Tesla a Bright Spot in Still Dim, but Improving Electric Car Industry

Photo of Nissan Leaf S courtesy of evworld.com

Photo of Nissan Leaf S courtesy of evworld.com

Anyone watching the still slow but improving progress of the electric car industry may have seen the Bloomberg Businessweek story on the “Tale of Two Electric Car Makers: Tesla Soars, Fisker Flops” (http://www.businessweek.com/articles/2013-05-08/a-tale-of-two-electric-car-makers-tesla-soars-fisker-flops). Tesla Motors not only produced a profit in the first quarter, as advertized, but also increased its guidance on sales for the year, from 20,000 to 21,000 cars. TSLA revenues were up 83 percent year-over-year to $562 million and the stock is soaring (see below).

While the article outlines supply chain and battery issues and other “kinks in its processes” Tesla needs to iron out, their stock is soaring and the outlook looks good. The contrast was provided by Anaheim, CA-based Fisker Automotive, which is laying off employees and hiring bankruptcy consultants, the article reports. Another electric car maker, Los Angeles-based CODA Automotive, recently filed for bankruptcy protection and announced it was “focusing its business strategy on the growing energy storage market,” according to a company filing.

For more positive electric car news, the BBC posted an article this week on the Nissan Leaf (http://www.bbc.com/autos/story/20130509-leaf-charges-into-mid-life) as it “charges through mid-life.” The Leaf, billed as “the first truly global mass-produced electric vehicle,” now includes the Leaf S, a lower cost model “designed to lower the barrier of entry to EV ownership.” One of the cost cutting moves was to move its assembly line from Japan to another Nissan factory in Smyrna, TE.

The BBC put the Leaf through its paces and managed to get 75 miles from a full charge, right about in line with Nissan estimates. Competitors mentioned in the article include the Toyota Prius PH-V and Ford C-Max Energi, both plug-in hybrids.

If anyone out there is charged up about the electric vehicle market, and knows of a small cap stock play in this market, please let us know. Meanwhile, we’ve been following a few small caps, plus Tesla to see how their stock is moving. We’ve also added a new company, Car Charging Group, to our list.

Palo Alto, CA-based Tesla Motors (Nasdaq: TSLA, http://www.teslamotors.com/) manufactures the Tesla Roadster, the Model S and other electric vehicles and electric powertrain  components. It’s way too large for our small cap blog focus, but just as a reference, the last time we looked at Tesla last February 20 it was trading at $38.90 with a market cap of $4.4 billion. As we mentioned, TSLA stock has been on a huge roll. It closed May 15 at $84.84, up $1.60 for the day. Its 52-week trading range is now $25.52-$97.12.

Santa Rosa, CA-based ZAP (OTC: ZAAP.OB, http://www.zapworld.com/) makes a variety of all-electric vehicles including trucks, motorcycles, shuttle buses and sedans and was formerly known as ZAPWORLD.COM. When we last checked on Feb. 20 its stock closed at $0.08 with a market cap of $24. ZAAP closed May 15 at $0.14, up 3 cents for the day, with a market cap of $42 million. Its 52-week trading range is $0.06-$0.27.

San Diego-based Maxwell Technologies Inc. (Nasdaq: MXWL, http://www.maxwell.com/) was formerly known as Maxwell Laboratories. The company manufactures ultracapacitors that are energy storage devices and power delivery systems for use in transportation, automotive, IT and industrial electronics.  MXWL closed back on Feb. 20 at $10.01 with a market cap of $292 million. It closed May 15 at $6.36, up 11 cents for the day, with a market cap of $185 million. Its 52-week trading range is now $4.90-$11.08.

Miami Beach-based Car Charging Group (OTCQB: CCGI, http://www.carcharging.com/) caught our eye with the announcement March 12 that it was acquiring EVPass, a company building destination charging networks for EV charging. CCGI  is also in the business of building charging station networks and has been busy making more acquisitions. Earlier this month, CCGI announced it had acquired 350Green LLC. CCGI closed May 15 at $1.34, up 4 cents for the day, with a market cap of $70.8 million. Its 52-week trading range is $0.60-$2.

