Buying shares of Ford Motor Company (F) today represents the investment equivalent of the foresight rock critic-turned-manager Jon Landau had when he "invested" in a relatively unknown Bruce Springsteen. As I noted back in April, the electric vehicle (EV) space is the "new zeitgeist." The latest from Ford, and others, provides further evidence to support my contention.
- Tesla Motors (TSLA) released photos of the 2013 Model S. Not only is the car slick, its launch appears on schedule with reservations now being taken in Canada.
- As I reported exclusively on my blog, a mutli-billionaire has, for all intents and purposes, taken control of EVACARO's (EVCA.OB) operations in five southeast states plus Puerto Rico.
- Coulomb Technologies, and other companies, continue to deploy EV charging stations across the country.
- Volvo (VOLVF.PK) offically enters the EV fray.
While each of these stories rank as nothing less than incredibly significant, they pale in comparison to what Ford announced this week. The company intends to triple its EV capacity between now and 2013, going from 35,000 EV sales yearly to more than 100,000 come 2013. Best Buy (BBY) and even Microsoft (MSFT) stand to benefit from Ford's EV push.
From an investment perspective, Ford makes for a relatively confident play on the EV space. If the foray into the electrified arena does not work out, Ford ought to perform well, particularly when you consider the depressed price it trades at today. As the company noted this week, things look bright going forward:
Clearly, success in the EV space would be icing on the cake for Ford. What's more exciting, for the sector as a whole, however, is that EVs could realistically account for close to 2 percent of Ford sales by mid-decade. Based on the above-mentioned 8 million vehicles sold number, 160,000 Ford EVs sold equates to 2 percent. While this does not sound like much, factoring in sales from the other major automakers, luxury players, and the smaller players that survive, makes President Obama's goal of one million EVs sold by 2015 appear more than attainable.
In the above-referenced status report, the Department of Energy points out that, to reach Obama's target, EVs would have to account for an average of 1.7 percent of total light-duty vehicle sales through 2015. It's important to note that supply numbers in that report are already outdated in some instances, particularly Ford's. And, as the Nissan (NSANY.PK) Leaf and Chevy (GM) Volt prove, if you build EVs, people will buy them. Presently, supply is the issue, not demand.
I intend to begin dollar-cost-averaging into F. Some dislike the strategy, but, in all honestly, all of us do not have the luxury of gobs of money to throw into every stock we like right out of the gate. For long-term investments, it's tough to go wrong with picking up shares on a regular basis. I presently dollar-cost-average into Sirius/XM (SIRI), Sprint (S), and Tesla (TSLA).
I also like the idea of selling a F put to assist in the purchase a F LEAPS call option. For instance, as of Thursday's close, you could have collected roughly $0.41 by selling the F August $13 put. You could then use those proceeds to partially offset the $1.79 or so it would set you back to get into a F January 2013 $15 call. Of course, you run the risk of becoming the proud owner of 100 shares of F for each contract you sell at $13 per share if F breaches that level between now and August options expiration day.
Disclosure: I am long TSLA, SIRI, S. I hold a substantial long postion in EVCA.OB. I may initiate a long position in F over the next week.