What’s Better: Big or Small Electric Vehicles?

Electric vehicles (EVs) are on everyone’s lips. And Tesla isn’t the only one with product in the game. Even a small start-up on outskirts of Beijing is getting into the EV market. Kaiyun Motors, founded by Wang Chao, creates tiny electric-powered trucks. They’re designed to zip up and down bumpy terrain, shown in the picture below.


Source: Bloomberg

The vehicle ‘will be as, if not more successful’ than the Ford F-150 pickup, Wang said. But unlike that gas guzzler, Wang’s trucks run on electricity.

The little-known start-up has sold 5,000 battery-powered trucks across China since May. Wang said they have received more than 100,000 orders. Among more than 200 companies racing to develop new energies, Kaiyun is one of few to reach the retail stage.

It plans to sell a million vehicles over the next five years.

Wang’s expectations are definitely ambitious. But it’s start-ups like Kaiyun that dream big and sometimes achieve their lofty goals. While not a listed company, there are some potential opportunities for investors looking outside the established players.

Tesla is already a US$26.7 billion company. This is not to say Tesla’s share price won’t grow in the medium to long term. But smaller companies bring with them the opportunity to potentially make higher returns in a shorter timeframe.

If you haven’t thought about adding small-cap stocks to your portfolio, it might be time. Global growth isn’t expected to do much in the short-term. It’s putting a lot of pressure on larger stocks. The coming US election could even cause more heartache for the market.

Yet when it comes to small-caps stocks, growth isn’t hard to come by. Sure, you have to pick the right small-caps to invest in, and not every pick will be a winner. But if you try to invest in quality small-caps with huge potential for growth, while managing your losses, you’ll potentially come out ahead.

Take the example of companies competing in the EVs market space. There’s no arguing that there’s demand for EVs in China. According to China’s Standardization Administration, a million EVs will roll out of production each year. A far higher figure than the 340,471 road-legal EVs produced in 2015.

This growth could very likely go to the largest players in the industry. But small-caps realistically only need small slices of market share. With that, revenues, and their share price, can explode.

China is the best place to run an automaker especially an electric car maker,’ Wang said. ‘There is so much demand that has not yet [been] met,’ Wang explained.

Wang spent around three years developing his EV truck — the Pickman. It sells for around 23,800 yuan (A$4,599) and can run up to 120km on a single charge.

Mini electric vehicles will be a key product going forward for people’s short-distance travel,’ Wang said.

Whether or not Wang is right remains to be seen. But keep your eyes both on the EV space and any potentially explosive small-cap stocks.

Härje Ronngard,

Junior Analyst, Money Morning

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