Only Invest in Car Companies that Build Electric Cars
Electric Vehicles are Just Better
Beyond 2025, battery and fuel-cell vehicles could simply become the best way to design and engineer a light-duty vehicle.
These are not the words of Elon Musk or some overzealous treehugger. These are the words of Lawrence Burns, the former corporate vice president for R&D at General Motors (NYSE: GM)
Lawrence, who now works as an advisor for Google (NASDAQ: GOOG) and Allstate, is bullish on electric cars. And not because of new climate regulations or pollution controls.
“Set aside all the motivations with climate change, oil dependence—it’s just a better way to do a car. It’s simple.”
He's absolutely correct, and most auto market insiders know this to be true.
Let's face it, while the internal combustion engine is a brilliant design, it's simply outdated.
In a world where we have access to all kinds of new battery chemistries, advanced materials, and state-of-the-art manufacturing technologies, relying on an internal combustion engine to move us from point A to point B is kind of like relying on a VHS player to watch movies.
Sure, VHS players do work, and VHS tapes are practically free. But the ability to press a button on your remote and watch a digital download of a new movie in the comfort of your own home is clearly better.
When Things can't get Better
Electric cars offer a number of advantages over internal combustion.
- They're quieter
- You can “fuel up” at home, while you sleep
- They're cheaper to operate as they don't require gasoline or diesel, don't require oil changes, and don't have external exhaust systems
- There is no environmental burden of tailpipe emissions
Of course, there are also some disadvantages, which include limited range, long refueling times, and higher upfront costs. But here's the thing …
All of these “disadvantages” will eventually be overcome.
Ranges will eventually exceed those of most internal combustion vehicles on the market today, refueling times will continue to fall, and as the sector advances, costs will inevitably come down.
Compare this to the disadvantages of internal combustion:
- Reliant upon gasoline or diesel
- Require regular engine maintenance
- More expensive to operate
- Tailpipe emissions are highly pollutive
While the disadvantages of electric cars are only temporary, the disadvantages of internal combustion are set in stone. They simply can't get much better.
Now I'm not suggesting you run out and invest all your money in an electric car company or a company that provides materials for electric cars, but I am saying that as we move forward, it will become increasingly clear that the major players in the auto industry that don't embrace electric vehicle technology will be on the losing end of history.
So if you're looking to invest in a car company, you may want to steer clear of any that aren't actively building out their electric vehicle fleets. Because these, dear reader, will be the losers over the long-term.
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