Another crash, with plenty more opportunities waiting just for you

Take a look how Chris Woodyard begins the following article:

The latest crash involving a Tesla in Autopilot mode didn’t turn tragic, as some past ones have, but certainly was embarrassing.

Yep, another Tesla crash. The model S veered into a parked police car on Tuesday this week. The 65-year old driver blamed it on the Autopilot function.

Sergeant Jim Cota was first to the scene. While no one was badly hurt, Cota said the crash was almost a replay of another Tesla crash in the same spot about a year ago.

I guess it’s just another one added to the list. Twice in 2016, and now four times in 2018, a Tesla Autopilot has caused a crash.

You’d think after the first Elon Musk would remove the function and not re-release it until it’s 100%.

This won’t be the last time you hear of an autonomous crash though. Electric vehicles (EVs) with semi-autonomous functions are fast making their way onto roads.

In fact, some estimates say EVs will triple within two years.

Simply because of the numbers, you’d expect crashes to increase. Safe to say insurers won’t be out of the job, yet.

 

Did Buffett kill the EV dream?

When Warren Buffett bought a stake in a truck stop operator, investors thought it was the nail in the EV coffin.

Buffett’s purchase of Pilot Flying J wasn’t all that long ago, October last year.

Around the same time, investors were getting hopped up on everything EV. There were reports hinting that EV’s could achieve mass adoption far sooner than people thought.

Battery prices were coming down, and still are. Producing the technology going into EVs was getting easier.

It’s why Aussie investors jumped all over lithium and cobalt stocks, which make up the batteries powering EVs.

But then friendly old Buffett had to spoil the fun.

His bet on Pilot Flying J was not only a bet on diesel and petrol trucks. It was a bet on America and truckers’ jobs.

Not only does Pilot Flying J sell fuel. They’re a popular rest stop for truckers wanting something to eat or to take a breather.

Yet far before Buffett bought into good old fashion American trucking, he bought a stake in little known Shenzhen battery maker.

Today that company, BYD is a major player in the EV market place. You could say Warren is betting on Chinese EVs, but American petrol.

 

 

EVs could triple within two years

According to the International Energy Agency, the global fleet of EVs is likely to more than triple to 13 million by 2020. Sales could compound by 24% up until 2030.

According to CNBC, the Energy Agency also sees a path to possibly 220 million EVs by 2030.

While battery costs are falling, the IEA acknowledges that government policy remains critical to making EVs attractive to drivers, spurring investment and helping carmakers achieve economies of scale,’ CNBC wrote.

From the International Energy Agency report:

The uptake of electric vehicles is still largely driven by the policy environment. The 10 leading countries in electric vehicle adoption all have a range of policies in place to promote the uptake of electric cars.

Have a guess which market will be the biggest for EVs?

That’s right, China.

It’s why Elon wants to build his own Tesla factory within the Red Kingdom. Producing the EVs in America and shipping them into China would put him at a disadvantage in the largest market for his cars.

But why China?

It’s not just because they have a massive population rising into the middle class, wanting to buy everything from cars to holidays. They also have a problem many others take for granted.

China has a pollution problem.

Down under we might find it hard to breathe beside a factory or refinery. In some parts of China, you’d be lucky to see the blue sky.

According to a recent article in the South China Morning Post (SCMP):

Residents in one of China’s most polluted cities are breathing in smog particles that are harder than steel, according to Chinese researchers.

Even in major cities like Beijing, Shanghai and Guangzhou, the air quality isn’t what it should be.

MM 01-06-18

Source: South China Morning Post
[Click to open new window]

Even worse are the water popsicles (below) taken from various lakes, rivers and streams within the region.

MM 01-06-18

Source: South China Morning Post
[Click to open new window]

One way to bring back clean air to Chinese cities is remove as many gas guzzling vehicles as possible.

SCMP continues:

EVs are expected to make up more than a quarter of vehicles sold in China by 2030, up from 2.2 per cent last year, according to the IEA’s estimates. More than half of global sales last year were in China, followed by the US.

The Chinese government has put a number of policies in place to encourage EVs, as part of an effort to cut air pollution in smog-choked cities. Last year, Beijing set minimum requirements for domestic carmakers on electric vehicle production through a credit trading system. It also extended a 10 per cent tax rebate for consumers until 2020.

So where’s your opportunity in all this?

Well you could go ahead and look at auto makers producing EVs. You could look at battery makers. You might even try to find a lithium stock that hasn’t already skyrocketed.

But it won’t just be EV sales soaring in China.

Aussie consumer products, tiny tech firms looking to make a name, and future energy needs are just three opportunities in Asia that could seriously boost your returns.

There’s huge growth coming out of China and Asia. And there will be plenty of Aussie stocks that could benefit.

You’ve just got to know where to look.

 

Your friend,

Harje Ronngard,
Editor, Money Morning


Harje Ronngard is the lead Editor at Money Morning. He’s also the Editor of Wealth Eruption and Gold & Commodities Stock Trader, and co-Editor of the Third Wave Portfolio.

The aim of both Wealth Eruption and the Third Wave Portfolio is to find misunderstood opportunities. These are the type of investments that multiply small amounts of money five- to 10-times in size.

Harje has an academic background in investments and valuation. He’s had experience across a range of asset classes, from futures to equities.

For any investment, Harje believes you only need to ask two questions. What is it worth? And how much does it cost? These two questions alone open up a world of opportunities, which Harje shares with Money Morning readers five days a week.


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