Time to Jump on the Electric Bandwagon?
Neha is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
If you wrote off electric vehicles, Pike Research’s latest report should make you sit up and take note. According to Pike, global sales of electric vehicles will triple over the next two years, with total sales surpassing the 1 million units per year mark by 2017.
The report should come as a breather for all the automakers who have been shelling out money for electric cars, particularly for the likes of General Motors (NYSE: GM), which even stalled Chevy Volt production because of tepid sales. Probably, GM and others can now be a bit more confident about their electric plans. As for investors, it might not be a bad idea to put some money on automakers stepping on the electric pedal for the long run.
Tesla Motors (NASDAQ: TSLA) has already set high standards when it comes to designing electric vehicles. It recently staged a coup by launching the much awaited Model S sedan ahead of schedule. Though questions about the car’s success are way too many, if Tesla manages to achieve even half of the sales it has planned (over 20,000 units in 2013), we’ll know there’s a market ready for electric cars. I say this purely based on the $70K price tag the Model S carries, which is almost twice that of a Leaf. So if Model S becomes a hit, other auto giants like Ford (NYSE: F) wouldn’t take much time to jump onto the luxury electric vehicle bandwagon.
Ford’s focus on electrified (which includes hybrids, plug ins and fully electric) vehicles is anyway strongly evidenced by its plans to "triple production capacity" of such vehicles by next year. It is looking at nearly a quarter (at the higher end of the range) of its total sales to come from electrified vehicles by the end of the decade. Though sale figures of its Focus Electric aren’t anything to write home about, the maker isn’t worried as it sees the EV market bucking up in the long run. The Pike report says plug-in hybrids will do well in the U.S. in the future. So Ford should be happy, because it is investing more in hybrids (remember the stunning Fusion unveiled early this year), and even seems keen on taking this technology into big potential electric-car markets like China.
Of course, Ford isn’t the only one investing in hybrids. Toyota’s (NYSE: TM) new hybrid Avalon will zoom out this fall, and its plug-in Prius has already made a "royal" entry into Europe with the company delivering the first to Prince Albert. Reports of a possible partnership pertaining to hybrids between BMW and Toyota are also doing the rounds. After BMW’s resentment over existing partner PSA Peugeot Citroen’s alliance with GM, this might come around soon.
BMW has a pretty big task at hand to meet EU emission targets, which would mean it has to achieve a one third dip in carbon emissions for its new cars. An ideal way of doing this would be through EVs and hybrids. This actually throws up another interesting point—how meeting regulatory standards is another factor that could boost sale of electric and hybrid vehicles in the years to come.
Automakers have got company
Interestingly, the world around seems to be waking up to the potential of EVs. Which is why efforts are being made to address problems electric cars come with. For one, charging stations are becoming a more familiar sight now. AeroVironment recently added ten more charging stations in Washington. That tells me this electric charger maker may be headed for really busy days in the coming years (and thus make a good bet).
Like infrastructure, efforts to deal with the low range issue are visible too. GM’s Chevy Volt’s 2013 model will offer higher miles-per-charge thanks to the company’s efforts on improving the battery’s storage and performance capacities. In May, Volt’s sales spiked three times compared to number of units sold in the same month last year. With better mileage, Volt could zoom to the top soon.
If you have noticed, automakers aren’t the only ones vouching for the electric drive. Case in point: General Electric’s (NYSE: GE) planned $1 billion investment to equip its workforce with electric cars. A whopping 25,000 electric cars is what GE plans to buy to encourage wider acceptance of these environment-friendly vehicles.
The Foolish bottom line
Let’s not exaggerate things by expecting EVs to take the world by storm by mid-decade or so. But with Fisker Automotive delivering its electric luxury Karmas again, Obama pushing for EVs, and more companies coming out in the open supporting electric vehicles, Pike’s report might just be a reason to start taking green initiatives by these automakers a little more seriously. What say? Share your comments and thoughts below.
Neha Chamaria has no positions in the stocks mentioned above. The Motley Fool owns shares of Ford and Tesla Motors. Motley Fool newsletter services recommend Ford, General Motors Company, and Tesla Motors . Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. If you have questions about this post or the Fool’s blog network, click here for information.