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This Big, Bad, 949-Horsepower, Million Dollar-Monster Is a Hybrid

If you are a fan of electric and particularly hybrid vehicles, and more people apparently are every day, you have to like the spectacular news coming out of Ferrari and the recent report from Autodata Corp., a research firm.

Photo courtesy of automonthly.blogspot.pt

Photo courtesy of automonthly.blogspot.pt

Let’s start with Ferrari, which unveiled its La Ferrari supercar in Geneva in March. Yes, Ferrari’s “biggest and baddest” car these days is a hybrid, according to the Los Angeles Times (http://www.latimes.com/business/autos/la-fi-hy-autos-hybrid-20130330,0,2070748.story). It’s a V-12, “949-horsepower, million-dollar monster” that also has two electric motors and recharges its batteries with regenerative braking and the engine’s excess torque.

Who knows how many La Ferraris will actually sell, but the good news from Autodata is that hybrids are certainly selling faster than ever. Hybrid sales in the first two months of 2013 are up 32 percent over the same period last year, according to the Times report.

While overall marketshare is still low, about 4 percent, the fact that Ferrari is now in the hybrid market underscores the fact that that hybrid technology “is being taken seriously by virtually all the automakers,” noted analysts in the Times, including Nissan which introduced a new hybrid version of the Pathfinder at the New York Auto Show in February after dropping out of the hybrid market a few years ago. Overall, hybrids deliver 40 percent better fuel economy than conventional gasoline-powered cousins of the same model.

As we have noted earlier, the Prius is now the best-selling car in California, the nation’s largest auto market, and they’re apparently reliable. Not only are they now being used as taxicabs, which take a notorious beating, but the Times story notes that Toyota reports that 90 percent of all Prius cars it sold since introducing the model are still on the road. 

The story includes a note that one large Houston Ford dealership reports that its sales of hybrids are up 400 percent from a year ago. Nationally, Ford reports it’s selling 3,000-4,000 of its C-Max hatchback hybrid, a direct competitor to the Prius V station wagon, according to the Times.

While Toyota’s hold on the hybrid market has dropped from 73 percent to 63 percent, thanks to competitors like Ford, the overall market size is much bigger, meaning “both automakers are sharing a bigger pie,” noted the Times.

Unfortunately, hybrid vehicles are difficult to link directly to small cap stocks. So we’ve taken some liberties and included companies like Tesla Motors, which makes electric vehicles and is a mid-cap, and Axion Power International, which makes a battery used in a hybrid 18-wheeler made by a private company called ePower.

Palo Alto, CA-based Tesla Motors (Nasdaq: TSLA, http://www.teslamotors.com/) manufactures the Tesla Roadster, the Model S and other electric vehicles and electric powertrain  components. The last time we looked at Tesla last on Feb. 20 it closed at $38.90 with a market cap of $4.4 billion. But it came out with promising news this week, saying car sales nearly doubled in the first quarter of 2013 compared to the fourth quarter, and expects to turn a profit. TSLA closed April 2 at $44.34, up 41 cents, with a market cap of $5.1 billion. Its 52-week range is now $25.52-$46.68.

New Castle, PA-based Axion Power International (OTC: AXPW, http://www.axionpower.com/) has developed a specialty PbC battery technology designed for micro- and mild-hybrids, as well as an advanced energy storage device. A private Pennsylvania-based company, ePower, is developing 18-wheeler hybrid trucks with the Axion PbC batteries. Axion closed April 2 at 26 cents, down 1 cent for othe day, with a market cap of $30 million. Its 52-week trading range is $0.20-$0.47.

Santa Rosa, CA-based ZAP (OTC: ZAAP.OB, http://www.zapworld.com/) makes a variety of all-electric vehicles including trucks, motorcycles, shuttle buses and sedans and was formerly known as ZAPWORLD.COM. Most of its business at this point is with government or military customers. When we last checked on Feb. 20 its stock closed at $0.08 with a market cap of $24 million. It closed April 2 at $0.17, up 2 cents on the day with a market cap of $51 million. Its 52-week trading range is $0.06-$0.27.

