to better serve the electric vehicle market.
The Norwegian company designs and manufactures lithium-ion batteries for a variety of applications, including electric vehicles, stationary energy storage, and marine and aviation uses.
The stock widened at the opening on Friday when construction began on a battery factory in Mo i Rana, Norway. This is a significant development, as it allows the young company to strengthen its capabilities in fast-growing markets, such as electric vehicles.
It would be the largest such factory outside of China. It comes at a time when international manufacturers are looking to source components from countries other than China.
The stock price is up 8.38% in the past month, 105.86% in the past three months and 22.63% year-to-date, easily outperforming the market in its together.
Shares of Freyr got a boost on Sept. 21 after Morgan Stanley analyst Adam Jonas raised his price target from $18 to $26 and gave the stock an “overweight” designation. Jonas also wrote a research note outlining factors that could increase the stock price, including the new plant.
The consensus rating on the stock is “moderate buy,” with a price target of $21.50, up 51.09%.
Because the company is relatively new and without revenue, analyst coverage is low. Even so, eight of the nine analysts who track the stock have positive ratings, with the ninth being neutral.
In December, Freyr announced a partnership with 24M Technologies, based in Cambridge, Massachusetts, and Volkswagen (OTCMKTS: VWAGY) to manufacture next-generation lithium-ion EV batteries using 24M’s SemiSolid platform. The partnership aims to develop technology for producing SemiSolid battery cells for Volkswagen electric vehicles.
“Developing next-generation EV battery cells based on 24M technology is a critical part of Freyr’s long-term strategy to accelerate the adoption of affordable EVs,” said Freyr CEO Tom Jensen. in a press release announcing the partnership.
Further solidifying Freyr’s commitment to the EV battery partnership, the company opened an office in Boston in August, co-located with 24M. It has also opened a factory in Japan, which, not coincidentally, is home to several major automakers.
Although unconfirmed, Freyr is said to be in talks to build a lithium battery factory in the United States. The company reportedly narrowed its selection criteria to five sites.
As you’d expect, Freyr will likely receive tax benefits built into the recently passed Inflation Reduction Act.
The company is in start-up mode, having merged with a SPAC, Alussa Energy Acquisition Corp., to list on the NYSE. It’s a bit of a unicorn, as many mergers from the SPAC boom have failed.
Freyr is still pre-profit and income, as it is funded by private equity and public markets. However, there were plenty of reasons for optimism in the company’s second quarter report in August.
For example, he plans to replicate the model established by the future Norwegian factory. He also expects more technology licensing deals, as well as partnerships with complementary technology developers, like 24M.
Additionally, the company maintained its capacity forecast through 2030, based on supply and demand dynamics in its key markets.
Freyr is one such stock that looks well positioned for future growth, although it is not currently a leader when it comes to fundamentals. In addition to its organic growth plans, companies like Freyr often grow organically and eventually position themselves as acquisition targets. It would not be surprising to see various ways in which shareholders can be rewarded.
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