A saying that goes back to the days of the California gold rush goes like this. When everyone is digging for gold, the best business is selling picks and shovels. Today there is “gold” in the electric vehicle realm. The entire automotive sector is moving toward electric vehicles which are cheaper to run and maintain than vehicles with internal combustion engines. Because a wholesale switch to electric vehicles promises to make a dent in global warming there are also tax incentives for folks who buy these cars, buses, and trucks. For the investor the question is where to put your money in this investment niche. Here we make our pitch for investing in practical aspects of EV technology more than in a specific automobile manufacturer like Tesla or GM.
Investing In Suppliers In the EV World
Individuals who are thinking of buying an electric vehicle commonly have a few valid concerns. One of them is the issue of recharging their vehicle after one use and before the next. If you commute to work and can charge your car during the workday that will be just fine. And, if you can charge your car in your garage overnight that works too. But it is summer and you promised your spouse and children a road trip after the prolonged Covid pandemic made everybody stay at home. You are used to pulling into a gas station and “gassing up” in a few minutes. With your electric vehicle will you need to stop for lunch every time you need to recharge? According to Pod Point it can take anywhere from 30 minutes to 8 hours to fully recharge an EV battery depending on battery size and the capacity of the charging station. This fact provides an investment opportunity in the EV niche.
Investing in Fast-charging EV Batteries
The New York Times reports that next generation battery technology is evolving and the technology is going into the manufacturing stage. The goal is to efficiently and cost-effectively produce electric car and truck batteries that can fully charge in minutes instead of hours. Startups are working on perfecting manufacturing techniques. Experts say we are probably years away from these super-batteries being available in moderately priced cars. When that happens it will make electric vehicles even cheaper to operate than vehicles with internal combustion engines. And it will take away the inconvenience factors that currently deter buyers who might otherwise buy an electric vehicle. A silicon valley battery maker, QuantumScape, is working on how to produce defect-free batteries of this type routinely and uniformly.
Investing for Electric Vehicles with More Horsepower
In our article about investing in the electric economy we wrote about the use of silicon carbide instead of silicon in traction converters in electric vehicles. The high band gap of silicon carbide allows for vehicles that use this approach, like the Tesla model 3 to accelerate like “muscle cars” making them attractive to buyers and in many ways safer for necessary things like passing a slow-moving vehicle and returning to your lane of traffic quickly. In our article we noted that Wolfspeed is working in this niche.
Benefits and Risks of Investing in the EV Supply Chain
The obvious benefit of getting in on the ground floor of businesses that will supply a growing market is that the value of your investment will benefit as the sector matures. A possible downside is that a change in basic technology used in the sector can strip away the value of your investment overnight. As such, it is often a good idea to look for two or three investments in this sector to hedge your risk as well as to increase your range of opportunities.
Investing in Practical Aspects of EV Technology – SlideShare Version