San Diego-based Maxwell Technologies Inc. (Nasdaq: MXWL, http://www.maxwell.com/) was formerly known as Maxwell Laboratories. The company manufactures ultracapacitors that are energy storage devices and power delivery systems for use in transportation, automotive, IT and industrial electronics.  MXWL closed Feb. 20 at $10.01 with a market cap of $292 million. It closed April 2 at $4.98, down 17 cents for the day, with a market cap of $145 million. Its 52-week trading range is $4.92-$18.33.

Does the ‘Car of the Future’ Have a Future? Tesla Says Yes

Does the “car of the future” have a future? That’s the question Time magazine asks as the end of its recent story on electric cars that ran under the headline “Electric-Vehicle Acid Test” (http://www.time.com/time/magazine/article/0,9171,2134523,00.html). While more and more battery-powered and hybrid vehicles are being introduced and prices continue to be slashed, sales continue to disappoint. Nonetheless, Cadillac, Fiat, Ford and Honda have announced that they will launch new all-electric vehicles this year.

Auto analysts say the biggest hurdle electric cars face is range, according to Time. Pure electric cars like the Nissan

Photo courtesy of Motortrend.com

Photo courtesy of Motortrend.com

Leaf list a range of about 80 miles before it needs a recharge, which can take hours. The Tesla Model S electric car boasts a range of 265 miles, although that’s currently the source of much debate, based on a kerfuffle kicked up by New York Times reporter John Broder’s test drive (http://www.nytimes.com/2013/02/10/automobiles/stalled-on-the-ev-highway.html?pagewanted=all&_r=0&pagewanted=print). When Broder reported that the Model S failed to live up to the range claims,  among other issues, Tesla founder Elon Musk took offense and offered other reporters a similar test drive to prove Broder was misleading readers and failed to fully recharge the batteries. Incidentally, Tesla reported its fourth quarter/year end results Feb. 20 and reconfirmed its guidance that 20,000 Model S vehicles will be sold this year and, in what was a new outlook, said the company will be profitable in the first quarter of 2013, not later in the year as they had guided investors earlier.

There’s little debate the fact that electric and hybrid vehicle prices are being slashed considerably. The lease price of the Nissan Leaf, which was about $449 per month in 2010, is now $139 monthly. Time reports that General Motors executives say the cost of next year’s Chevrolet Volt “will be thousands of dollars cheaper than last year’s.”

So how does a small cap investor play the electric and hybrid vehicle market? Here are a few randomly chosen options:

Palo Alto, CA-based Tesla Motors (Nasdaq: TSLA, http://www.teslamotors.com/) manufactures the Tesla Roadster, the Model S and other electric vehicles and electric powertrain  components. It’s too large for our focus, but just as a reference, the last time we looked at Tesla last September 19, 2012 it was trading at $31.05 with a  market cap of $3.3 billion. It closed Feb. 20 at $38.90, down $0.38 for the day with a market cap of $4.4 billion. Its 52-week trading range is now $25.52-$40.

Santa Rosa, CA-based ZAP (OTC: ZAAP.OB, http://www.zapworld.com/) makes a variety of all-electric vehicles including trucks, motorcycles, shuttle buses and sedans and was formerly known as ZAPWORLD.COM. Most of its business at this point is with government or military customers. Its stock, which traded for 20 cents last March 13, 2012 with a market cap of about $45 million, closed Feb. 20 at $0.08, no change on the day. Its market cap is now $24 million and 52-week trading range is $0.06-$0.21.

San Diego-based Maxwell Technologies Inc. (Nasdaq: MXWL, http://www.maxwell.com/) was formerly known as Maxwell Laboratories. The company manufactures ultracapacitors that are energy storage devices and power delivery systems for use in transportation, automotive, IT and industrial electronics.  MXWL closed back on March 13, 2012 at $18.69 with a market cap of $522 million. MXWL closed Feb. 20 at $10.01, down 48 cents for the day. Its market cap is now $292 million.

‘Try It, You’ll Like It’ Is Hope of Non-Profit Group Backing Plug-In Electric Vehicles

Much has been made about the relatively weak sales of electric and plug-in hybrid vehicles, particularly the Chevrolet Volt. The Volt received good reviews for its pep, its seamless operation and design when it first debuted in December 2010 (http://www.nytimes.com/2010/12/26/automobiles/autoreviews/26volt.html?pagewanted=all). But then it was priced at $41,000 (before a $7,500 federal tax credit) and initially sold in only six states (California, New York, New Jersey, Texas, Connecticut and Michigan) and Washington, DC. By last March, General Motors announced it would suspend production of the Volt for five weeks because inventory had built up faster than sales.

