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Published: November 10, 2010
Today, exciting developments in electric cars could put
battery-powered vehicles in Americans' driveways in the very
near future - and the technology fueling the transition could
send shares of one small-cap carmaker significantly higher in
the short term. Here's a glimpse at how to find gains in the
electric vehicle market right now...
Electric cars aren't a new phenomenon. More than a decade ago,
the EV1 changed everything.
A short, futuristic-looking car with a memorable profile,
General Motors' (NYSE: GM) first attempt at creating a commercially viable,
highway-capable electric car in the mid-1990s was a major step
for the automotive world. So why haven't most people heard of
it?
The EV1 came as a result of a mandate from the California Air
Resources Board that required major automakers to sell a certain
quota of zero-emission vehicles in California. To sell its
vehicles in the nation's most populous state, GM management
decided that the company would bring an all-electric vehicle to
market.
In doing so, GM created an unassuming car that surprised
journalists, auto enthusiasts and even GM by generating extreme
praise and a cult following...
The cars weren't available for sale; consumers could only lease
them. After the program's completion (and legal challenges were
upheld against California's zero-emission vehicle rules), all
EV1s were repossessed by GM and destroyed (save the few now
residing in museums).
Why the extreme ending for the EV1? It all came down to money.
While the car was a critical success, it proved to be less of a
financial win. In total, GM invested around $1 billion in the
EV1 project, only to produce around 800 vehicles between
1996-1999. During that time, you could lease an EV1 for as
little as $349 per month, a losing proposition for GM, which
spent an estimated $80,000-100,000 on each vehicle once
manufacturing and R&D costs were factored in. To avoid liability
issues and laws over parts and service requirements, GM
destroyed one of its beloved cars.
That's not to say the EV1 was alone. Around the same time,
Toyota (NYSE: TM) created the RAV4 EV, an all-electric version of the
popular RAV4 compact SUV. Ford (NYSE: F), Chrysler and Honda
(NYSE: HMC) also joined
the mix with electric offerings that were leased to consumers at
a substantial loss to appease the CARB's emission requirements.
But they all suffered a similar fate. Extremely high battery
costs, short battery life and range limitations put the nail in
the coffin for the electric car.
Despite the shortcomings of the electric vehicles of the 1990s,
there were some big benefits to electric vehicles. And there
still are...
Maintenance costs are substantially lower for electric cars.
With significantly fewer moving parts on EVs, the mechanicals on
them are subject to significantly less wear than conventional
internal-combustion-driven autos. And although overall prices
are much higher for electric vehicles (thanks to extremely
pricey batteries), running an electric car is much more cost
efficient than a traditional car can be - especially as gas
prices rise: The RAV4 EV, for example, costs only 25% as much to
operate per mile as its gasoline-fueled counterpart.
So while consumer demand stayed real for electric cars in the
2000s, the technology didn't yet exist to bring this potentially
transformational product to market.
A decade later, with more advanced battery and motor technology,
the economics of the electric car have changed. And one company
stands to reap the benefits as consumers start to consider the
alternative of an electric car.
A Different Outlook for Electric Cars
In 2010, a lot of attention has been paid to General Motors'
electric efforts once again. In November, the 2011 Chevy Volt is
expected to hit dealership floors at a base price of $41,000
before government “green” incentives. Leases start at $350 per
month with $2,500 down. What's significant is the fact that GM
isn't selling the Volt at a substantial loss to placate a
government agency... This is a true production vehicle.
As with the EV1, other automakers are joining in the push for
electric cars too. Toyota is developing a new version of the
discontinued RAV4 EV. Nissan's LEAF electric is expected to
start seeing U.S. sales in December.
But these aren't small-cap companies. And electric initiatives
still constitute only a small portion of their businesses.
Despite the attractiveness of this industry, there really hasn't
been a direct way to invest in an electric car manufacturer...
Until now.
We've just completed our analysis on an electric car stock
that's set to completely change the industry with its innovative
engineering and brilliant marketing. At present, the firm has
already sold out one of its car models through 2012 - and it's
well positioned to become a leading automaker in the future.
We sent out our research on this stock last week; with shares
still well within buy territory, now's an ideal time to learn
more about this company.
-- Jonas Elmerraji
Contributing Editor
Penny Sleuth
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