What percentage hybrids?

[PrincessB]

I was musing about investments as usual and as a thought experiment I was identifying areas of huge growth. Leaving aside the obvious stuff like medical technology, cars have always interested me as they evolve continually and have a relatively short lifespan.

I seem to recall that the average cars life is a mere 11 years unlike aircraft, trains or buses which last considerably longer or perhaps smartphones which seem to be obsolete a few months after purchase.

There's a clear set of trends developing which I'd like to cash in on. Basic observation says.

The government has decided that it used to like diesel and now it doesn't.

Pure electric cars are getting better each year. As a family, we could easily have something like a Leaf and a petrol car for longer journeys - We don't but I would consider that option when it is time to change vehicles.

Hybrids are becoming ever more popular and this is a trend I see little chance of reversing as some of the more advanced hybrid cars are arguably better than a pure petrol - The Honda NSX is possibly best in show with three electric motors programmed to make up for the shortfalls in the engine.

I would guess that many regular drivers would be more than happy with a car that has a 0-60 time of under 10 seconds (brisk but not silly fast) cruises quietly at motorway speeds and returns 50+ miles to the gallon. These are the type of performance figures a proper hybrid could easily offer and as you're not towing a tonne of battery around you won't feel like you're driving a whale.

The obvious investment opportunities are battery, electric motors, rare earth and transmission (GKN look like good value but have an enormous pension problem).

Just wondering if anyone has followed the same logic chain and would like to comment?

Regards,

B.

[Urbandreamer]

I would guess that many regular drivers would be more than happy with a car that has a 0-60 time of under 10 seconds (brisk but not silly fast) cruises quietly at motorway speeds and returns 50+ miles to the gallon. These are the type of performance figures a proper hybrid could easily offer and as you're not towing a tonne of battery around you won't feel like you're driving a whale.

The obvious investment opportunities are battery, electric motors, rare earth and transmission (GKN look like good value but have an enormous pension problem).

Just wondering if anyone has followed the same logic chain and would like to comment?

Regards,

B.

Symilar, but not the same.

I was looking at the growth in electric cars. With the exception of the batery they should have a far longer lifespan and need less maintenence. However they do need electricity. If they became popular enough that 30% of cars were electric then it would have huge implications for the likes of NG, SSE and others.
Here are some figures.
http://www.nextgreencar.com/electric-cars/statistics/

That Bond-badie DRAX has a bit to say on the subject.
http://www.drax.com/energy-policy/power ... tric-cars/

Of course electricity investment is not without political risk.
Then again there are lithium miners. After all the batteries do have a limited life.

Caviet: I have shares in SSE, GKN and Ricardo.

[bungeejumper]

Interesting question. It's appropriate that you're (correctly) focusing on component suppliers rather than hybrid/electric car manufacturers as such. (If you had been, then Toyota and Tesla would be the horses to watch, with Volkswagen on the outside rails and getting ready for a challenge on the finishing straight in two or three years' time.)

I suspect we could agree that any 'green' investment in the car manufacturers (except Tesla) would be diluted by the disappointing fact that 80% of their sales would still continue to be based on the infernal consumption engine. But just how good is it to invest in a component supplier, given that the manufacturer can swap his preferred supplier on a whim? And the fact that technology companies tend to leap-frog each other? (I mean, who wanted Betamax once VHS came along?) Are there any car buyers who would insist that their car had batteries from XYZ company? I think not - they'd just go for the brand of the car, and never mind who made the bits.

I have lost some money over the years on solar panel technology companies, where the Chinese have all but wiped out the first-world premium suppliers by building lower-quality arrays that were only 80% as efficient but (crucially) only a third of the price. It's been a useful lesson, all the same. Do any suppliers (eg of batteries or gearboxes) have an unassailable lead? Or are they all replaceable? Serious question.

BJ

[Howard]

It is interesting to consider which companies will benefit from electric cars and hybrids.

I think they will catch on rapidly as the technology continues to progress. We have a hybrid and it is a superb performer. It combines the advantages of electricity and petrol. Uncannily quiet at low speeds and seamless power if you need it. With an electric-only range of 16 miles, most of its journeys don’t use petrol. It is easy to charge overnight through a normal 13 amp socket. I’m sad enough to check the consumption of both fuels from receipts. (80 mpg petrol, but if you add costs of electricity, the consumption is the cost equivalent of 58 mpg). The previous diesel achieved 44 mpg with similar usage.

