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An Overview Of The Electric Vehicle, And The Potential Investments That It Presents
A Bit Of History
The first electric vehicle was invented during the 1830s by Robert Anderson. Early editions were little more than a carriage with a crude battery to power the vehicle. Unfortunately, the crude batteries used back then were not rechargeable, and combined with the lack of sufficient roadways; these vehicles were quite limited in their use. In 1899, a Belgian built electric race car set a world land speed record of 68 miles per hour. Around the same time, EVs began to gain acceptance for commercial applications. Of which, they were first used for a fleet of New York City taxis built by Electric Carriage and Wagon Company of Philadelphia. The early 1900s turned out to be the heyday for EVs, as they outsold both gasoline and steam automobiles. Gasoline vehicles were smelly, noisy, vibrated, and required a hand crank to start them and, steam versions took a long time to boil the water necessary for propulsion. However, the invention of the electric starter in 1912 eliminated one major problem with gasoline vehicles. And with the creation of the production line by Henry Ford, the traditional automobile as we know it became significantly more cost effective to own, when compared to its EV and steam competitors. Over the past 100 years, there have been a few different attempts to use electric vehicles in commercial fleet applications, or as city cars, where the range and proximity to charging stations was known. But, it wasn’t until now, with many Americans wanting to gain independence from foreign oil, as well as a global push to improve our environment for future generations, that the proliferation of the electric vehicle may really gain traction.
At the moment, it appears that General Motors Company’s (GM) Chevy Volt is the top mass-produced electric vehicle. The Volt went into production in November of 2010. It benefits from an internal combustion engine to help generate electricity after the car’s batteries have been depleted. Chevy has coined the phrase, “Extended Range Electric Vehicle” to contrast the Volt to other 100% electric offerings made by competitors. It is not considered a Hybrid, as those vehicles typically use an electric motor and a gas motor to propel the vehicle. Instead, the Volt can travel 40 miles on one charge, after that, the small gasoline engine kicks in and drives a generator, which produces the necessary electricity needed to charge its batteries and run the electric motor.
The next most viable EV is Nissan Motor Co. Ltd’s (NSANY) Leaf. It boasts the title of the industry’s first all-electric, zero-emissions car designed for mass production. The Leaf is anticipated to have a range of 100 miles on a single charge. However, at that point, it will take eight hours to fully charge the battery on a 220/240 V outlet (the same kind of receptacle used to power your washer and dryer at home). Presumably, that means that the battery could take 16 hours to charge on a standard 110/120 V outlet that most drivers would have access to, when they are far away from home. Also in the works is a 480 W quick-charging station that should vastly shorten the time needed to charge all-electric vehicles. However, until charging stations become as prevalent as gas stations, it will take some planning for the longer road trips that Americans are so fond of when vacationing. This will likely be one major hurdle that this type of vehicle will have to tackle before it will be adopted by the masses.
But the technology exists to get wider drive ranges out of EVs. For example, Tesla Motors Inc. (TSLA) has been selling its Tesla Roadster since 2008. Once fully charged, it can go 245 miles before needing to be plugged in. Another advantage to this all-electric vehicle is that its charging station is on board the car, meaning that any standard 110/120 V outlet will be sufficient to get you back on the road, although it can take up to 48 hours to recharge a completely depleted battery, depending on the type of outlet being used. As with any EV, the higher volt outlets benefit from reduced charging times. The downside to the Tesla Roadster stems from somewhat limited production, which has resulted in a lengthy waiting list, as well as a $109,000 price tag. But this is not your standard EV; it boasts 288 peak horsepower, 295 lbs/ft of torque, and a 0 to 60 mph time of just 3.7 seconds.
A few companies are in the process of releasing electric motorcycles. They offer instantaneous torque and due to the lighter curb weight when compared to cars, battery life should last longer. Also, since the electric motor doesn’t have gears, it eliminates the need for a clutch, thus, simplifying the process of riding a motorcycle. The Brammo Empluse is one such offering. Brammo is accepting orders; however, it is unclear when shipments will begin. In fact, once Brammo’s offerings are in full production, Best Buy (BBY) will stock the vehicle, since it is kin to the products offered by the retailer. Meantime, Mission Motorcycles has created the Mission R, which will enter the race circuit this year. Although there has not been any information released on when this state-of-the-art bike might go into production, technology created by the company will no doubt raise the bar for all manner of EV.
Some three-wheeled EV’s are also in the works. The Idealab Aptera 2e is a futuristic looking 3-wheeler that seats three people and has a 100 mile range on pure battery power. This vehicle is already in production and has a long waiting list, which is all the more impressive considering a price has not yet been released. So far, the quoted ceiling is $40,000. Three wheelers like this one, benefit from increased stability and an enclosed cabin when compared to motorcycles. They are also subject to less stringent safety restrictions and red tape because they are technically not an automobile, which could help lower sticker prices, down the road.
Companies like Coulomb Technologies installed the first public electric charging station in New York City in the middle of 2010. That facility was located in a parking lot near the Port Authority bus terminal. At this time, the company has 30 charging locations in Manhattan, and approximately 720 nationwide, including three in Hawaii. The bulk of those stations are located in California, Washington State, Michigan, and along the Eastern seaboard, with concentrations in major cities. Coulomb’s Web site allows you to search nearby charging stations to find one that is available for use. Unfortunately, charging the lithium-ion batteries that are the favored power source for today’s EVs takes substantially longer than the five minutes or so needed to fuel up on gas.
Power Plant Alternatives
One of the largest determining factors for widespread acceptance of EVs will be their potential driving ranges. While many early adopters are taking hold of the electric vehicle technology, it will likely take some time before it is accepted en masse. The technology for longer-lasting, more-powerful lithium-ion batteries exists today. In fact, U.S.-based A123 Systems (AONE) offers one such battery. Unfortunately, domestic battery producers are being beaten to the punch by their foreign counterparts due to economies of scale. The technology in lithium-ion batteries was first developed by U.S. scientists back in the 80s. During the 1990s many Asian company’s continued to invest in capital projects to develop state-of-the-art facilities for the production of these batteries. And in the late 1990s, prices for lithium-ion batteries declined considerably, causing many U.S. producers to halt production and source cheaper alternatives overseas. This uninterrupted production has given Korean- and Japanese-based manufacturers a serious competitive advantage. It is also resulting in significant barriers to entry for U.S.-based companies, like A123, as well as a catch-22 scenario. The only way for A123 to be able to produce its batteries for less, and give cost breaks to automotive companies like GM, is to get some large orders and ramp up production. However, the large automotive companies will not award them contracts until pricing is reduced. Meanwhile, the larger automotive companies have problems of their own, and have to import components in an effort to make EVs economically viable to the consumer. This eye-on-the-bottom line perspective resulted in GM awarding those battery contracts to LG Chem, a division of Korea-based LG Corp., at least for the first model Volt that was recently released. Other companies developing and manufacturing lithium-ion batteries are Ener1 Inc. (HEV) and Johnson Controls Inc. (JCI).
This is an exciting time for the electric vehicle. And, while some opponents of the technology hold that the problem of going on longer trips, shorter average drive times, and higher costs, all detract from EVs, it will only be a matter of time before those issues are resolved. As a comparision, when flat panel television came out not that long ago, many scoffed at the seemingly high price tags, but as technology improved and economies of scale kicked in, everyone wanted them. Over the next couple of years, electric vehicles may well be entering the same stage, which poses some interesting investment opportunities.
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.