The potential of electric car investing
MAKING the most of your hard-earned capital to secure a decent income in retirement, or save for a rainy day, is no mean feat, especially in today's markets.
After 30 years of investing, the investment rules often don't make sense, but the old saying still stands true: If it doesn't make sense in front of you, it will make sense somewhere else. That's where the motivation behind the decisions are, and of course the investment opportunity.
Four and a half years ago, the most obvious protection for your capital, and similarly the most obvious investment, was the free use of electric via solar, and in turn the free use of that fuel in a car. But it didn't take off like it obviously should have.
Gordon Brown stated in 2008 that every car in the UK should be hybrid or electric by 2020.
Perhaps the complexities of living in a city and having the car charged at home is one of the issues. Leads from your house across a path to a main road aren't aesthetically pleasing.
My house roof was immediately converted to a money making machine, and I drove my Mitsubishi Hybrid Outlander, virtually for free, with my fuel bills down 90 per cent through careful usage. It's an obvious investment then and now.
I wasn't early to the electric car market. But why has it not accelerated, and when will it take off?
The key to any harmonious society is efficiency, sustainability and abundance. These are poles apart and an enemy of that other word – profit. My excitement at having a low energy bill is simply that I don't have to pay out so much, and I have the control of my bills, rather than the questionable energy companies.
Energy companies' objective is scarcity, for scarcity drives prices upwards, and with it, profit – one of the poor symptoms of an uncontrolled monetary society. Note OPEC reducing and increasing supply to control prices and markets.
The electric car market is no different. Scarcity is created from the blocking of patents, to the slow production and excessive charges of this new market and product design, coupled with issues with the underlying minerals needed to make the batteries. Subsequently, cars have been beefy in price, and oil/automotive companies realising their market could disappear overnight, were slow to hop to the obvious new world.
That has changed now, in particular driven by China, who I'm sure want to create independence away from oil. Last year they added over 600,000 new electrical vehicles.
Once the tide turned, it's a race to get to the market share. Next year we have a range of new vehicles coming to the market with some 300 miles of pure electric power available.
In the meantime, BP announced its £130 million purchase of Chargemaster, the UK's largest charging network, and virtually every established car brand has announced or created a hybrid or electric vehicle. Hybrid sales grew by 73 per cent and diesel plummeted 25 per cent, all on a backdrop of confusion as to what an electric car can really do.
The natural move is to dash to invest into the car manufacturers themselves, but the cuter money moves toward the enablers. The research into making longer running and more powerful batteries is a great area for investors to look towards.
The battery is the real reason the cars cost so much more than a petrol version, and every move to develop this is where the returns will be gained. An investment fund exposed to these upsides will have performed very handsomely indeed.
Investments into venture capital trusts hit a record $1 billion last year into companies storing that power from wind and the sun and also $438m into batteries for electric cars.
Challenges to accessing Cobalt (needed for the batteries) has been a problem, given the serious issues in the Congo, where mass graves have been found, and that destabilisation had created scarcity which drove prices through the roof.
Developments are everywhere, and we are aware of exploration in Australia in the ocean which could circumnavigate the Congo issue creating bumper profits for investors.
:: Peter McGahan is chief executive of independent financial adviser Worldwide Financial Planning, which is authorised and regulated by the Financial Conduct Authority. For advice on investments call Darren McKeever on 028 6863 2692, email firstname.lastname@example.org or visit www.wwfp.net