Electric vehicle EV investing in the current reset could continue to provide investors with alpha returns. But as investors have seen in the Dot-Com era, there could also be many pitfalls. If the 80s were the decade of the computer, and the 90s the internet and Dot-Com era, and the early 2010s the smartphone and internet of things, then 2020 and beyond could be the EV revolution.
Let’s zero-in on the potential snakes and ladders of early EV investing with the aim of picking winners and walking away from losers in our investment portfolios
Earlybird investors know that investing early in emerging macro trends can provide phenomenal returns.
For example, a 10,000 US dollar investment in Tesla, an American electric vehicle and clean energy company, in 2013 would have returned one million US dollars today.
The technology of electric mobility is nothing new since it has been around for decades, with Toyota Prius in Japan launching its hybrid EV over 20 years ago.
“2020 and beyond could be the EV revolution”
Nevertheless, we believe investor enthusiasm for EV investing is not a fad
But a macro trend spurred on by government regulatory policy, which is enforcing a popularized trend towards zero-emission mobility.
So as Zero-emission mobility is one of the Commandments of the current Reset, “the build back better” the era we are living under, capital flows are likely to accelerate into companies that comply with environmental, social, and governance rules (ESG) over the next decade.
“By the year 2030, it’s expected that a whopping 95% of all assets will incorporate ESG factors” wrote visualcapitalist.
Moreover, there has been a call for the EU to move forward with its ban on petrol and diesel vehicles which aligns with its zero-emission policy.
The UK’s ban on selling new petrol, diesel, or hybrid cars in the UK will be brought forward from 2040 to 2035.
“By the year 2030, it’s expected that a whopping 95% of all assets will incorporate ESG factors”
In the US, President-elect, Biden promoted two distinct EV policies in his campaign climate plan. First, his Day One, “unprecedented executive actions”, include moving the federal government procurement system toward 100 percent “clean energy and zero-emission vehicles.”
In a few words, EV investing and green-related investments are young, sexy, and likely to multiple profits going forward
So how do investors put money to work in the EV sector?
There are several ways, with the most obvious one being, either directly in EV companies or indirectly, such as EV infrastructure and related raw materials.
But here is the challenge concerning direct EV investing in automakers
Will self-charging electric vehicles displace plug-in, thereby making plug-in EV vehicle makers, and related infrastructure investing an underperforming investment blackholes?
Self-charging vehicles, as they are marketed, are also known as “self-charging” hybrids, which use both internal combustion engines together with electric vehicle technology to provide motion.
“Hybrids offer motorists the option of using electricity, which could be a requirement in metropolitan areas requiring zero-emissions motoring” – Win Investing
Concerning EV investing in an automaker, you have to decide what vehicle will be most in-demand, hybrids, or plug-ins
As I have stated above, there is nothing new about hybrids. The same technology was available since the launch of the Toyota Prius in Japan over 20 years ago.
What are the advantages of hybrids over plugins?
Hybrids offer motorists the option of using electricity, which could be a requirement in metropolitan areas requiring zero-emissions motoring.
But let us assume the motorist lives in the sticks, a long way from a charging station, and has hundreds of kilometers to cover to reach the next town.
In this case, the motorist will likely go for, “self-charging” hybrids to get the best of both worlds. So, they switch to conventional combustion engine motoring out of town, where there are no zero-emissions regulations, and when the vehicle enters a metropolitan zone the vehicle reverts to electric to comply with the zero-emissions technology.
So, while the drive-chain of hybrid is being powered by fossil fuel energy, an alternator is also charging the electric battery, which will power the drive-chain when the vehicle enters metropolitan zones. Again, this technology is not new, as the battery in combustion engines powers a starter motor, which turns crankshaft to fire up the petrol/diesel engine.
The alternator then coverts motion into electricity, then via electric circuits sends the electricity back to the battery for storage, which is then used to power the electric starter motor.
In this chase, hybrids are self-charging in that they do not need to be plugged into an electricity socket. But let us be clear about this, hybrid vehicles are not perpetual motion machines. The First Law of Thermodynamics (Conservation) states that energy is always conserved, it cannot be created or destroyed.
Hybrids provide long-range, flexibility and for those living in subzero temperatures in remote areas that could be a lifesaving option
A breakdown in subzero temperatures miles away from help could be life-threatening event.
But hybrids, with more moving parts and technology, are also more expensive to purchase and maintain.
A budget-conscious motorist that does most of their motoring in metropolitan areas, school runs, grocery shopping, visiting nearby friends and family, will probably opt for plugins.
“The recent rally is Switch Back Energy (SBE) suggests that the market is pricing plugins to dominate the EV market” – Win Investing
Concerning EV investing in an auto manufacturer’s sixty-four million dollar question is how big will the plug-ins EV market be?
If motorists opt for hybrids, then that could dampen the rally investing in the already red hot EV infrastructure.
The recent rally is Switch Back Energy (SBE) suggests that the market is pricing plugins to dominate the EV market.
If you think everyone is going to have a plug-in EV in their driveway or the street, then, ChargePoint, an open electric vehicle charging network with more than 114,600 public charging locations in America, Europe could be a profitable play.
Or maybe not, maybe tomorrow’s motoring will be hybrids with the vast majority getting about on electric bikes in the reset neo-socialist world where you own nothing and are happy.
EV investing could be the best bet of the decade, or maybe not.