The High-Tech Material Coming to the Car Market

Today’s Money Weekend begins with seaweed.

The Australian reported on Monday that researchers from James Cook University ‘are close to producing a low cost biofuel extracted from seaweed that will be powerful enough to fly a jet aircraft.

Intriguing, isn’t it?

The seaweed is a macro-algae. After harvest, it can turn into different products, from biofuel to food, depending on the environment where it grew. 

There’s something even more fascinating. It can grow on polluted water and help clean the degraded site.

The technology and research are still very much in the early stages. But this could prove to be part of a much larger trend, one that is set to shake up major global industry… 

Big Market, Big Problem

That trend is how technology and research can combine to reduce pollution. It’s happening across so many different industries.  

And there is one country where pollution is so chronic it’s estimated that 80% of its rivers cannot support any aquatic life.

You probably already guessed – China.

Regardless of your view on Chinese growth and local government debt levels, tackling the pollution in China surely must be a megatrend of the next decade or more.

It’s already showing up in one industry – automobiles.

Take this from the Wall Street Journal this week:

China rolled out a new incentive program for environmentally friendly cars and buses to help battle increasing levels of pollution. Buyers of electric cars can receive up to 60,000 yuan ($9,800) in subsidies, while buyers of certain gasoline-electric hybrids can get as much as 35,000 yuan…The program seeks to "speed development of the new-energy automobile industry, reduce emissions and help control pollution," the ministry said.

China is the biggest car market in the world. 

The problem for the Chinese government is that, even with the subsidies, sales of electric cars and hybrid vehicles are a minuscule percentage of the market. According to the WSJ, sales of electric cars were just over 11,000 out of total vehicle sales of 19.3 million.

That’s a lot more regular cars on the road. It’s also a lot of exhaust fumes. As you can see…

Sources: Business Week

One of the problems for the growth of electric cars is a lack of battery-recharging infrastructure across the country. That hinders the growth of the market. That’s a typical problem everywhere, especially in a country as big as China.

Regardless, the automakers have plenty of plans for alternative-energy vehicles on the table. After all, it’s not just China that wants to reduce pollution. It’s a global market and a global problem.

 Over in the US, they plan to double the average fuel efficiency of regular cars in America. By 2025, the benchmark will be 54.5 miles per gallon (5.2L per 100km).

Pollution isn’t a problem with easy solutions. But it is spurring on entrepreneurs to find an answer.

If Kris Sayce and technology analyst Sam Volkering over at Revolutionary Tech Investor are right, there’s one way car manufacturers are tackling this problem in particular that might be the one worth focusing on for investors

They make the case that the answer lies in reducing the weight of both electric and petrol cars to make them more fuel efficient. 

A New Material That Could Change Everything

‘When you reduce the weight of a car without changing its engine capacity you get greater power to weight ratio,’ reports Revolutinary Tech Investor in the latest issue.

They continue:

Now if you reduce the weight of the car and reduce its overall capacity you get the same performance as before but the added benefit of lower fuel consumption…

In the case of electric cars, carmakers need to be conscious of the weight. If carmakers try and run an electric car using a typical car frame it will drain the battery fast.

But how do you reduce the weight?

You might remember a while ago we mentioned that carmakers were working with aluminium. It’s lighter than steel.

The problem is aluminium is not as strong as steel. The aluminium solution, even mixed with steel, isn’t ideal. But what if there was a material that could match the strength of steel but increase the fuel efficiency?

Revolutionary Tech Investor says it will be a lightweight material that’s five times as strong as steel and more resilient to extreme temperatures.

The problem until now has always been the cost of producing it.

This is what has Kris and Sam so excited. They’ve identified a company with a proprietary process to produce a unique version of this material that could cater to the automakers (and other industries) without the crippling costs.

That could put a huge wind at its back as fuel efficiency becomes a dominant trend of a trillion dollar industry. That’s a pretty good place to be in anyone’s book.

The even better news is it trades on the ASX. For the full story, click here

Callum Newman+
Editor, Money Weekend

From the Port Phillip Publishing Library

Special Report: Are You Waiting for a Real Estate Crash That Isn’t Going to Come?

Callum is a feature editor for Money Morning. He covers areas of interest arising from world markets and the global economy that could mean new investment opportunities for Aussie investors. If you're already a subscriber to these publications, or want to follow Callum's financial world view more closely, then we recommend you join him on Google+. It's where he shares investment insight, commentary and ideas that he can't always fit into his regular Money Morning essays.

Leave a Reply

Your email address will not be published. Required fields are marked *

Money Morning Australia