Howestreet.com - the source for market opinions

ALWAYS CONSULT YOUR INVESTMENT PROFESSIONAL BEFORE MAKING ANY INVESTMENT DECISION

May 8, 2018 | Why Your Next Car Will Be Electric

Sean Brodrick

Sean is the natural resource analyst for Weiss Ratings. You can read his thoughts on gold, oil, cannabis, uranium and other natural resources at Wealth-Wave.com

You’re going to buy an electric car. Maybe not today, maybe not next week. But soon.

That’s because the electric vehicle (EV) wave is coming, and it is a monster. And a recent development nailed that fact home.

What happened? I’ll tell you. Volkswagen (OTC Pink: VLKAY) just placed orders for EV batteries worth $48 billion. FORTY-EIGHT BILLION DOLLARS! That’s a whole lot of green. Heck, that’s nearly as much as the entire market cap of Tesla (Nasdaq: TSLA).

Volkswagen’s EV battery purchase is so big, it needed three suppliers to handle it:

• Samsung SDI, a division of Samsung Electronics (OTC Pink: SSNGY).

• LG Chemical (OTC Pink: LGCLF).

• And Chinese battery giant Contemporary Amperex Technology.

This means that Volkswagen, the world’s biggest car maker, is serious about EVs.

You know that this company knows how to make cars. And make ‘em fast. It’s going to leave Tesla in the dust. And it’s not the only one. GM, Toyota, Ford and more — they’re all taking the turnoff onto the EV highway.

To be sure, I told you about this back in August. At the time, I recommended the Global X Lithium ETF (NYSE: LIT). And how much has LIT gained in that time? Oh, just 5.59%.

Wait! How is that possible? If the EV revolution is this massive megatrend?

Well, LIT is up 5.59% — but it didn’t go in a straight line. Up — down — up — down — up! It’s the kind of winding road that would make you driving-through-the-Bavarian-Alps carsick.

Nonetheless, LIT is trading near its lows. The entire EV industry, lithium included, is cranking into higher gear.

And if you want to buy something on a wild ride, you buy it near the lows.

Now, why do I say that you are going to buy an electric car? Maybe you don’t like that idea. EVs are too short-ranged … charging takes too long … they’re too expensive. And you’re no granola-crunchin’, Birkenstock-wearin’, hippy-dippy tree hugger, that’s for gol-dang, sure. There’s NO WAY you’d buy an electric car.

Well, what if I told you …

EVs Keep Getting Cheaper

The big price of these cars is the battery. And the price of EV batteries is falling like a rock, as this chart from Bloomberg shows.


Click image for a larger view.

Batteries account for about half the cost of EVs. Their prices will fall by about 77% between 2016 and 2030. And the price of an EV should be about the same of an internal combustion engine (ICE) powered car around 2025.

And 2025 ain’t that far away!

But what if the price of lithium and cobalt go higher? Doesn’t matter. Advancements in efficiency and construction will make the batteries cheaper anyway. Combine that with improved efficiencies on the vehicle assembly line, and yeah, cars will get cheaper.

And you know who knows how to make cars efficiently? The Germans! Volkswagen is going to kick Tesla’s butt on this point.

So, yeah, EV cars will get cheaper.

EV Range is Improving

The Tesla Model S has a range above 337 miles. But if $75,000 for the base model is too pricey for you, your average EV has a range nowadays of at least 100 miles. That’s good enough for everyday driving.

It’s going to get better. Battery makers and car manufacturers are competing to at least TRIPLE the average range of EVs. Tesla, Toshiba, Panasonic and Samsung are all boosting ranges to 200 miles … 600 miles … potentially more!

And maybe sooner than you think. The Fisker Emotion is set to roll into showrooms next year. It can reportedly travel 400 miles on a single charge — and recharge in just nine minutes.

And Toyota plans to roll out a “solid state” EV battery in 2020. That should have a range of 300 miles. Meanwhile, Toyota is working with Honda on the next-generation solid-state lithium battery. That should have a range of 500 miles, and debut in 2030.

That’s all fine. But who wants to spend 30 minutes charging up your EV? That’s the average charging time. A Tesla Supercharger station takes about 20 minutes to charge a car to 50%, 40 minutes to charge to 80%, and 75 minutes to charge to 100%.

Charging Times Will Drop

Well, that’s changing, too. And guess who’s helping lead the way on that? Volkswagen!

Volkswagen’s subsidiary, Electrify America, is working with Walmart to roll out fast electric vehicle chargers at 100 locations across 34 states by the summer of 2019.

In other words, next year!

The new chargers pump between 150 and 350 kilowatts of electricity. That lets customers to charge up 20 miles of battery range per minute. And that’s seven times faster than the charging rates of 50-kilowatt DC chargers.

Now, it’s not superfast — yet. But those super-fast chargers are coming. In fact, all the major auto and battery makers are working on ways to charge your EV in 10 or 15 minutes.

So, to recap: EV costs are going down … ranges are increasing … and charging times will drop.

At that point, your only reason for not buying an EV is because you’re an old cranky puss. And believe me, I understand that argument. I see an old cranky puss when I look in the mirror every morning.

And I’m sure some ol’ cranky pusses held onto their horses and buggies as those newfangled gasoline cars started puttering down the roads. And the old guys shook their fists and swore they would never, ever, buy one of those gasoline-powered demon machines.

But times change. And change isn’t always terrible.

The road sign up ahead says, “Get ready to buy an EV.” And buddy, that sign is meant for you.

All the best,
Sean

STAY INFORMED! Receive our Weekly Recap of thought provoking articles, podcasts, and radio delivered to your inbox for FREE! Sign up here for the HoweStreet.com Weekly Recap.

May 8th, 2018

Posted In: Wealth Wave

Post a Comment:

Your email address will not be published.

All Comments are moderated before appearing on the site

*
*

This site uses Akismet to reduce spam. Learn how your comment data is processed.