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| The Only Electric Car Stock to Own in 2016 | ||||
| By Jeff Siegel | Wednesday, November 11, 2015 | ||||
 Today, I’m writing you from the archipelago of Orkney, which is situated in the northeastern coast of Scotland. I’m here on a research trip, checking out the largest marine energy test site in the world. It’s a magnificent facility, where the giants of the energy industry are testing the latest in wave and tidal energy devices. This truly is cutting-edge stuff. Of course, if you’re looking for anything cutting-edge in the world of renewable energy, this is the place to do it. Generating 110% of its power from renewables (that’s right, they generate more electricity than they use here), the good people of Orkney are not laggards when it comes to embracing the future. In fact, 20% of the driving population here uses electric cars. Per capita, there's more than any other place in the world. This is actually a pretty big deal considering electric cars have really only been available to the general public for about five years now. But it’s only going to get better. It’s a Huge Growth Story While Orcadians may claim the largest electric car-driving population in the world, the number of electric cars on the roads here doesn’t even come close to what we’re seeing in places like Norway, the Netherlands, and the United States. On a global scale, more than a million electric cars have been sold. In less than four years, this will be an annual sales number. Of course, that still may not seem like much. But it’s a monumental beginning to a major transition that’s well underway in the auto market — and a huge investment opportunity for us. Because if you’re looking for a growth story, there are few as exciting as this one.
Horses, Buggies, and Internal Combustion When I speak to those who still think electric cars are only for tree-huggers and wealthy eccentrics, I often hear about how the number of electric cars sold doesn’t even come close to the number of conventional internal combustion vehicles sold. When I hear this, I simply smile and happily agree. Because this is, in fact, true. Of the roughly 80 million cars that will be sold in 2015, only about 1.25% will be electric. Barely an accounting error. But for investors, it’s not about where the electric car sector is today — it’s about where it’s going to be tomorrow. Look at it like this... Coal still commands far more of the electricity market today than solar. But we all know coal is on its way out, and solar’s booming. So which would you invest in? The same holds true for electric vehicles. While conventional vehicles still control the market, the internal combustion engine is no longer the superior technology. Nor is it particularly efficient or economical in comparison to electric motors. With internal combustion, there’s not much else that can be done to advance the technology. But electric vehicles... that technology is still in its earliest stages, getter better and better by the day. Watching the beginning of this transition today must be similar to what it was like when the Model T first started rolling off the line behind the backdrop of naysayers who swore such a machine would never overtake the tried and true horse and buggy. Five Years Too Early If you’re a regular reader of these pages, you know that I’ve been a huge supporter of electric vehicles for years. I told you about Tesla years before the company went public. I was test-driving the Chevy Volt before most folks even knew GM was building an electric car. And I predicted that by 2020, consumers would be able to buy an electric vehicle with an all-electric range of 300 miles. On that one, I was wrong. We got to see that 300-mile range appear on our roads five years earlier! But that’s yesterday’s news. The question for investors now is, what’s next? So let’s take a look at what’s in store for 2016.
Test Driving the Future Here’s the 2016 Chevy Volt...
This vehicle, which is not a pure-battery electric car but rather an extended-range, plug-in hybrid electric vehicle, offers an increase in all-electric range in 2016, moving from the earlier model's 30 miles to 53 miles. This range, by the way, is more than what 70% of U.S. commuters require per day. Nissan’s LEAF has been slightly upgraded for 2016, offering 107 miles per charge. Of course, not much was to be expected on this one, as the second-generation LEAF, which will come out in 2017, is expected to deliver an all-electric range of about 200 miles, with the possibility of hitting 300 miles in 2018. The latter would suggest a 175% increase in range within just two years This, my friends, is how fast this stuff is moving. And this is why we’re looking to get a piece of this action any way we can. In 2016, we’re definitely going to get some more clarity on where things are heading as far as production numbers and cost reductions are concerned, but right now, there’s a very easy way to wet your beak in the early stages of this transition to vehicle electrification. And it has nothing to do with manufacturing electric cars. What I’m talking about is what “fuels” these vehicles, not only today but well into the future. My colleague Keith Kohl has actually written a white paper on this very subject, which you can check out right here. In the meantime, if you’re looking to buy a new vehicle soon, do yourself a favor and go out and test-drive a Volt, LEAF, or a Tesla Model S. Even if you don’t buy one, just get yourself acquainted with the future. Because mark my words, dear reader: Electric cars are the future. And you'd better believe we’re going to make a few bucks as this transition takes hold. To a new way of life and a new generation of wealth...
Jeff Siegel Jeff is the managing editor of Energy and Capital and contributing analyst for the Energy Investor, an independent investment research service focusing primarily on stocks in the oil & gas, modern energy and infrastructure markets. He has been a featured guest on Fox, CNBC, and Bloomberg Asia, and is the author of the best-selling book, Investing in Renewable Energy: Making Money on Green Chip Stocks. For more on Jeff, go to his editor's page. |
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