Every once in a while one of two things occur that personally exhilarate me. One, I read something that I don't completely agree with (or at least don't want to agree with), yet I walk away from it wanting to praise its author for a job well done. And, two, my seven years or so of schooling and research in urban studies and planning pays off in the work I do now.
When these two events merge to help me construct several points I have been wanting to make, as they did the other day, it's tough to control my excitement.
As Seeking Alpha contributors go, they do not come much better than John Petersen. Practically every article he writes challenges my assumptions. That's what it's all about - consuming information that prompts you to reevaluate where you stand. Petersen's latest article - Hydrocarbons, Industrial Metals and the Alternative Energy Fallacy - not only triggered self-critical waxing, it brought up in me several points I should have been making all along as I promote the electric vehicle (EV) space as ripe for investment.
First, consider several paragraphs from Petersen's article that sum up his take on the alternative energy and EV industries.
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While I do not necessarily agree with Petersen's assessment, it's authoritative and well-stated. It's hard not to respect the man and allow his opinions to influence your own. Petersen's ability to cogently state his strong convictions gives me an opportunity to clarify my own.
I do not suggest an investment in the EV industry on the basis of any sort of feel-good, do-good, environmental or political agenda. Truth be told, I absolutely hate cars. I don't care if they run on gasoline, natural gas, corn or use electricity. I scratch the surface on this point in a recent Seeking Alpha article:
The car culture that permeates the U.S. perpetuates the notion that Americans should be able to drive whenever, wherever, however and whatever they want, unabated. In fact, contrary to much of the rest of the West, Americans have come to expect government to facilitate their obsession with incessant driving and gas-guzzling SUVs. You'll be hard-pressed to hear a yelp about subsidies for highways (thanks to a relatively non-existent gas tax), but any discussion of favoring EVs over SUVs or complete streets over parking spaces sparks outrage ...
Every once in a while, government needs to step in to save "free-thinking" people from themselves .... Turning crude into gasoline isn't working out for us - structure the system where one day Americans will have no choice but to opt for a fuel-efficient vehicle. It could be worse, really. The government could ask you to walk or bike and leave the car at home, but, of course, the political will for such common sense lacks in Washington.
I have long written about the ills of car culture, here and in various forums. I used to speak out in more of an activist role. At day's end, I vote for EVs for the same reason I voted for Obama - they represent the lesser of two established evils - car culture and partisan politics - that will not change anytime soon. In and of themselves, I would never invest money in EVs or Obama. Instead, I invest in the story that underlies each.
If Obama were a stock during his election campaign, I would have loaded up. It's akin to taking the opportunity, if I could, to buy private shares of Facebook. I dislike Facebook. In fact, I think it will die a not-so-slow death shortly after going public, but that really does not matter. Like short-lived Obama-euphoria, the story that carries Facebook - it's popularity and omnipresence in our daily lives - makes it a worthwhile investment.
EVs present a similar "storybook" opportunity, if you will. While I do believe that EVs represent a better environmental bet than the internal combustion engine, I could be swayed to think otherwise. Frankly, I'm not sure we'll ever know whose on the "right" or "wrong" side of that debate. And I do not think it matters all that much from an investment perspective.
As I noted, I hate cars. They're dirty even when they're "clean." They kill people daily. They litter our built environment. And they render much healthier and more social forms of transportation - walking, cycling and public transportation - less than pleasant activities in most parts of the country. As an investment, however, I think the future of the auto industry is bright.
One way or the other, the government will ensure EVs succeed, even if it's not the best economic or environmental move. The government should ask Americans to make concessions. It should ask them to change the way they live and behave, but it will not do such a thing. First of all, it's politically unpopular to challenge voters to do anything other than what they want to, even if the status quo is ill-advised. And it's not profitable to scale down everyday life. Enter Petersen again, one of the few writers to bring common sense into this whole discussion, as he lists much better ways to right many of the wrongs backers think EVs will take care of:
I put one red mark next to the ideas I love and two red marks next to the ideas I really love. In urban planning circles, we've been spouting off about these things for a long time. I have come to terms with a simple fact - most of them will not happen on a large scale until they absolutely have to. We live in a country that loves the status quo. Plus, we're pretty lazy and self-entitled. We want to live life they way we want to live it regardless of what it does to others as well as our surroundings or pesky other things like natural resources and the planet.
When the government and the general public continues to rebuke actual viable suggestions for change (see Petersen's list), yet appears to get behind (a lot for the government and a little for the general public) something like EVs, you ought to jump on board. Over the next five years, EVs will be the zeitgeist, for better or worse. You do not have to be politically-aligned with those who advocate them. You do not have drive one. You do not even have to think they will work or make sense. At day's end, embarking on the EV project holds more profit potential than striping bike lanes and asking people to walk, cycle and ride transit instead of blowing 35-grand on a new car.
Regardless of what it might do to the earth, large companies, ranging from Ford (NYSE:F) to General Motors (NYSE:GM) to Toyota (NYSE:TM) to luxury niche providers like Tesla will produce, market and sell EVs. The government will subsidize and promote them. People will buy them. Some will even feel good about themselves and get all sanctimonious in the process. This scenario is no more dysfunctional than the one we've been in for decades with gasoline-powered vehicles.
I don't pay much attention to the noise. I pay attention to the story. On that basis, I think the EV space will generate considerable returns for investors over the next five to 10 years. That said, the moment I sense the story changing (I don't think it will anytime soon), I will drop the space like a bad habit. I'm hardly emotionally attached to anything on four wheels that nearly runs me over every time I hop on my bicycle or try to cross the street.
Disclosure: I am long TSLA.