This is a world changer…
I’ve been hearing about electric vehicles (EVs) for more than 20 years.
A few days ago, I searched the internet trying to buy one.
Cute girl, glorified golf cart
This was my only choice…
You can buy it for $7500 if you are so inclined.
It runs for sixty miles at forty-five miles per hour — and you get free parking in California.
Not a bad deal, really.
The problem is that most people would rather buy a car that goes 80 miles per hour and will drive from Toronto to Terra Del Fuego, one gas station at a time.
The Nissan LEAF just might be a world beater
That said, the world of electric vehicles just got a whole lot better.
Plugin.com recently gave the Nissan LEAF rave reviews. The test-driver took the car 116 miles on one charge in a variety of driving conditions.
Here is part of the review:
Most electric cars are two seats, a monster battery pack, and not much luggage space. A brief ride in the Nissan Leaf, due to ship shortly, is enough to convince you that an electric car can be roomy inside and have decent trunk space. Driving the Leaf is like driving most any other modern compact car: fun to drive, easy to maneuver, relatively uneventful.
With gasoline so cheap, a $25,000 electric is no bargain. As a steppingstone to the future of cars, it’s breathtaking.
Hop in and you’re behind a futuristic dashboard. You can ignore most of what you don’t understand. The speedometer part is clearly the speedometer (digital), except it’s at the base of the windshield in a secondary array. Press the start button and a chime tells you the Leaf is ready to roll.
To charge those batteries, Nissan says it can be done in as little as 30 minutes and that’s what you’ll see, along with an asterisk, in Nissan’s promotional material. Here’s the translation: With a standard 120-volt outlet, a full charge takes 18-20 hours. The middle ground is a $2,200, 220-volt charger that refills the batteries in seven hours.
The hot ticket is a 440-volt charger that takes the Leaf to 80% of max charge in 30 minutes. Those are more likely to be seen in public areas, paid for by someone else. Because electric motors are so efficient, the cost to travel 100 miles is around $3 of electricity. That’s the same as $1-a-gallon gas in a 30 mpg car.
LEAF sells out
This is the car we’ve been waiting for.
The first 20,000 have already been sold out on a waiting list. The company is planning to start deliveries in December of 2010, and eventually ramp up to 500,000 cars a year.
If you live in a two-car family with one average commuter driving less than 50 miles a day, owning a LEAF seems like a logical way to go. The fact that gasoline prices are going to go up based on new taxes and a falling dollar will only spur sales.
Buy Nissan?
I first recommended Nissan at around $7 back in 2003 based on value and growth numbers. My readers more than doubled their money in a year.
In fact my mom didn’t take my sell recommendation, and she holds the stock to this day.
As you can see in the chart above, Nissan took a hit during the credit crunch of 2008 along with everyone else. More recently, it has moved up in anticipation of the LEAF.
Right now the market values Nissan as a $39.5 billion company, with a trailing P/E of 13 and quarterly revenue growth of 21.41%, and earnings growth coming off a horrible year of 298.50%.
That’s an impossible number to beat for a car company, and it won’t happen again.
The LEAF is the first real world electric car to hit the market. Is being first worth a market premium?
Steel baron Andrew Carnegie once said that he never met a rich pioneer. And in fact, Wall Street is littered with the empty shells of first movers…
Ford
With most of the hype going to other automakers, Ford is quietly building its own hybrid and electric cars — including an electric work truck, a 70 mpg hybrid, and an all-electric Focus for sale in 2011.
The range, speed, and MPH of Ford’s new electric car (called the BEV) is based on a Focus and will be similar to the LEAF.
Ford (NYSE: F) has a market value of $55 billion and a trailing P/E of 9.66; the company has revenue growth of 30.88% and earnings growth of 14.90%.
Toyota (NYSE: TM) has a P/E of 20, revenue growth of 27%, and earnings growth of 3.03%.
GM has yet to IPO… Though given the $40 million market cap they are talking about, it will likely go public at a better value than any of its peers.
All of these companies are running above their historic price-to-earnings ratio. This is because earnings haven’t caught up from the recession. The market is betting they will.
The investment here, if you were to take it, is to buy Ford. And it looks like Ford is heading to $30, based on pent-up car demand and an improving economy.
But the real money in the EV game will be made in the battery makers…
My good friend Nick Hodge made several hundred percent by following Warren Buffett into a Chinese battery stock last year. The stock is now 40% off its highs, and Nick just put out another buy.
This is the way to play the electric car revolution.
Look for the full report next week.
All the best,
Christian DeHaemer
Editor, Energy & Capital
