Electric Vehicles: Creating the Next Wave of Multibaggers?
If you think the pollution in India is bad, take a look at this picture.
The air in China's capital, Beijing, is so bad you can barely identify its buildings.
China has had to ground hundreds of flights, and close down highways, because of the thicknes of the smog.
The air quality is so toxic that face masks have become a common sight in cities across China.
To make its cities breathable again, China will have to take some big, bold steps.
Has it been up to the challenge?
You bet it has.
China plans to take petrol and diesel cars off its roads. And replace them with battery run electric vehicles (EVs) that are much cleaner and cause signficantly less polllution.
If China's ambitious plan is successful, we could possiby withstand the biggest commercial upheaval of our times.
The wheels are already in motion. The Chinese government is helping put together a nationwide infrastructure of charging stations. It's also offering generous subsidies.
Thanks to these efforts, China is leading the boom in electric vehicles.
In 2016, EV sales grew an impressive 53% YoY. And so far this year, the volumes are already up 30% YoY.
Just to put things in perspective, China has set goals for EV cars to make up at least a fifth of the country's sales by 2025. This is huge. This could see EV volumes go up by 10 or 12 times in China alone.
Other countries have also jumped on to the electric vehicle bandwagon.
The British government plans to ban sales of diesel and gasoline-fueled cars by 2040. So does France. Norway and the Netherlands have been even more aggressive about getting gas-guzzling vehicles off their roads.
And thankfully, India is also getting serious about electric vehicles. The world's fifth largest auto market is gearing up for a mind boggling transformation.
India wants to move completely to EVs by 2030.
If you think car companies are resisting this change, you will be surprised.
Volvo, the Swedish/Chinese car company has announced it will only offer electric or hybrid vehicles by 2019.
Mercedes is planning on launching two SUVs and two sedans as EVs by the end of this decade.
Volkswagen has big electric plans too. It has set a goal of 30 new EVs and two to three million plug-in sales by 2025.
MM, India's largest EV manufacturer, recently forged a partnership with Ford to work on electric cars.
The EV industry has conditions ripe for what Charlie Munger likes to call the Lollapalooza effect: A situation where multiple factors act together in concert to kickstart an unstoppable trend.
And when that happens, massive wealth is generated.
So, how should you play this trend? What are the companies best positioned to extract the maximum mileage?
Stay tuned. We've got a close eye on this megatrend - and we don't plan to miss a thing.
Editor, Smart Contrarian
Brain Food for the Day
The Lollapalooza Effect
According to Charlie Munger, Berkshire Hathaway's success under Warren Buffett is due to what he calls: The Lollapalooza effect.
- Why did Berkshire under Buffett do so well?
Only four large factors occur to me:
(1) The constructive peculiarities of Buffett,
(2) The constructive peculiarities of the Berkshire system,
(3) Good luck, and
(4) The weirdly intense, contagious devotion of some shareholders and other admirers, including some in the press.
...In particular, Buffett's decision to limit his activities to a few kinds and to maximize his attention to them, and to keep doing so for 50 years, was a lollapalooza. Buffett succeeded for the same reason Roger Federer became good at tennis.
That's Berkshire Lollapalooza for you. Four factors, all acting together to create one of the biggest wealth creating juggernauts in modern history.
What are the factors likely to bring about Lollapalooza in electric vehicles?
- Strong push by the Government
- Massive improvements in battery technology
- Global warming
- Fear of total depletion of oil reserves
There could be more. But these are strong enough for electric vehicles to mount a serious competition to conventional cars.
- Who Says Warren Buffett Doesn't Invest In Real Estate? January 24, 2018
- A look at Buffett's analysis in picking up a commercial real estate property.
- The 'Warren Buffett' of Real Estate is Betting Big on India. Should You? January 22, 2018
- Why is the world's largest asset management company taking a big bet on Indian real estate? Should one follow its lead or there's more pain to come?
- This is Why the Crypto Correction is a Good Thing January 19, 2018
- Corrections force discipline on an otherwise broadly unsophisticated market. And that's only a good thing in the long run.
- 'Smart Money' Enters Bitcoin. Will You? January 17, 2018
- As institutional money enters bitcoin, the gains over the last year could just be the tip of the iceberg.