Solar Powered Cars? - It's Not As Far-Fetched As You Might Think

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Includes: FSLR, GM, SCTY, SPWR, TM, TSLA
by: Bruce Vanderveen

Summary

Solar power can now power popular EVs.

Why solar eventually may be the most common way to charge an EV.

If it can happen in Texas it can happen anywhere.

EV popularity is growing fast.

How investors can go along for the ride.

At first glance, the idea of a solar powered car seems preposterous. When thinking about solar energy most Americans envision dim stick-in-the-ground landscape lights or expensive rooftop panel arrays sporting questionable economics.

Certainly, they think, the sun could never actually power a car. (Though scientists might note that oil itself originated from the decomposed remains of trillions of tiny marine organisms over several tens of millions of years ago.)

Australian Race Solar Vehicle

Perhaps you have heard about the World Solar Challenge. It's a biennial solar powered race across the Australian continent. Impressive, bizarre looking vehicles powered only by the sun, reach speeds up to 140 km/h (87 mph) over the mostly desert.

Interesting, but who would actually want to own something like that?

Solar power can now power popular EVs

Click to enlargeBut that's not the way it will happen. The Australian race vehicles are not solar prototypes for the family car. Instead, look at the plug-in EVs (electric vehicles) listed below. (The 2017 Chevy Volt is pictured.)

Popular plug-ins priced under $35,000 and capable of carrying at least 4 passengers include: The Chevy Spark (pure electric), Nissan Leaf (pure electric), Ford Focus (pure electric), Volkswagen E-Golf (pure electric), Kia Soul (pure electric), Ford Fusion (hybrid), Chevy Volt (hybrid), and Toyota Prius (hybrid). Hybrids can run on both electric or gasoline but tend to cost somewhat more than pure electric vehicles. For a complete list of plug-in cars see here.

And what do the above cars have in common with solar power? Simply this: All plug-ins can easily be charged with solar panels via chargers.

You might ask, "Is it practical and cost saving?" After all, in the U.S. and most everywhere else, EV charging stations, much less solar ones, are few and far between. And if you do find a charging station, it's likely powered off the grid which probably means the electricity was generated from burning coal or natural gas.

But yes, you can charge any of the above popular, on-the-road-now EVs with solar panels. The car doesn't care how the electricity was generated, coal, natural gas, nuclear, or solar.

One obvious choice for solar EV charging? The EV owner's home. More than a million U.S. homes now have solar panels. Once equipped with storage batteries these solar arrays can charge EVs for free -- something most people will find very appealing. The EV owner uses his vehicle during the day then charges it up at night while he sleeps.

One Volt owner in New Hampshire (not a particularly sunny state) says that on an average day his rooftop solar array produces enough energy to power his Volt for 75 miles. Since Volts are hybrids, drivers can simply buy gas during cloudy periods. Chevrolet expects Volt owners, who charge up regularly (solar or otherwise), will drive an average of 1,000 miles between fill-ups. Now that's something everyone will like (except maybe gas station owners)!

Other likely places for solar EV chargers include places of employment (an employee perk?), shopping centers, restaurants, and medical facilities -- practically any place where you might park your car for an hour or more. You might think of it as topping off the tank (err... battery).

Why solar eventually may be the most common way to charge an EV

It's quite a leap, but I feel solar will eventually be the most popular way to charge an EV. Why? Well the sun shines just about everywhere and it's simplest to pick up the charge from on-site generated power. Why get energy from far away when it's (literally) falling on top of you.

On site solar power generation eliminates the need for the costly, often dangerous, mining and transport of fossil fuels, large power plants, and long transmission lines. Plus there are the obvious environmental benefits and reductions in regulations (we hope).

It may take decades, but I feel that this will be a sea change revolution as the world migrates away from fossil fuels to renewables such as solar and wind.