Many electric car/plug in hybrid advocates have suggested that the real reason car buyers are not choosing these

Chevy Volt photo courtesy about.com

vehicles is that they haven’t driven them. To that end, a nonprofit group called Plug In America has organized National Plug In Day on Sept. 23, a celebration taking place in 60 U.S. cities that allows people to drive these cars. Cars available for driving include the BMW ActiveE, Chevy Volt, Coda, Fisker Karma, Honda Fit EV, Mitsubishi iMiEV, Nissan Leaf, Plug In Prius, Tesla Roadster and Toyota Rav4 EV.

On Sept. 18, Pike Research issued a report tracking factors like age, race, gender and income, among other determinants, that indicate the likelihood of a North American consumer to buy a plug in electric vehicle (PEV). One of the most important indicators is geography and the report concluded that that state with the highest PEV sales for the remainder of this decade will be California. The report, titled “Electric Vehicle Geographic Forecasts,” notes that PEV sales “roughly correspond to population but other factors, including demographics, socioeconomics and public policy have a strong influence as well.” The report including an executive summary is available for free at the Pike Research website.

We last covered a random variety of small caps related to the PEV and hybrid automobile markets, including battery companies, last March.  Here’s a look at what has happened to these stocks in the meantime.

Santa Rosa, CA-based ZAP (OTC: ZAAP.OB, http://www.zapworld.com/) makes a variety of all-electric vehicles including trucks, motorcycles, shuttle buses and sedans and was formerly known as ZAPWORLD.COM. Most of its business at this point is with government or military customers. Its stock has been on a gradual downturn since it sold for 90 cents in early 2011. It sold for 20 cents last March 13 with a market cap of $45.25 million. ZAAP closed Sept. 19 at $0.13. Its market cap is now $38.7 million.

Waltham, MA-based A123 Systems (Nasdaq: AONE, http://www.a123systems.com/) makes lithium ion batteries based on its proprietary Nanophosphate technology. It stock was a high flier back in the fall of 2009 when it traded for about $26 but those days are long gone. Last March 13 the stock closed at $1.69. AONE closed Sept. 19 at $0.32 cents. and market cap is now $54.4 million.

Austin, TX-based Valence Technology Inc. (Nasdaq: VLNC, http://www.valence.com/) manufacturers energy systems based on another phosphate-based lithium ion technology. Its products are used in a variety of applications in addition to all-electric vehicles, such as wheelchairs, robotics and remote power devices. VLNC stock has come way down in value from $5 in 2008. Last March it traded for 88 cents and its market cap was $150 million. VLNC closed Sept. 19 at $0.019 with a market cap of $3.2 million. It is currently facing a variety of class action shareholder lawsuits.

San Diego-based Maxwell Technologies Inc. (Nasdaq: MXWL, http://www.maxwell.com/) was formerly known as Maxwell Laboratories. The company manufactures ultracapacitors that are energy storage devices and power delivery systems for use in transportation, automotive, IT and industrial electronics, as well as microelectronic products including single board computers and high-density memory and power modules for satellites and spacecraft applications. Last March 13 MXWL stock was trading near the top of its 52-week range at $18.69 with a market cap of $522 million. The stock took a hit when management cut back on its revenue guidance in August. MXWL closed Sept. 19 at $8.54, down 31 cents for the day. Its market cap is now $249 million.

San Carlos, CA-based Tesla Motors (Nasdaq: TSLA, http://www.teslamotors.com/) manufactures the Tesla Roadster and other electric vehicles and electric powertrain  components. Its market cap of $3.3 billion puts it out of our smallcap focus but its stock hit a 52-week high of $36.29 March 12, which put the stock up more than 30 percent in the past five months. By Sept. 19 it had dropped down to $31.05.

