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The Rise of the Consumer Electric Car

Written by Meg Dailey
Posted October 27, 2017 at 8:00PM

“Good morning! I hope you’re having a good day!”

“Who are you talking to?” asked the friend I was driving to work the other day.

I pointed forward through my windshield. Ahead of us on the highway, maybe two or three cars away, was a beautiful cobalt blue Tesla Model S.

“Do you know them?” she asked.

I shook my head. “Nope. I just hope they’re having a good day. I mean, they’ve almost got to be, right? They’re driving a Tesla!

She just rolled her eyes. The lovely electric car driving ahead of us that day had no special meaning to her. She just saw it as another luxury car for rich people.

A few minutes later, I glanced over at the other side of the highway and the cars rushing by in the direction from which we’d just come.

“Hi, hope you’re having a good day!”

She turned up the radio after that.

A Novelty… for Now

A few years ago, I’d have been in the same boat as my friend there.

I, too, once thought Teslas were just another car for rich people. Shiny and sleek, but not something I’d ever want to waste my money on.

That is, before I found out just what’s under the hood.

(Nothing. There’s nothing under the hood. Instead, there’s an empty space Elon Musk has dubbed the front trunk, or the “frunk.”)

Of course, now that I know they were the start of an electric transportation revolution, I take special note of them any time I see one on the road.

When I told the story above to my colleague Alexandra Perry, she did manage to point out something I’d been missing about these cars, though.

She said that even though they’re notable to us, it’s an advantage that they can still sort of blend into the scenery. That my friend assumed they were just another luxury car was a good thing!

After all, if it looked too different, fewer people would want to buy it.

This has, indeed, been a problem for previous electric cars.

Just take a look at this little number: Sebring-Vangard CommutCar

That is “the world’s first production model electric car,” built between 1974 and 1976 by Sebring-Vanguard Inc. It ran on a lead-acid battery from General Electric, seated two people, and had a production run of just 2,000 cars.

To me, it looks more like an incomplete Lego creation than a vehicle.

Suffice it to say Sebring-Vanguard went bankrupt in 1977, and the company that bought it out had time to make a few key upgrades to the car’s design before it went out of style for good.

This was partially because gasoline cars were still growing in popularity at the time, but the off-putting style certainly didn’t help.

Tesla has managed to bypass this issue by creating not only a car that is all electric, but one that also looks like a beautiful luxury vehicle.

Because of this, Tesla has never had to spend a cent on advertising. The cars speak for themselves.

Even the Model 3, Tesla’s “affordable” commercial electric car, is eye-catching!

The problem is that it’s still kind of a car for rich people.

Lithium Batteries and the Cost of a Car

The Model 3 is marketed as Tesla’s most affordable car, and it is! But the $35,000 minimum price tag still puts it above the national average price of a new car and out of range of many people’s budgets.

And if you think that high price is due to the massive battery packs that power the car, you’d be right!

But perhaps not for the reason you’re thinking…

Many assume it’s the lithium that gives these batteries their name that makes them so expensive. After all, the metal has seen its price skyrocket in the last few years.

But it’s actually not the lithium that’s keeping the price of batteries so high.

In fact, lithium only makes up between 1% and 3% of the battery by weight.

It’s cobalt, another unique metal that can account for as much as 60% of a Li-ion battery, that’s making things difficult.

You see, cobalt is much rarer and harder to get than lithium for a number of reasons.

If you’re an EV driver, or hope to be someday soon, that means the cost of your car isn’t likely to drop dramatically overnight.

If you’re an investor, it means there are still quite a few opportunities to make money in the EV space.

Still, Tesla and its competition are working hard to bring the cost of these batteries down.

We’ve talked about a few before here. Rest assured, there are easier ways to make money in this market than investing in the volatile Tesla stock.

So keep this in mind next time you see a Tesla on the road: The cars may still be for rich people, but the investment opportunity most certainly is not.

Until next time,

Megan Dailey Signature

Megan Dailey

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Megan Dailey is a fresh young face on the investment scene. In her years as a research analyst with Angel Publishing, she’s learned that adapting fast to new investment situations is critically important to successfully navigating today’s volatile market. Her research has helped individual investors identify fast-growing companies in the energy industry that pay actionable investors back in spades. In an age of boundless information, her research is razor-focused on the most lucrative opportunities in energy and beyond. Megan’s research can be found in her weekly editorials on the Energy and Capital site. She also manages the Energy and Capital social media, and is always ready to answer your questions about energy investments via Facebook or Twitter!

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