For anyone interested in the emerging market for electric vehicles, The Economist has published a leader and an in depth article on the subject. These are “must read” articles and I highly recommend taking the time to review them in detail.
While the main reason to follow this topic from an economic standpoint is obvious enough, The Rational Walk has a special interest due to Berkshire Hathaway’s (BRK.A) investment in BYD (OTCPK:BYDDF), a Chinese company with roots in battery technology that has developed a revolutionary all electric vehicle which will be introduced in the United States next year. The Economist had the following to say about BYD:
At least one battery-maker, though, has loftier ambitions than merely supplying carmakers with its wherewithal. BYD, a Chinese firm, seems to have Panasonic’s (PC) success in the world of cameras in mind. Earlier this year it launched the first of what it promises will be a range of electric cars that will undercut those made by American and European producers, in part by using a novel material in the batteries’ electrodes. It claims this will make those batteries both cheaper than conventional types, and faster charging. BYD started with fleet sales in China and plans to begin private sales there later this month and launch its first vehicle in America next year. The company is being watched closely, not least by Warren Buffett, a celebrated American investor who has taken a 10% stake in it.
Putting aside economic and investment considerations, another reason to get excited about electric vehicles is the massive torque that will be available:
The “killer app” of this car would be its acceleration. Unlike internal-combustion engines, electric motors have full torque, as pulling-power is called, from zero revs. They are thus predisposed to go like a bat out of hell without the aid of a gearbox. Mr Musk’s brainchild is known as the Tesla Roadster. The sports version goes from zero to 100kph (62mph) in 3.7 seconds—not much slower than a top-line Ferrari.
While this writer is not about to pay the $121,000 required to purchase a Tesla Roadster (it would be preferable to purchase one Berkshire A share and have almost enough left over for a 2010 Ford Mustang GT), similar performance advantages will apply when electric vehicles are introduced at much lower price points in the future.
For more coverage of the electric car industry on The Rational Walk, please click on this link.