Editors' note: This article is meant to introduce the new Marketplace service from Long Term Tips, The EV Supply Chain.
As the world has grown to scorn large sources of greenhouse gas emissions, greener alternatives have taken the spotlight. In the automotive industry, this has meant a shift toward electric vehicles (“EVs”). My new service The EV Supply Chain aims to capitalize on that shift in a bit of an unconventional way. I will focus on EV suppliers, though a shift to incorporate EV manufacturers later on in my service is likely, especially if members request it.
I began monitoring the emerging market for cleaner cars in 2017 when most analysts were predicting Tesla’s (TSLA) downfall. Since then a lot has changed. The small EV startup has since become the most valuable automaker in the world and I rode it, and others’ coattails, to a 300%+ return. My devotion to this sector is unique and is what I attribute to my success. I have a head start on most other investors in the sector and my service will let those who may not know a whole lot about intricacies, such as lithium mining or different battery chemistries, share this head start. As the transition to EVs has evolved from a matter of “if” to “when,” members of The EV Supply Chain will be best positioned to maximize their profits from the change.
When
It’s easy to look at Tesla’s meteoric rise and say that the EV boom has come and gone, new investors are climbing aboard a slowing train. While this could be true for Tesla, everyone else is just getting started. I’ve compiled a list of all of the major commitments made for the production of EVs.
Volkswagen (OTCPK:VWAGY) has committed $91 billion to EV development
General Motors (GM) has committed $27 billion to EV development through 2025
Daimler (DDAIF), the inventor of the combustion engine, will halt development of their gas and diesel-powered engines in order to pursue EVs
Ford (F) has committed $29 billion to EV development through 2025 and will be fully electric in Europe by 2030
The United States has recently announced a $174 billion investment to encourage greater EV adoption
IHS projects a 53% CAGR for global EV sales through 2025, representing ~20% of total cars sold in 2019
The UK will ban dedicated combustion-powered vehicles by 2030, followed by hybrids in 2035
Multiple EU countries plan to ban combustion-powered vehicles by 2032 or sooner
More comprehensive lists from the likes of Car and Driver and Consumer Reports include even more large automotive commitments, but I wanted to keep this fairly concise and I believe the point has been made. The point being, over the course of this next decade, EVs will become far more popular than they are today and as they take shape as the future of the automotive industry. So if the manufacturers are the ones bringing the future, why not invest in them?
Why Suppliers?
First, there's a great deal of uncertainty about which automotive companies will emerge from this transition successfully. Automotive manufacturers will need to alter their products tremendously in order to appease their changing market, while suppliers are just creating new iterations of their existing products. This greater degree of security that exists with EV suppliers is something that's unavailable with the automotive manufacturers.
Secondly, investors should consider the market that both EV manufacturer and EV supplier will be competing in. While automakers don’t really have much room for growth, EV suppliers are about to enter a period of extreme market growth. The core product that automotive manufacturers are selling isn’t changing, an electric car is still a car and just as many people need cars as before, but companies producing the batteries, or mining the lithium, to power those cars will see tremendous growth in demand.
My Research Focus
As my name suggests, I’m keen to find long-term investment plays that have the potential to generate strong returns through sharp growth. This focus is what drove me to the sector in the first place. In the sector, I tend to focus on companies that are preparing themselves well for the future. As I keep saying, this is a sector on the move, so a leader today might not be one tomorrow if they don’t continue to innovate.
Another joy of mine is finding undercovered companies and shining a light on them. This couldn’t be exemplified better than through my recent publication on junior lithium companies. Finding an undercovered company in a sector that has suddenly got millions of eyes on it and billions of dollars pouring in is a challenge, but a challenge that my service will alleviate for subscribers. These undercovered companies have the most room for growth and finding them is what I believe to be one of the most valuable aspects of my service.
I don’t have a particular method for finding these companies, rather I have come to experience that by simply consuming large amounts of media in the sector, or perusing chat forums, I can discover a few hidden gems. Not all unknowns are good companies, far from it, and it's my job to sift through the muck to see which ones are worth investing in. Eliminating this time consuming-process for my readers, which utilizes my experience and connections in the sector, is something that I feel is rather valuable.
One such example of this is Lithium Americas (LAC). Lithium Americas was the third company that I ever covered on Seeking Alpha, back when I started in late 2018. I happened across the company when I was reading about Tesla’s Nevada Gigafactory and the article made brief mention of a nearby lithium mine under construction. Since publishing that first article, the company has risen more than 280%. If you’re interested in learning about the company or just getting a taste of the typical style of these types of articles, I’d recommend reading this more recent article of mine covering the company.
Member Benefits
To kick things off, understanding that many of you may be unfamiliar with this unique sector, I’ve created a series called “The Basics.” This series is my way of getting all of you up to speed on the EV supply chain, teaching you everything you need to know about the sector. Two articles in the series already are live and I will publish a third within the first week of the service being live. My community will have the ability to drive the focus of these articles moving forward, making sure that I cover all relevant topics. My hope is that this series will allow me to condense years of research learning about the sector into just a handful of articles.
Investors also will have access to an exclusive portfolio that I’ve constructed. The portfolio currently has 14 companies under its management, but holdings will grow to reflect my content as I expand my coverage. Unfortunately, due to the nature of this sector, the majority of companies are not traded on US exchanges. The portfolio was finalized on April 1 with a net asset value of $100,000. I will not add any more capital to the portfolio, in order to quantify the value brought by the service, but it will be actively managed.
Beyond the uploads of articles for “The Basics,” members can expect actionable advice and thorough research papers. My niche focus allows me to explore all of my ideas in incredible detail, providing more value per piece and ensuring that I'm highly knowledgeable of the topic at hand. As the only Marketplace service focused solely on the EV supply chain, this community will be the go-to place for high-quality analysis of this emerging sector. My articles are the bread and butter of the service, giving members access to the research and insight that has made me successful in the sector.
The last thing I would like to highlight is the chat room that will be available upon becoming a member. The chat room will offer a place for members to discuss ideas with one another, myself included, and offer a way to take my research a step further. This also will serve as a less formal way for me to interact with the community, perhaps offer insight into what my current research is focused on or what my next idea is. Shorter ideas that may not warrant an article themselves may also be posted here.
To sum it up, members will get access to:
An actively managed portfolio
Thorough analysis with actionable advice
An active chat room
Full access to any of my past, present, or future ideas
Special situation alerts
Ability to discuss investment ideas with me
My Future Content on Seeking Alpha
A big part of the value proposition here comes from exclusivity. This means that my coverage on Seeking Alpha’s free site will change. I will no longer publish research covering the EV supply chain to Seeking Alpha, but all else will remain the same. I plan to continue to cover the EV trend via the manufacturers themselves and continue to write about whatever else interests me. I also will post the odd article from my service, though they will be published at least a month after their original release on The EV Supply Chain.
Join Now!
The first 10 people to sign up for an annual subscription will receive a 15% legacy discount. The current price of $245 for a year-long membership will be raised to its regular price of $290 following this milestone. Monthly subscribers will pay $35, an annual fee of $420. I want to encourage investors to join me for an extended period so that they can experience the most of what my service has to offer, taking advantage of an industry on the rise.
For those who are hesitant to commit to something they haven’t yet experienced, a two-week free trial is available. I encourage you to try it out to get a feel for what a subscription would entail. Feel free to shoot me a direct message, or leave a comment, with any questions you have and I’ll do my best to answer them in a timely manner.