Hot Market Driving Interest in Automotive Technologies, Both Old and New

They say the used car market is hot right now, thanks mostly to the slumping economy. But even a hot market can’t really explain the recent news from CNNMoney that the world’s oldest, still running used car just sold for $4.6 million (http://money.cnn.com/2011/10/10/autos/worlds_oldest_car/index.htm?iid=HP_Highlight). No, this 1884 De Dion-Bouton et Trepardoux, also called “La Marquise,” is a collector’s item and its selling price, according to the report is the “highest price ever paid for an early automobile at auction” and twice what its owners expected. The car certainly offers an interesting look at how automotive technology has changed over the years.

This is, in effect, where car technology started: Its fuel was not gasoline, but powered by steam created by “coal, wood and bits of paper.” Top speed is 38 miles per hour but it takes about a half hour to warm up and create enough power to drive it.

Of course, for our purposes, this is an interesting ignition point for covering some of the new automotive technologies that are powering some small cap stocks. Here are just a few and perhaps we can add to this list in the near future:

Cincinnati-based AMP Electric Vehicles * (OTCBB: AMPD, http://www.ampelectricvehicles.com/) is a young company that currently retrofits those sport utility vehicles (SUVs) and crossovers that Americans love to emission-free pure electric vehicles. AMPD is currently working on the Mercedes Benz SUV ML 350; they drop out the internal combustion engine completely and integrate their proprietary electric drive components into the Mercedes, leaving all the safety and luxury components intact. Drivers tell us that the superb M-B performance is not only undiminished; in some ways it is actually enhanced. CEO Jim Taylor is a former President of GM’s Cadillac division and CEO of its former Hummer division.  We anticipate announcements about the Jeep Cherokee as well.  The stock trades thinly, as often happens in such early stage companies, and is currently selling for $0.50. Its 52-week high is $1.05.

New Castle, PA-based Axion Power International * (OTCBB: AXPW.OB, http://www.axionpower.com/) manufactures high-performance low-cost lead-carbon (PbC(R)) batteries for a variety of markets, including for “mild” and “micro” hybrid vehicles, which are anticipated to be the commonest form of hybrid in the US within a couple of years (and it already is the most common in Europe). Its PbC batteries are as easy to manufacture as the older lead-acid batteries, but they use activated carbon instead of half the lead.  They are lighter and 100% recyclable (unlike lithium ion batteries), and have a higher charge acceptance and faster recharging rates, making them ideal for the growing  micro-hybrid and mild hybrid markets.  AXPW stock closed Oct. 10 $0.51, near the low end of its 52-week range ($0.42-$1.27).

San Carlos, CA-based Tesla Motors (Nasdaq: TSLA, http://www.teslamotors.com/) manufactures the Tesla Roadster and other electric vehicles and electric powertrain  components. With a market cap of $2.9 billion it’s really out of our smallcap focus, but it certainly should be included in even a brief survey of new automotive technologies. Its stock was highest (more than $35) about a year ago but like many companies now is languishing. It closed Oct. 10 at $27.80.

Northville, MI-based Amerigon * (Nasdaq: ARGN, http://www.amerigon.com/) is the world’s leading marketer of thermoelectric technologies for automobiles and is best known for its actively heated and cooled seat systems featured in more than 50 vehicles. But it is winning new headlines for a thermoelectric generator (TEG) that the company is developing with partners including BMW, Ford and Caltech’s Jet Propulsion Lab. The TEG converts waste exhaust heat into electricity, a technology that has been shown to reduce toxic emissions and increase fuel economy along with providing a much needed new source for electricity in a vehicle. The TEG is currently being tested in a BMW X6 and Lincoln MKT. The stock closed Oct. 10 at $14.02, down from its $18.18 high for the past year, but above the $9.33 low.

Oak Park, MI-based Azure Dynamics (Toronto: AZD.TO, http://www.azuredynamics.com/) develops and manufactures electric power trains for light and heavy-duty commercial vehicles, including vans and buses. The company is best known for partnering with Ford and building the electric drivetrains for the all-electric Ford Transit Connect. Azure recently announced that it is enrolling Ford truck dealerships across North America to be electric Transit Connect dealers and service centers, the sale of 100 electric Transit Connect vans in Europe, and the sale of 34 electric Transit Connect to municipalities and a regional governmental authority in North America. Its stock closed Oct. 10 at $0.15 with a 52-week range of $0.11-$0.41.

* Denotes client of Allen & Caron, Inc., publisher of this blog