Three Incentives, One Opportunity

I believe that ultimately the electric motor will be universally used for trucking in all large cities, and that the electric automobile will be the family carriage of the future. All trucking must come to electricity. I am convinced that it will not be long before all the trucking in New York City will be electric.

Thomas Edison, 1914

Little did Thomas Edison realise that his prediction would take another 100 years to come close to reality.

Electric cars were quite popular during his time. They didn’t make much noise and could be recharged at home, while gas cars needed…well, petrol.

But even though people liked them, the electric car didn’t take off back then.

It wouldn´t be until the 1970s that interest in electric cars sparked again, mainly because of higher oil prices at the time and technology advancements.

We are seeing a big push for them today, and there are a lot of incentives from all parties to make the switch.

China is definitely taking the lead on this.

According to EV Volumes, China is the largest market and producer of plugins. In just the first half of 2018, new electric vehicle (EV) car sales were three times higher than in the US. And the numbers keep growing.

China is also looking to end production and sales of internal combustion engine (ICE) vehicles by 2040. And other governments like the UK and France are also taking similar steps to phase out ICE vehicles.

Yes, the push for change may have to do with decreasing pollution, but we suspect it’s not the only reason.

It could also very well have to do with your data.

According to an investigation from the Associated Press, the Chinese government is getting data reports from electric vehicle manufacturers. As they wrote:

More than 200 manufacturers, including Tesla, Volkswagen, BMW, Daimler, Ford, General Motors, Nissan, Mitsubishi and U.S.-listed electric vehicle start-up NIO, transmit position information and dozens of other data points to [Chinese] government-backed monitoring centers, The Associated Press has found. Generally, it happens without car owners’ knowledge.

The automakers say they are merely complying with local laws, which apply only to alternative energy vehicles. Chinese officials say the data is used for analytics to improve public safety, facilitate industrial development and infrastructure planning, and to prevent fraud in subsidy programs…

Automakers initially resisted sharing information with the Shanghai monitoring center; then the government made transmitting data a prerequisite for getting incentives.

Which brings me to automakers and their incentives …

Automakers and their incentives

With governments phasing out ICE vehicles, electric auto manufacturers have a great opportunity to sell more vehicles, and replace every car that is currently on the road. This is a huge incentive.

And there could be an added bonus. They could be adding a new source of revenue: data.

Just think about it, cars can tell a lot about you.

You also spend a lot of time in your car, time that could be used to sell you stuff…especially if vehicles start driving themselves.

McKinsey estimates car makers could make between US$450–750 billion by 2030 just on your data.

But, electric vehicles also have perks for consumers.

Electricity is cheaper than petrol and much like your counterparts in the 1900s, you can conveniently charge your car at home.

Some countries are already seeing the benefits. From The Guardian:

Electric cars are already cheaper to own and run than petrol or diesel alternatives in five European countries analysed in new research.

The study examined the purchase, fuel and tax costs of Europe’s bestselling car, the VW golf, in its battery electric, hybrid, petrol and diesel versions. Over four years, the pure electric version was the cheapest in all places – UK, Germany, France, Netherlands and Norway – owing to a combination of lower taxes, fuel costs and subsidies on the purchase price.

Researchers from the International Council for Clean Transportation (ICCT) said their report showed that tax breaks are a key way to drive the rollout of electric vehicles and tackle climate change and air pollution…

‘[Sandra] Wappelhorst [from the ICCT] said financial incentives for electric cars would not be needed when purchase prices fall to that of fossil-fuel powered cars, which is likely between 2025 and 2030. “It will happen, because battery costs are dropping and that means that the initial price of the vehicles will drop as well,” she added.

Governments’, electric car makers’ and consumers’ incentives are all aligning well to make the change.

With governments already starting to set deadlines to take action, you can see where the electric vehicle trend is going.

My colleague Ryan Dinse has identified a great opportunity to profit from this booming trend.

If you’re not familiar with Ryan, he used to be a financial advisor for a big Melbourne-based institution with $150 million in funds under management.

That is, until he landed his dream job here, at Port Phillip Publishing. Ryan is now the editor of Exponential Stock Investor.

He’ll tell you all the details himself on 26 February.

Stay tuned!

Best,

Selva Freigedo,
Editor, Markets & Money


Selva Freigedo is an analyst with a background in financial economics. Born and raised in Argentina, she has also lived in Brazil, the US and Spain. She has seen economic troubles firsthand, from economic booms to collapses and the effects of hyperinflation, high unemployment, deposit freezes and debt default. Selva now writes from her vantage point here in Australia. She is lead Editor at the daily e-letter Markets & Money. And every week, she goes through each report and research note produced by our global network of trusted advisors to find, in her opinion, the best investment opportunities for you in Australia and overseas. She packages these opportunities for you in Global Investor.


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