Electric Vehicle Investing Opportunities

Bipartisan support.

It's the elusive beast that's seen about as often as the chupacabra.

And when it does make an appearance, it's usually in regards to congressional pay raises or to maintain a system where special interests sit at the VIP table while hard-working Americans get stuck with the bill.

But yesterday, we did see some broad bipartisan support on something that I didn't really expect at all...

The Promoting Electric Vehicles Act (PEVA)

Intended to pony up about $3.9 billion over 10 years to build electric car charging infrastructure, conduct research, and provide incentives, PEVA was voted out of committee and will now be scheduled for a vote in the Senate.

Of course, as with anything in Washington, there's good news and bad news.

The good news

It's pretty simple...

Anything that enables us to decrease our oil consumption is a good thing — for the economy, for the environment, and for the sake of national security.

I don't think you'll get many arguments on that.

And of course, any support on the Hill for electric vehicle integration is good for all those electric car and high-performance battery stocks, like Tesla Motors (NASDAQ: TSLA), A123 Systems (NASDAQ: AONE), and Ener1 (NASDAQ: HEV).

Whether or not you're an investor, more electric vehicles on the road equates to a stronger, cleaner energy economy.

And that benefits everyone.

The bad news

First of all, there seem to be quite a few overzealous policy makers in Washington who are being unrealistic in regards to how many electric cars we can get on the road within the next 20 years.

The goal, as I understand it, is to electrify half the country's cars and trucks by 2030.

I'm about as optimistic as they come when discussing the potential of electric vehicles. And I'm not saying that such a goal is impossible to reach...

But $4 billion for this program, no price on carbon, and exceptionally low gasoline prices — thanks to continued oil subsidies and a complete disregard for the liquidation of natural capital — will make this goal very difficult to reach.

I've had the opportunity to talk to a lot of experts in this field. And I've yet to meet one who believes we can electrify half of the country's cars and trucks by 2030 if gasoline prices continue to stay so artificially low.

Of course, that being said, the reality of peak oil and its effect on gasoline prices could force me to eat a huge plate of crow. And I'll be happy to dig into that!

Another issue that can't be disregarded is the simple fact that there will be opposition to this bill.

There will be the obligatory “this is just more spending of tax payer dollars” argument. (Although $4 billion over ten years is peanuts compared to the $44 billion we spent to protect the oil supplies of the Persian Gulf in 2007 alone.)

I guess when talking about tax dollars, it really all boils down to priorities.

Another argument is that the bill only targets a small group of communities and would not be deployed nationwide.

Why should federal dollars only be targeted in certain regions, but not in others?

In theory, I actually understand this argument; but in practice, I don't know if it's valid.

Aside from South Dakota and Alaska, I've had the great privilege of visiting every state in the nation...

And I can tell you that you're going to have a lot more luck with the large-scale integration of electric vehicles in places like Los Angeles and Washington D.C. than you will in Biloxi or Casper, Wyoming — a place where limited-range electric vehicles wouldn't even make much sense.

Of course, there are plenty of folks in these regions who do own conventional hybrids. And I think that in our race to electrify our vehicles, we shouldn't completely disregard the impact that conventional hybrids can have on our oil consumption.

While you may not see a lot of Nissan LEAFs next year on Highway 10, Toyota (NYSE:TM) Priuses are already quite common in the Equality State.

And as conventional hybrid prices continue to fall, we'll likely see even more hybrids on the roads going forward.

Heck, Ford actually just came out today with an announcement that it will now sell its hybrid version of the 2011 Lincoln MKZ sedan for the same price as the gas-powered version!

Granted, it's still a pricey vehicle, coming in at around $35,000... But if you're going to pay that much for the car, wouldn't you rather have the model that gets better mileage?

While the gas-powered version of the MKZ gets 18 mpg/city and 27 mpg/highway, the hybrid version delivers 41 mpg/city and 36/highway.

Not bad.

Overall, it's refreshing to see some bipartisan support on this electric vehicle bill. But the need to curb our insatiable thirst for oil is an urgent one.

And this bill must be just one of the many efforts we take as a nation to transition our energy economy.

To a new way of life, and a new generation of wealth...

 

Jeff

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