Smart Electric Car Investing
Game Changer: The 600-Mile Electric Car
It didn't take more than ten seconds for the beads of sweat to start rolling off my forehead.
It was last Thursday, and with the heat index, a crushing 114 degrees of sticky Baltimore soup blanketed the city.
Had I not scheduled a lunch with a former engineering professor that day, I doubt I would've left the climate-controlled comfort of my home office. But this was not a meeting I had any intention of missing...
You see, as someone who has helped thousands of investors make a ton of dough in alternative energy, I know that the best intel does not come from sitting behind a row of computers all day.
The truth is, every single big score I've ever pulled off for my readers has always come after I've uncovered some new development by interviewing the guys behind the scenes. I'm talking about chemists, engineers, even physicists — not Wall Street mouthpieces.
When I want to know about new solar technologies, I'm not interested in what the investor relations reps have to say; I want access to the labs and the universities. That's where the good stuff is.
So when my former engineering professor told me he was going to be in Baltimore last week to consult on a new electric propulsion project for some German investors, I immediately invited him to lunch.
You see, over the past decade or so, every time I met with this guy, he clued me in on some exciting new technology. And because he's a huge energy geek, it almost always had something to do with new energy technologies.
He was the one who first told me about thin film solar — about three years before thin-film leader First Solar (NASDAQ: FSLR) went public. It was his insight that led me to tell readers about this company after it debuted in 2006 at $24.50...
Two years later, the stock catapulted to $311 a share.
He was also the one who first told me about the connection between microturbines and natural gas development; following our conversation in 2007, I told readers about a little $1.00 microturbine play called Capstone Turbine (NASDAQ: CPST)...
That stock flew past $4.00 a share in the summer of 2008.
The point is when this guy talks, I listen. And last week, I got an earful about the future of electric cars... and some of the technologies that'll be leading the way.
Give the Customer What He Wants
Most electric vehicles on the market today — or coming to market within the next year or two — deliver an all-electric range of at least 100 miles. And this is more than sufficient for daily driving (for more than 70% of the U.S. driving population).
But there are still plenty of folks who are hesitant to buy an electric car because they're worried that at some point, they'll be in a situation where they'll need more than 100 miles — and they won't be able to get it.
This fear creates a serious hurdle for electric car manufacturers.
So what's the solution?
Well, I've always believed that electric vehicles were never really intended (at least early on) to be used for long-distance driving. Daily commutes, yes; long road trips, not so much.
But my professor, who has consulted on dozens of electric vehicle projects for both small startups and major car manufacturers, reminded me of a very basic principle: You have to give the consumer what he wants.
If the consumer wants an electric vehicle without range anxiety, that's what you give him — even if that range anxiety is a bit irrational.
So how do you do that?
You provide two things: a vehicle with a much longer all-electric range and quick-charge stations that are just as easy to find as gas stations.
And this is exactly what the car-buying public will have access to in less than 20 years' time.
Getting to 600 Miles
When it comes to increasing range, it's all about squeezing the most mileage out of your battery as possible. Part of this will be accomplished with new battery technologies.
As he pointed out, you have to remember that when you look at a high-performance electric car battery today, you're looking at something that'll be obsolete in ten years, at least in its current form.
The electric car batteries of the future will come in all kinds of new shapes, sizes, and chemistries. And there will be no dominant chemistry until much further down the road because there's still much progress to be made.
Can you imagine if you were still using the same computer or cell phone you were using 20 years ago? Talk about obsolete!
Lithium will still play an important role in these batteries, but so will zinc and vanadium. And new chemistries that utilize cheaper or better materials will spark the kind of competition the marketplace desperately needs. That kind of competition will drive down prices and increase reliability and efficiency.
Engineers and chemists are actively testing electric car batteries right now that utilize some of these new materials and chemistries. They're getting between 500 and 540 miles per charge — and that's based on electric drive systems and frames that are being used in the marketplace today...
In ten years, there will be some major upgrades here, specifically with regards to weight.
In fact just last week, we got word that the DOE ponied up a $730 million loan to a steel manufacturer in Michigan. This steel manufacturer is building new factories that will produce an advanced high-strength steel that can cut a vehicle's weight by ten percent without sacrificing safety. Using this steel in the construction of conventional internal combustion vehicles would allow for an annual gas savings of 30 million gallons.
But for electric vehicles, this is an even bigger deal, as any decrease in weight offers a substantial increase in range. Although I was told this steel is only part of the weight reductions, we'll soon see.
New lightweight carbon fiber technology will also find its way into the mix as the shell of vehicles. This is the same stuff used by Formula One drivers; it could cut an additional 7 to 10 percent off the total weight of the vehicle.
By getting a 15 to 20 percent total reduction, you allow for a significant boost in range — as much as 50 to 70 miles, according to the earliest estimates. And a new baseline range of 600 miles is expected in less than ten years...
But then what?
Topping Off the Tank
Even with a 600-mile range, without a place to charge, you're still limited to 600 miles.
This is no good if you're on a long road trip or an extended weekend getaway.
We already know of a number of companies developing charging stations: GE (NYSE: GE), Siemens (NYSE: SI), and ECOtality (NASDAQ: ECTY) are the big names today. But we're only now starting to see a worthwhile rollout of these charging units.
I asked my former professor how long-range electric vehicles could gain any traction if it ends up taking 50 years to get enough charging stations set up across the nation. His answer surprised me...
While charging stations and electric vehicles seem to be a chicken-and-egg conundrum, I was informed that for every electric vehicle sold in the United States, by 2015, there will be two public charging stations within a 200-mile radius of each electric vehicle driver's home. And that doesn't include the charging that'll be done in that home.
Also worth noting is that by 2025, about 90 percent of those charging stations will use quick-charging technology that'll give your battery an 80% charge in about 20 minutes. He said it could be even quicker, depending upon how safe and efficient some of these new chemistries will be...
Maxwell Technologies (NASDAQ: MXWL)
While we still have to wait another eight to ten years before much of this stuff comes to fruition, there is one technology that's available today, is being used today, and can offer us an opportunity to make a few bucks — today.
I'm talking about ultracapacitors.
These things continue to gain in popularity thanks to their ability to increase battery life and enhance power density. They are helping to up the fuel economy ante for conventional hybrids.
Although electric vehicle development is well underway, the demand for increased fuel economy cannot wait a decade. That's why every major auto manufacturer on the planet today is pumping out hybrids to meet that demand.
Toyota has claimed its entire fleet of cars will be hybrids by 2020. And its hybrid claim to fame, the Prius, will be a plug-in hybrid electric vehicle starting in 2014.
This is some serious development. And you better believe ultracapacitors are going to play a major role in this development...
So if you're looking for an ultracapacitor play, check out Maxwell Technologies (NASDAQ: MXWL).
The company's ultracapacitors can already be found in hybrid-electric buses, trucks, cars, and electric rail vehicles, and it's becoming a major player in the development of new hybrid and electric vehicle drive trains.
Maxwell releases Q2 earnings this Thursday, so keep an eye out for that. In the meantime, you can read more about the company here.
To a new way of life, and a new generation of wealth...
Editor, Energy and Capital