Another advantage is that over 7 months I have visited the petrol station less than once a month!

I think that BMW buy their batteries from Samsung. As well as Tesla, I believe Google and Apple are developing electric cars, so there may be some investment opportunities in companies which are helping phone and car manufacturers get the best out of their batteries?

Also, as indicated in Urban Dreamer’s Drax article above, there are major opportunities for companies who can help to co-ordinate the charging of car batteries with the availability of off-peak electricity.

regards

[Urbandreamer]

Whatever happened to Torotrak, weren't they supposed to be the future of vehicle transmission technology at one time? Never heard about them for years now. I recall "the big announcement" from them was always "just round the corner".

Last I heard it was still "just round the corner". I believe that they are still hanging in, but I bet that their investors are getting a bit fed up.

I think that BMW buy their batteries from Samsung. As well as Tesla, .....

I believe that Tesla's gigafactory is now in production.
https://www.bloomberg.com/news/articles ... igafactory

Tesla is one of SMT's top holdings at 6% of their trust.

BTW I keep coming across rabid journalistic articles preditcting a colapse of our electricity system and a need for taxation to build power stations. I'm happy to provide a link showing that generators and electricity distributers have investigated the issue. I believe that provided the state allows the likes of NG, SSE et-al to make a profit there should be few problems.
http://sse.com/newsandviews/allarticles ... -rewarded/

A quick word of warning about "rare earth" magnets. Without a daubt they revolutionised electric motors over the last 20 years, however they are not the only game in town. Switched reluctance motors use cheaper and more abundunt materials. ie
https://www.theengineer.co.uk/issues/fe ... cle-motor/

Think carefully about your investments and diversify rather than picking a "sure thing".

[gryffron]

IMO electric cars are still at the gimmick stage. And will remain so for a long time until batteries get MUCH higher capacity and MUCH longer lifespan. At the moment the cost, both of purchase and to replace batteries, nowhere near justify their capabilities.

Hybrids are a different matter. They have a lot of advantages. Peak power just when you need it, dropping to very little for the majority of cruising, and nil in a traffic jam. Easy to implement 4wd (important on snow and ice even for road cars, and helps acceleration too). Easy to drive. Also of course, they do not need a transmission, as the motors provide direct drive to the wheels. So poor old torotrak could be obsolete before the perfect their product. I can see most domestic cars being hybrid fairly soon, with the market being driven by the US where they really like their automatics.

Gryff

[Urbandreamer]

IMO electric cars are still at the gimmick stage. ......Also of course, they do not need a transmission, as the motors provide direct drive to the wheels. ....
Gryff

I'm afraid that most hybrids do require a transmission. The IC engine is connected to the wheels via a gearbox (parralel hybrid). The only ones that I know that don't work that way (serial hybrid) use gas turbines (miniture jet engines) to generate the electricity. They are currently more concept than mainstreem.
http://www.bladonjets.com/applications/ ... ase-study/

I am not going to dispute your opinion on pure EV's save to point out that they do seem to be selling surprisingly well.

Re batteries. Many hybrids use NiMh technology simply because it has a long life. Lithium would give better performance, but need replacing a lot more frequently. EV's need that performance boost, hence the complaint that the batteries need replacing at high expence after a "few" years.

[Howard]

Urbandreamer

Thank you for the interesting articles. As a user of a hybrid, I would be very happy for an electricity supplier to decide when my car is charged when it is plugged in. Particularly if there was a modest price advantage for being flexible. In fact I now realise that this is much more convenient than having to go to the nearest petrol station (four+ miles away) to fill up with petrol. Obviously this would not be suitable for everyone, but for a low mileage vehicle often used on short runs it is a benefit I hadn't realised until getting the car.

The electric motor drives my car through the auto gearbox in tandem with the petrol engine which gives a very smooth transition between motive power and charging the battery on overrun.

As a result of reading the article you mentioned about electric motor design and my experience of a hybrid, I have made a modest investment in Ricardo. This company seems to be involved in some of the developments we have discussed. I'll give it five years, to see if they benefit from their involvement in the technology!

[k333]

I seem to recall that the average cars life is a mere 11 years unlike aircraft, trains or buses which last considerably longer or perhaps smartphones which seem to be obsolete a few months after purchase.

The average life of cars is a lot more than that, at almost 14 years, and this will include cars that get written off because of an accident. Of the cars that don't have an accident I would guess that the average would be either side of 15 years.

- K