Electric Vehicle Investing

It's no secret that we're huge advocates of electric and plug-in hybrid electric vehicles.

I've personally been writing about this stuff for nearly a decade now, providing coverage on electric vehicle-related companies like:

• Ener1 (NASDAQ: HEV)

• Maxwell Technologies (NASDAQ: MXWL)

• UQM Technologies (AMEX: UQM)

• Enova Systems (AMEX: ENA)

• Electrovaya (TSX: EFL)

• Johnson Controls (NYSE: JCI)

• and A123 Systems (NASDAQ: AONE)

And I maintain that electric vehicles (EVs) can help us significantly reduce our oil consumption, and if done right, provide millions of jobs for hard-working Americans.

However, despite the EV enthusiasm we're seeing today in the marketplace, I don't believe that electric vehicles can realistically achieve much more than a 3%-4% market penetration within the next ten years. And that's being very optimistic.

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Now this has nothing to do with demand, or the reliability of the vehicles or the battery technology...

In fact battery technology is absolutely going to advance by leaps and bounds over the next decade.

Of course, I realize that battery technology remains to be a major sticking point for those who don't believe that EVs have much of chance. And in all fairness, there are still many challenges ahead when it comes to high performance battery technology.

But it's one thing to objectively recognize technological barriers early on, and work to overcome those barriers.

It's another to dismiss an entire market altogether because the technology is still developing.

If we all adhered to that mentality, we'd still be using typewriters and rotary phones.

That being said, the need to reduce our oil consumption is an urgent one. We don't have time to wait around for an electric car with a 500-mile range and quick charging capabilities at gas stations.

With each passing day — and each barrel consumed — we become more and more vulnerable.

And that's why we're so focused on capitalizing on every potential (and responsible) solution to this problem.

From electric vehicles and next-generation biofuels (using non-food crops) to mass transit, high-speed rail and more walkable communities, we need to responsibly embrace it all.

I would even argue that the continued development of modern-day internal combustion and conventional hybrid vehicles can also play a crucial role in our quest to curb our appetite for oil.

How's 1.8 billion barrels grab ya?

I thought it was disturbingly amusing last year when we watched a handful of bureaucratic dolts on the Hill fighting against the increase of the corporate average fuel economy standard (CAFE) to 35.5 mpg.

Why would you fight against something that helps us curb our oil consumption?

Why would you fight against something that is expected to save 1.8 billion barrels of oil over the life of all new passenger vehicles sold during the five years between 2012 and 2016?

That's more than our 2008 combined imports from Saudi Arabia, Venezuela, Libya, and Nigeria.

Regardless, here we are today — with modern hybrid and conventional ICE vehicles on the market already exceeding, or coming pretty damn close to, those mandated CAFE standards.

Take a look at this top ten list of most fuel-efficient cars of 2010, as reported by the EPA:

1. Toyota Prius Hybrid – 51/48 mpg

2. Ford Fusion Hybrid and Mercury Milan Hybrid – 41/36 mpg

3. Honda Civic Hybird – 40/45 mpg

4. Honda Insight Hybrid – 40/43 mpg

5. Lexus HS250h Hybrid – 35/34

6. Nissan Altima Hybrid – 35/33 mpg

7. Ford Escape Hybrid, Mazda Tribute Hybrid, Mercury Mariner Hybrid – 33/41 mpg

8. Smart fortwo – 33/41 mpg

9. Toyota Camry Hybrid – 33/34 mpg

10. Lexus RX450h Hybrid – 32/28 mpg

And it's only going to get better.

In fact Nissan (NSANY.PK) announced on Tuesday that its latest hybrid offering — a hybrid version of the Fuga sedan — will likely be between 60% and 90% more fuel-efficient than the gas-powered model.

While it won't give you as many miles per gallon as the Prius, Nissan has upped the ante with new operational and design changes that could be integrated into the next generation of hybrids.

For instance, Nissan's hybrid system is about 66 pounds lighter than Toyota's system. Nissan's model also uses one electric motor, whereas Toyota uses two.

And according to Nissan chief engineer Koichi Hayasaki, beyond providing significant weight reduction, these changes provide cost reduction, too, as the Nissan system is just simpler than Toyota's.

As a side note, Toyota is often used as the base comparison, as it is the most fuel-efficient hybrid on the road today.

Everything from advances in battery technology to basic design changes to lighter weight materials will continue to be incorporated into new hybrid vehicles as we move forward..

And with these advances, we will see continued progress in efficiency, continued reductions in oil consumption, and continued opportunities for Green Chip investors.

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

 

Jeff

P.S. Nearly every new hybrid coming to market after next year will be using lithium-ion batteries. But lithium-ion batteries are also being used for utility-scale storage — allowing solar and wind to potentially become providers of baseload power. It's just like coal, but cleaner and cheaper. To learn more about lithium-ion storage — as well as 10 other storage technologies — check out our free Energy Storage Report.