EVs and HEVs: Mushy Veggies or the Hope for the Future?

“Like mothers who push healthy food at skeptical children, carmakers insisted that despite the mushy-veggies taste of smaller engines and hybrid everything, Americans will learn to love gas sippers and drive them without shame.” (from coverage of the New York Intl Auto Show by the NY TIMES: http://www.nytimes.com/2010/04/04/automobiles/autoshow/04SHOW.html?hpw)

Now while it’s clear that automobile writers may be wondering where the muscle cars went (and choosing to write about ever-clunkier-looking crossovers and sport utility vehicles),  it turns out the first mass-market pure EV is hitting the showrooms in Japan, and auto buyers are taking to it like the proverbial duck to water: http://finance.yahoo.com/news/Japanese-start-buying-apf-3281658505.html?x=0&sec=topStories&pos=1&asset=&ccode=.  It’s a 4-seater from Mitsubishi called the i-MiEV and it costs about $30,000 after tax and other incentives.  The car is rated for 100 miles between charges, and can be charged in as little as 30 minutes at a turbo-charged charging station (no, there are not very many of them).  See this article from AutoBlogGreen: http://green.autoblog.com/2010/04/02/mitsubishi-aims-for-sub-30-000-price-tag-on-u-s-i-miev/

i-MiEV from Mitsubishi, Japan's first mass-market EV

At the same time, Nissan announced that its new EV, the Leaf, will be in showrooms by December, and they have started taking orders.

We’re anxiously awaiting the Tesla IPO announced earlier this year (http://earth2tech.com/2010/01/29/tesla-ipo-electric-car-startup-files-for-100m-public-offering-finally/), and that offering, when it happens, may herald the first true US EV “muscle car” public company.

For the smallcap investor, there are ways to invest in the EV as a passenger-car trend, both by investing in cross-border companies and by investing in companies that make parts and pieces of EVs.  One hint at the broad influence that EVs will have if they are widely accepted (and we assume they will be) is written between the lines in an announcement by Ford and Microsoft, and released on the first day of April.  It deals with a cooperative agreement between the two companies as to a program called Hohm (a combination of the place you live and a measure of electrical energy), which may help EV owners calculate the cheapest and most efficient ways to re-charge their cars, considering that charging a car is likely to double the energy usage of some homes. http://www.greencarcongress.com/2010/04/hohm-20100401.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+greencarcongress%2FTrBK+%28Green+Car+Congress%29

Also mentioned in that announcement are Ford’s plans to introduce 5 new electric vehicles over the next few years, the first of which is the electric Transit Connect, which was shown at the Chicago Auto Show earlier this year, and which will start being delivered in the 4th quarter of 2010.  The Transit Connect is a co-product of Ford and Oak Park MI-based Azure Dynamics Corp* (TSX: AZD and OTC: AZDDF; http://www.azuredynamics.com/), and while it has been announced as a commercial vehicle, there seems a strong likelihood that some portion of the Transit Connects that hit the roads will find themselves serving at least partly as family vehicles.  It’s worth noting that the Transit Connect (which will be available in gas-powered and EV versions) was named North American Truck of the Year for 2010: http://www.northamericancaroftheyear.org/.  AZDDF and AZD shares closed Thursday at $0.26, with average volume of well over 800,000 shares a day in Toronto.   

Privately held Norwegian company, Think Electric, announced last week that it will begin selling its Think City, a mini-sized urban vehicle, in New York City and other US cities: http://www.thinkev.com/Press-Material/Press-releases/THINK-to-begin-selling-city-electric-car-in-New-York.  Think’s US cars will be built in Elkhart IN, near the operations center of its battery supplier and significant partial owner, Ener1 Corp (Nasdaq: HEV; http://www.ener1.com/), which has been the recipient of a hefty federal stimulus award for its own battery operations.  HEV shares closed at $4.40 vs a 52-week high of $7.90 on Thursday, for a market cap of $550 million and daily average trading of  nearly a million shares.  One could own Think indirectly through HEV shares.

Think City EV (in a bubble)

I attended a presentation last month by Henrik Fisker, founder of venture-backed Irvine CA-based Fisker Automotive, which has announced a plug-in electric luxury sports car, the Karma, and is taking orders for it now.  Fisker Automotive has been awarded more than $500 million in federal stimulus loans conditioned on the company’s posting adequate investment matching funds.  While Fisker is privately held, a small minority of its shares are owned by its strategic partner, also based in Irvine CA, Quantum Fuel Systems Technologies (Nasdaq: QTWW; http://www.qtww.com/).  QTWW shares closed at $0.67 on Thursday, vs a year-high of $1.77, with average trading volume climbing toward 2 million shares a day, and a market cap of just under $100 million.  While it seems obvious given the high level of venture capital that has been invested, that Fisker will eventually go public, no plans have been announced to date.

The cloud that hangs over the EV and HEV industries is some worry about whether the car-driving public will give up their gas-powered cars.  Hybrids (there really are very few EVs yet available) as a percentage of sales dropped year-to-year in March: http://blogs.edmunds.com/greencaradvisor/2010/04/march-us-hybrid-sales-rise-18-percent-but-lag-overall-vehicle-growth.html, although the figures are not complete since not all hybrid makers reported.  The Prius still leads the pack with 53% of hybrid sales last month. 

It could be that the EV will attract a more willing audience than the technologically complex dual-system hybrids.  Standard-looking cars like the Tesla and Fisker will be needed to establish that EVs are not glorified golf carts, a moniker still thrown at some of the smaller ones, and once the big car companies are putting EVs in their showrooms that will help as well.  For now, the electric Transit Connect by Ford and Azure Dynamics looks to be the first of those big-name cars in the US, probably followed by their Japanese brethren from Nissan and Mitsubishi.

*client of Allen & Caron, publisher of this blog


One thought on “EVs and HEVs: Mushy Veggies or the Hope for the Future?

  1. Pingback: Tweets that mention EVs and HEVs: Mushy Veggies or the Hope for the Future? « SmallCapWorld -- Topsy.com

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