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Electric Vehicle Investment

Colin Powell's Electric Car

Written by Jeff Siegel
Posted September 4, 2011 at 8:00PM

A few years ago, I attended a fundraising meeting for Fisker Automotive.

This is the company that's just delivered the Fisker Karma, the world's first pluge-in hybrid electric luxury car.

fiskerNow although I did not partake in the early raise, I have no doubt those who got in first will walk away with a nice little profit.

And quite frankly, it's an absolutely beautiful car...

In fact, when it comes to luxury cars, I think the Fisker Karma is one of the most impressive pieces of machinery I've seen a very long time.

And of course, I wish nothing but success for the company — after all, Fisker is the reason there are 120 less out-of-work Americans today. Those folks will be staffing an old General Motors plant in Wilmington, Delaware.

All in all, it's a great company with a great product.

But to be honest, I've never been all that interested in high-end luxury electric cars — at least, not from an investment standpoint...

Instead, I'm more interested in the development of electric vehicles for regular middle-class folks.

The fact is, these are tough times. And as we head further into the vortex of Peak Oil, it's not going to get any easier for struggling middle-class families that rely on their gas-guzzling cars to get them to and from work and school every day.

While the Fisker Karma is beyond impressive, I'm looking forward to seeing the regular guy's electric car: a vehicle that can boast the same swagger as the original Ford Model T - affordable to the common middle-class American.

A Model T Moment

Thanks to Ford's innovations (specifically, assembly line production), 15 million Model T's were produced and sold in less than 20 years.

In less than two decades, the Model T replaced the horse.

Of course, when Henry Ford first started laying the groundwork, he heard time and again that the horse could never be replaced by an automobile. In 1903, the president of the Michigan Savings Bank actually told Ford's lawyer the automobile was merely a novelty, a fad.

Today, we are at the cusp of a similar transition, moving from outdated internal combustion technology to hybrid and electric propulsion technologies. And there are plenty of folks today who have about as much wisdom as that old bank president in Michigan more than a century ago...

They're looking for every excuse in the book to criticize the very real disruptive power of electric cars. I suspect folks like these will continue to carry on about it. But that's of no concern to us. Because the bottom line is that no matter how you slice it, the transition to hybrid and electric propulsion is already underway.

It will be a necessity in a post-Peak world, not a cute little side project for tree huggers and wealthy eccentrics.

And there isn't a damn thing the detractors can do to stop it.

The Proverbial Middle Finger

While the first Fisker Karmas arrive for those who got in line early — former Secretary of State Colin Powell and insanely wealthy actor Leonardo DiCaprio, just to name two — the major automakers are grinding away to get their "less flashy" electric offerings out the door as well.

The Chevy Volt and the Nissan LEAF were the first to hit. Both are nearly impossible to get your hands on as there is limited supply to meet demand: Fleet operators got first dibs, and the remaining inventory was delivered to those who put down their deposits nearly two years ago.

Both GM and Nissan are plugging away to get these vehicles into the hands of the innovators and early adopters that will put these vehicles through their paces.

Meanwhile, Mitsubishi's “i” will be available in the U.S. market next year, as will the Ford Focus Electric. Beyond that, there's essentially a conga line of new electric offerings coming out over the next three to five years from every major automaker on the planet...

And every year, they'll become less and less costly to produce — getting us to the point where the average middle-class American can afford to buy one, and then happily give the proverbial middle finger to every hostile oil-producing nation that's got us by the ball bag.

Growth is Good!

If you had a chance last week to read my new free monthly letter, Modern Energy Monthly, you saw that the latest data from Pike Research indicates a 19.5% CAGR between 2011 and 2017 for vehicles in the “electrified” vehicle category. That figure compares to 3.7% for the overall vehicle market during the same time period.

And for charging infrastructure, Pike has forecast a total of 7.7 million electric vehicle charging locations across the globe will be operational in just about five years. (That doesn't include electric outlets already in garages, driveways, or near parking spots.)

When we first started covering the electric vehicle market, we focused most of our attention on the high-performance battery companies. And we did quite well by hitting that angle early. We also played a few lithium producers, which made us a nice chunk of change.

But when looking at the electric vehicle market today, we're focusing our attention on the infrastructure — more specifically, charging infrastructure.

A 56% Gain in Less Than Two Months

A few months ago, I wrote about charging infrastructure and touted a company called ECOtality (NASDAQ: ECTY).

At the time, the stock was trading around $3.20 a share. By the end of May, it catapulted to $5.24, flying past our initial price target of $5.00.

Most who played this stock cashed out after it crossed the $5.00 mark for a 56% gain in less than two months. Not too shabby!

Of course, after an 8.5 million share offering at $2.50 and a broader market nosedive, the stock fell hard. Today it trades for just about $2.00 — a nice discount for those looking to play this one again for another quick ride.

The company remains solid (thanks in some part to the sizable stake ABB (NYSE: ABB) took earlier this year) and continues to install a significant portion of all new charging stations across the country. In the second quarter, the company installed 1,892 chargers.

For Q2 2011, the company boasted 40% growth in revenue while booking new deals with car2go (a subsidiary of Daimler North America), American Electric Power (NYSE: AEP), which landed a deal with Wal-Mart/Sam's Club to install ECTY's stations, and Sears Holdings.

And of course, the company is still fulfilling its 11,000 charger order for the DOE-supported EV Project that's deploying infrastructure in 18 major cities...

Bottom Line: ECOtality is the only pure electric vehicle charging play that's generating revenue and actively building out its network.

And at $2.00, it's a bargain.

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

Jeff Siegel Signature 

Jeff Siegel
Editor, Energy and Capital

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