It has been about 11 years since the Tesla Model S was launched. It demonstrated to the world that lithium-ion battery technology was good enough to bring electric vehicles (EVs) to the mainstream. It only took a few years into Model S production before the panic in the world’s great automotive centers – Detroit, Stuttgart, Milan, Nagoya, etc. – became palpable.
Automotive management sobered up to the fact that they were far behind in propulsion technology, and the future was no longer going to be about turbochargers, pistons, pneumatic valve trains, etc., but rather about neodymium magnets, lithium-based batteries, traction motors, inverters, etc.
Today, nearly every major automotive manufacturer has multiple EVs of all shapes and sizes on the market. The car makers making the biggest strides are Audi (FWB: VOW), Mercedes (OTCMKTS: MBGYY), BMW, Ford (NYSE: F), General Motors, and even Porsche (FWB: P911). Besides Tesla [NASDAQ: TSLA], there are new, non-traditional EV manufacturers, such as Aptera, Lucid (NASDAQ: LCID) and Rivian (NASDAQ: RIVN).
The same batteries, motors, and inverter technologies that have made electric cars and trucks successful are now finding their way into a variety of off-road vehicles. In addition, entirely new business models have been introduced in converting existing off-road vehicles from fossil fuel powered to electricity powered. There are many inspiring examples.
A company named Hyster Yale (NYSE: HY) offers fully electric forklifts for factory floors that are powered using lithium-ion batteries. Toyota is also close to offering lithium-ion battery powered forklifts.
American small vehicle manufacturer Polaris (NASDAQ: PII), which has traditionally offered gasoline powered watercraft, motorcycles, and small off-road all-wheel-drive utility vehicles, is now beginning to offer many of these vehicles with all electric powertrains.
Last summer, it introduced the Ranger XP, which is a fully electric, lithium ion powered, small utility vehicle that is being used by ranchers, farmers, and people just looking for a clean way to explore mountain trails.
Communities around the world are committing to converting their civic utility vehicles to all electric as well. Last week, California based company ZeroNox, whose business model is converting existing fossil fuel powered vehicles to electricity powered vehicles, announced that it signed a contract with Ghana based company Jospong to convert 1000 refuse trucks to all-electric.
It is the largest conversion project yet announced. ZeroNox also converts forklifts, off-road utility vehicles, and tractors to fully electric. You can now invest your money in ZeroNox because it recently went public via a SPAC (special purpose acquisition company) deal with New York based Growth for Good (NASDAQ: GFGD).
Ways to Invest Upstream of the EV Manufacturers
It’s no secret that electric vehicle manufacturers (actually nearly all automakers) don’t make all the parts that go into their products. In fact, they purchase raw materials, components, and sub-assemblies on a massive scale. Consequently, another way to invest in the transition away from fossil fuel powered vehicles is to invest in the companies that sell to the auto makers.
We’ve mentioned above the critical role in which elemental lithium is playing in popularizing electric vehicles. Two companies in which you can invest to benefit from this are South Carolina-based Albemarle Corporation (NYSE: ALB) and Australia-based Rio Tino (NYSE: RIO). Both companies are among the highest producing raw lithium suppliers in the world.
In past Proffe’s MegaTrends articles, we’ve written about the criticality of rare earth elements, such as neodymium, in producing the strongest magnets known to mankind. These are necessary to maximize efficiency and range of most EVs. For decades, rare earth materials and magnets have been the sole domain of Chinese sources.
Now, Nevada-based MP Materials (NYSE: MP) has invested heavily to bring back the entire supply chain for producing rare-earth magnets back to the US. It owns the only operating rare earth materials mine in North America. It is known as the Mountain Pass mine and it is located near the California – Nevada border, not far from Las Vegas. It recently finished construction on a facility near Dallas, Texas where it will take raw materials from the Mountain Pass mine and produce complete, ready to use neodymium magnets.
Finally, integrated powertrain units for EVs, which include the motor, transmission, inverter, and controller all in one package are currently offered by both Borg Warner (NYSE: BWA) and Italy’s Marelli S.p.A. These units can be used by companies wishing to enter the EV market, but don’t necessarily have the resources to build economic motors and electronics. Overall, this increases the ease with which new companies can enter the EV space.
The Electric Vehicle MegaTrend
So, you can see that there are many places to invest to get in on the EV megatrend. Given all these automakers and the supply base, the $700 billion dollar valuation of the transition must be quite conservative. Perhaps you too should invest in some of the companies discussed above.
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