Heavy Vehicles Trailblazing for EVs: 2nd in a Series

This morning, the widely read website, seekingalpha.com, published an article with an intriguing headline: “Electric Cars Could Dominate Market by 2030.”  The article is based on a study carried out at UC Berkeley, and the proviso is revealing: “provided that consumers don’t have to buy the high-priced batteries themselves and an infrastructure can be built to maintain and manage them.” (http://seekingalpha.com/article/152127-electric-cars-could-dominate-market-by-2030).  There it is: the key to our willingness or ability to switch to electric vehicles is the batteries that power them.  The study is worth looking at (there is a link in the article above), and it figures the cost of an infrastructure to handle batteries at $320+ billion, partially offset by a saving of $205 billion occasioned by reduced healthcare costs due to fewer harmful emissions.  The article also ventures a guess that emissions could be reduced by 62% from 2003 levels, and that 350,000 new jobs could be added to the economy. 

In the first article in this series, we had a brief look at the definitions of two types of hybrids: power-split hybrids and mild hybrids.  We believe that these hybrids will dominate the EV market for the midterm at least, and that the pure EV market will arrive in terms of meaningful numbers several years down the pike.

Before we discuss the battery market, we should note that heavy vehicle operators, makers and conversion specialists may well be leading the way in emission reductions.  Torrance CA-based Enova Systems (Amex: ENA, http://www.enovasystems.com/) is an example of the conversion specialist.  It has had a string of good news recently, including a news bulletin this morning on its work with Smith Electric Vehicles, with vehicles delivered to numerous illustrious (and big) companies like AT&T, Frito-Lay, Coca-Cola, Staples, and PG&E (http://finance.yahoo.com/news/Enova-Systems-Sees-Fleet-bw-2788026103.html?x=0&.v=1).  ENA shares languish, primarily it seems because the audience is small, and the stock is trading at $0.52 vs a 52-week high of $3.45, a market cap of under $11 million, and average volume of only 30,000 (though that is not double-counted).  ENA is reporting losses and probably is due for some dilution from new financings in the future, but its market seems to be growing by leaps and bounds, and the endorsements of big companies can do nothing but good for them.

At the same time, Mississauga ONT-based Azure Dynamics (TSX:  AZD, Pink Sheets:  AZDDF; http://www.azuredynamics.com/), also a pennystock is developing, building and selling hybrid trucks delivery vans for companies like FedEx, and passenger busses for municipal bus lines.  We have written about AZD in the past.

Azure Dynamics Hybrid Delivery Van

Azure Dynamics Hybrid Delivery Van

AZD shares trade fairly heavily on the TSX, with an average daily volume of nearly 1.5 million shares.  The US Pink Sheets version of the stock trades far less (70,000 shares), but that is the price we will quote because it is in USD: $0.19 vs a 52-week high of $0.27.  AZD is also reporting losses and consuming cash, but it is hard to imagine how a company gearing up to make fleet vans and trucks and city busses could do so without breaking a few eggs.  They announced a supply agreement with Johnson Controls earlier this year.

Another Canadian company,  Reno-based Altair Nanotechnologies (Nasdaq: ALTI, http://www.altairnano.com/) is concentrating in its transportation segment in batteries for heavy-duty vehicles and municipal busses, although we hasten to add that its primary identification is with the storage of energy from renewable sources, and if you go to their website, the first thing you will see is wind turbines.  Altairnano batteries for the transport market are lithium ion powered.  ALTI shares are trading at $1.03 at the moment, vs a 52-week high of $2.94, and the average volume is nearly 700,000 shares, so there is some liquidity.

We did an article on the subject of busses on June 8.  If you put “hybrid bus” into the search engine of this blog, you can get to that article.  There are illustrations of several, including one from privately held, Golden CO-based Proterra, (http://www.proterraonline.com/pdfs/Index-5_Page-1.pdf).

In the next article in this series, we will start to look at batteries, which, as the SeekingAlpha article that began this article says clearly, are the sine qua non of hybrids now and EVs later.

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