Where to Invest in EV Battery Stocks: Three Contrasting Plays in a $115B Market

The global EV battery market is undergoing a critical transformation. According to Fortune Business Insights, the sector was valued at approximately $69 billion in 2024, with projections climbing to $77 billion in 2025 and potentially reaching $115 billion by 2032—a compound annual growth rate of 6% over the next seven years. This explosive expansion hinges on a fundamental truth: as electric vehicles proliferate worldwide, battery innovation becomes the decisive competitive factor.

For investors seeking exposure to this high-growth space, three stocks warrant serious consideration: QuantumScape Corp. (QS), Toyota Motor ™, and Tesla (TSLA). Each carries a Zacks Rank #3 (Hold) rating, yet they represent distinctly different bets within the battery ecosystem.

The Next-Generation Gamble: QuantumScape’s Solid-State Bet

QuantumScape stands apart as a pre-revenue company making headlines with next-generation solid-state lithium battery technology. Unlike conventional lithium-ion designs, solid-state cells promise substantially higher energy density, faster charging times and enhanced safety characteristics.

The company’s recent trajectory has accelerated considerably. In June 2025, QuantumScape unveiled a manufacturing breakthrough through its Cobra process—a system approximately 25 times faster than its predecessor Raptor platform and markedly more compact. This milestone addresses a longstanding challenge: transitioning from laboratory prototypes to commercially viable production at scale.

Progress extended through Q3 with the initiation of B1 sample deliveries, enabling major automakers to begin hands-on evaluation of QuantumScape’s QSE-5 cells. The company also demonstrated its technology at Munich’s IAA Mobility Show, featuring a Ducati V21L motorcycle powered by QuantumScape cells through a partnership with Volkswagen. Additional joint development agreements with global automakers now complement expanded collaborations with Corning and Murata on ceramic separator production.

A notable inflection point emerged with the company’s first customer billings totaling $12.8 million—signaling that commercial adoption is transitioning from concept to reality. The Zacks Consensus Estimate projects QS’ 2026 EPS will improve by 15.5% compared to 2025 levels.

The Scaled Manufacturer: Toyota’s Catch-Up Battery Play

Toyota represents the established automaker aggressively closing its EV battery gap. While the company has trailed competitors in electric vehicle market share, recent capital investments suggest an intensive catch-up strategy.

Production commenced at Toyota’s monumental new North Carolina battery facility, a sprawling 1,850-acre complex capable of producing 30 GWh annually at full operational capacity. This manufacturing hub will serve as Toyota’s primary U.S. lithium-ion battery development center, featuring 14 production lines supporting hybrids, plug-in hybrids, and battery electric vehicles. Near-term models powered by this facility include the Camry HEV, Corolla Cross HEV, RAV4 HEV, and an upcoming all-electric three-row SUV, with additional production lines planned through 2030 as Toyota expands its electrified lineup.

Beyond North Carolina, Toyota is methodically strengthening its domestic supply chain. A $1.5 billion purchase agreement with LG Energy Solution’s Lansing plant secures long-term lithium-ion supply, while a $50 million investment in a Michigan battery development laboratory—scheduled for 2026 completion—positions the company for future innovation. Longer-term, Toyota is pursuing solid-state battery technology with commercial deployment targeted for 2027-2028, anticipating dramatic improvements in vehicle range and charging velocity.

Zacks Consensus Estimates project TM’s next fiscal year EPS will rise 20% year-over-year, reflecting growing confidence in the company’s electrification trajectory.

The Integrated Producer: Tesla’s Vertical Battery Strategy

Tesla remains indispensable to any EV battery investment thesis due to its vertically integrated approach to battery design, manufacturing and deployment. The company’s in-house 4680 lithium-ion program represents a cornerstone strategy: reducing costs, simplifying vehicle architecture, and decreasing dependence on external battery suppliers.

Tesla’s 4680 production scaling has proceeded incrementally over several years. In April, the company disclosed that cumulative 4680 cell production had reached 100 million units as of September of the prior year, with management asserting that in-house cells now deliver superior cost economics versus external sourcing alternatives.

However, recent supply-chain repositioning signals execution complexities. A notably reduced cathode materials agreement with South Korea’s L&F indicates Tesla is proceeding conservatively with 4680 ramp-up, avoiding over-commitment. Rather than forcing aggressive scale, Tesla maintains a balanced portfolio, combining constrained in-house production with battery sourcing partnerships involving CATL, Panasonic, and LG Energy Solution.

The Zacks Consensus Estimate for TSLA’s 2026 EPS points to a 42% improvement versus projected 2025 levels, suggesting substantial profit growth expectations despite manufacturing challenges.

Investment Consideration: Three Distinct Pathways

Where to invest in EV battery stocks depends fundamentally on risk tolerance and time horizon. QuantumScape appeals to technology-first investors with conviction in solid-state viability, while accepting pre-revenue and commercialization execution risk. Toyota attracts those seeking established manufacturing scale and near-term profitability, balanced against EV market share concentration risk. Tesla combines battery innovation with vehicle production leverage, though supply-chain dependencies warrant monitoring.

All three stocks operate within an expanding global market where battery specifications increasingly define competitive advantage. As the sector matures from $69 billion to a projected $115 billion, strategic positioning in battery technology—whether through next-generation chemistry, scaled manufacturing, or vertical integration—will separate winners from laggards.