Now that the early adopters have catapulted Tesla to stratospheric valuations, are there investment opportunities in other electric vehicle companies? To me that means that electric cars become a viable option for a large number of people and not just a second car for super wealthy Silicon Valley yuppies.
I did some research and I think we are a long way from that so to me there’s not much of an opportunity. But as Lord Keynes said, “the market can remain irrational longer than you can remain solvent”. Here’s the rational case:
The first question is what is the reality today about electric car use? Here’s a recent article in USA today, no Neanderthal Trump supporting publication they.
The White House wants $174 billion of that directed toward boosting electric car sales. Fossil fuel use in transportation is significant, and gas-guzzling autos are one reason why. Electric cars — admittedly cleaner by almost every metric — offer relief. Well, they would if people could actually afford them. Forgoing gas is pricy, preserving the status quo less so. Which explains why only 2% of autos soldannually are powered by electricity.
Norway and electric cars
The answer purportedly lies in subsidies. Nothing — we are told — woos consumers like handouts do. Just look at Norway, where the local government has been doling out generous incentives for electric car purchases since the early 1990s. The result? Just over 54% of all new cars sales there are electric, a global record, and up from a mere 1% of the overall market a decade ago.
Impressive stuff. At least it would be were it not for a few minor — yet important — details. For one thing, Norway’s electric car experiment has cost billions, and the majority of the vehicles sold have been to households that also own gasoline-powered cars. Put simply, consumers seem to treat electric cars as complements, not substitutes. More worrying, electric car owners still rely heavily on gasoline-powered cars to get around. The average Norwegian household drove 7,500 miles in 2018, a mere 515 of which were in electric cars.
One of the main impediments to adoption of electric cars is the distance problem. Just like the intermittency problem dooms solar and wind energy to being bit players for electric power, the problem of driving long distances in electric cars has not been solved.
Here’s a 2018 article but I don’t think the situation has changed since then:
The article lists eight requirements none of which are met by current electric cars.
So my bottom line is that there really aren’t good investment opportunities with electric car manufacturers. But the Democrats and Rinos are going to pump $trillions into this so there may be opportunity with rent seekers like Tesla