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Assessing Electric Car Markets and Opportunities as a Logical Investor (TSLA, GM, TM)

|Includes: F, GM, NSANY, PEIX, TM, Tesla, Inc. (TSLA)
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Three Part Series Links: Part One Part Two Part Three
Rising Gas Prices To Fuel Electric Car Demand?

As gas prices rise consumers are starting to feel the pain at the pump. Although oil is just now pumping over $100 barrel for the first time since 2008, one thing remains almost certain: oil is poised to have a strong run this summer. Blame it on demand, lack of supply, or Middle East revolutions, no matter what the blame is, it seems oil prices could ignite consumer incentive to look at electric cars. In this three part series we will: 
 

  1. Investigate the case for electric car markets to see if it is even a feasible product.
  2. Identify different companies making progress in the arena.
  3. Present our assertions to the best potential stock investments.
Electric Car Monthly Payments Offset By No Need For Gas!

The Federal tax credit of up to $7,500 for electric car buyers might help induce individuals to make the leap at low gas prices. Some electric car investors are banking on it. However, if gas prices continue to rise, the gas prices themselves could force many individuals to buy an electric car as it makes more financial sense on their budgets. If you are spending $300 a month at the pump, why not buy an electric car and spend $300 a month on a car payment, get a new car out of the deal, and then charge it on electrical outlets for a fraction of the gas price? This is a question I have been asking myself and I am heavily contemplating buying an electric car soon. This is what sparked the idea for this report.

Are Electric Cars Really THAT Much More Expensive?

Many contrarily object to the electric car movement. They say that the prices are out of line with other cars on the road so that the electric cars cannot outsell gas powered cars. One extremely important variable they forgot to assess is the offset of a higher car payment by not having to fuel up at the pump anymore! So if a car is $10,000 more than an equally equipped car (theoretically), your monthly payment may be only $100 to $200 more a month.

oil prices gas pump electric cars Electric Automakers: The Auto Industry Investment For The Next 100 Years (TSLA, GM, NSANY) 1 of 3

Gas Prices Offset Electric Car Premium Prices

The savings in not having gasoline purchases will far surpass this amount if you use the car to drive to work or take family vacations on the road! What the question really comes down to is this: Is the increased in cost for the car on a monthly basis higher or lower than what I am spending per month on gas? What if gas prices fall to $2? You could still be saving money. Better yet though, what if they rise to $5 a gallon, or more? Then your savings is phenomenal!

Electric car companies could then easily charge more money for their cars than gas powered car companies. This will help increase margins and pave a way for the new industry to have immense profits. There could be a lot of opportunities to invest in this new technology! It has tremendous value and potential for profits. This is something that bio fuels and solar-only cars did not have the capability to provide.

Electric Vs. Bio-Fuels and Other Ideas

Ethanol was basically a bust. Investors who snapped up shares of Pacific Ethanol Inc (Nasdaq: PEIX) thinking that ethanol will be the new oil, quickly learned that externalizations can affect the successful adaptation of the consumer to a formidable technology. Pacific Ethanol loses almost $3 per share and trades for $0.69. The stock traded near $50 for some time. The failures of ethanol companies were not largely due to mismanagement, but a case of failed adaptation. The only companies that could really distribute the E-85 fuels to the consumers with ethanol friendly cars are oil companies. The conflict of interest here is what failed to let this technology take root. As an oil company, why would you:

  1. Market a small product that has a small profit potential, that could threaten your entire business and create an alternative competition?
  2. Invest in pumps to provide this new alternative?
  3. Want to do anything with Ethanol as only a small number of cars on the road actually accept it, and the future of the adoption of E-85 is in the hands of politicians, a few patent hungry companies, and flawed in the concept of replacing gas (still 85% gas).
Hydrogen Poised With Same Fate As Ethanol

As you can see, ethanol was doomed from the start. Some companies such as Ford Motor Company (NYSE: F), recently have said hydrogen powered cars may be the answer still. However, then you fall into the big problem of fueling stations that ethanol did. Electric cars can be charged anywhere and at home thanks to electrical power lines being more abundant than gas pumps. Hydrogen pumps would be costly to establish, just like our example of ethanol, and that major bottleneck would prevent it from ever taking off. This further makes us optimistic on electrical automobiles with business in mind. Let’s meet some contenders in this arena in part 2 of 3 directly on our site shaneEdmund.com

Three Part Series Links: Part One Part Two Part Three