If it can happen in Texas it can happen anywhere

Recently I visited my brother-in-law in Houston. The Texas culture is big, brassy, and in your face. Everything is larger than life: pickups, billboards, stacked interchange levels, food portions, etc. And why not? The state runs on large quantities of hubris and oil. After all, two of the free world's biggest oil and gas basins, the Permian and Eagle Ford, lie within its boundaries.

So does solar energy, much less solar-powered vehicles, have a future in Texas? Well, the oil, hidden in immense formations underground as it has been for millions of years, is certainly not going anywhere. Yet, above ground, everyday, the sun pours down, hot and relentless. (Those broad-brimmed cowboy hats aren't just fashion statements.) Which, oil or solar, is ultimately the best energy source?

Low oil prices, however, mean hard times in Texas and many of those big pickups are now for sale at bargain prices. With scads of vacant buildings lying along the highways, abandoned in the hot sun, I couldn't help but think how easy it would be to outfit them with solar panels and convert them into EV charging stations. Perhaps a radical thought in Texas, but maybe not. We will see.

EV popularity is growing fast

Above I listed the most economical and best selling plug-ins. Their popularity is growing fast. This year, through June, over 64,000 plug-ins have been sold in the U.S. Forbes notes that in China EV sales are up 164% over last year. Much the same is true for the rest of the world.

EV charging stations too are proliferating. Japan now has more electric car chargers than gasoline stations.

The rise of EVs is an unheralded revolution and it's truly starting now. The big question is: How can investors profit?

How investors can go along for the ride

If you accept the premise of this article -- that solar power will increasingly displace fossil fuel for powering vehicles -- the critical question still is: How can investors profit? It's not an easy question to answer but here are some thoughts.

First, you can ride with a visionary. Elon Musk has thrown his life, passion, and money into two companies: Tesla Motors (NASDAQ:TSLA) and SolarCity (NASDAQ:SCTY). (Tesla offered to acquire SolarCity in June.)

Some of the world's greatest companies have been built by visionaries, Henry Ford, Bill Gates, Steve Jobs, to name a few. Maybe Elon Musk's Tesla will be the next?

With Tesla and SolarCity Musk hopes to lead the world into an energy revolution -- a revolution as big as the industrial one. Musk sees his electric vehicles, batteries, and solar panels as a means to save a world which is, often literally, choking on polluting fossil fuels.

Tesla plans to start production of its Model 3 all electric sports sedan in 2017. The car is expected to have a cruising range of 200+ miles, be mass produced, and sell for around $35,000. Many claim he won't be able to pull it off.

Here is a man who not only thinks outside the box but acts on it. We need people like that, for inspiration if nothing else. Will he succeed? Well, Tesla's critics are legion and they make a good case. However, I remember using the same logic as to why I shouldn't buy Amazon (NASDAQ:AMZN) 10 years ago. So maybe yes, taking a small flyer on the stock could be highly profitable; it also seems like a long shot.

Second, you can invest in solar panel manufacturers. I'm not going into this in depth here as I am preparing an article on which solar companies I consider to be the best. I'm looking closely at First Solar (NASDAQ:FSLR) in utility scale projects and SunPower Corporation (NASDAQ:SPWR) in distributed applications (home and business).

Warning: Profits in the fast growing solar sector have proven elusive to say the least. (See my article on how poorly solar ETFs have performed as an investment).

Finally, here is a conservative option: The large automakers at this point, could be considered as bargains in this high-flying market. Look at: General Motors (NYSE:GM) and Toyota (NYSE:TM). Both have popular EVs, boast single digit P/Es, and are trading well below their 52 week highs.

While potential appreciation in the big automakers may be low compared to Tesla, First Solar, and SunPower they see the light (so to speak) and are fast ramping up EVs production. Yet, GM and Toyota are blue-chip investments and the world will probably give up its love of motoring.

So no, the concept of using the sun to power vehicles is no longer ludicrous. The revolution has started and it will be fascinating to see how it all plays out.

Disclosure: I am/we are long SPWR, TM.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.