Bank of America has forecast that initial public offerings (IPOs) from new electric vehicle companies will raise about $100 billion over the three years ending in 2023. Patrick Steinmann, co-head of global investment banking at Bank of America, stated that increased investments in this sector, ranging from batteries to vehicle charging, will lead companies to separate from their units and go public.
Steinmann noted, "We are already in a wave that will see up to $100 billion raised from IPOs in the electric vehicle sector, through supply chains for electric vehicles, batteries, and charging." This comes after the largest IPO in 2021, from Rivian Automotive, which raised $13.7 billion in its U.S. listing earlier this month, and saw its stock price rise by 47% from its offering price.
Electric vehicle manufacturers have become a favorite among investors over the past year, experiencing remarkable stock increases amid bets on rising demand for cleaner vehicles. Tesla’s value nearly doubled last year, with billions raised through both IPOs and subsequent stock sales.
Chinese automaker and battery manufacturer BYD raised $1.8 billion last month through a stock offering in Hong Kong, marking its second deal of this type in 2023, following a $3.9 billion stock sale in January.
The increasing demand for electric vehicles is expected to drive investments in companies that manufacture batteries for clean cars. According to Bloomberg, the top 10 battery manufacturers are projected to triple their manufacturing capacity by 2022 to meet future supply commitments and prepare for the anticipated surge in demand.
Steinmann remarked, "Battery companies will become a world of their own, as they enter a stage that requires massive capacity increases, needing significant capital to keep up with the growth in electric vehicle demand. So far, battery companies have been largely financed by debt, but the next phase of their growth will be funded through a wave of IPOs."
One of the largest public offerings anticipated from Asia next year, and possibly globally, is the battery unit of LG Chem's subsidiary, LG Energy Solution, in South Korea, which could raise around $10 billion. It is one of the largest battery manufacturers in the world, following Chinese company Amperex Technology.
