How can we gain by investing in the electric vehicle (E.V.) revolution that is upon us?
Right now we at the very early dawn – that moment where the sun nudges above the horizon.
Which vehicle manufactures are going to win the E.V. race?
My answer is – they’re all going to win!
Whether every single niche E.V. start-up will survive is another matter, I believe the best will be snapped up by the current, established manufacturer’s.
Obviously Tesla is an example of a new entrant that has gained an enviable position in the market place.
Whether any of the new tech entrants will actually produce a successful E.V. is open to debate.
I think their success will be in providing I.P. and software for the next step in the revolution – that of driver-less vehicles.
My investment conviction is that we should gain exposure to the mining companies.
Why? – because all E.V. cars need one thing – massive batteries!
They also need much more cabling than combustion engine vehicles – so that means copper – estimates are that every E.V. will need around 38 Kg of the stuff!
Let’s focus on batteries for a moment;
Japan’s New Energy and Industrial Technology development Organization (NEDO) has launched a public-private project to develop solid state battery technology.
Some 23 companies including Panasonic, Toyota, Nissan and Honda are involved.
The group has set 2022 as the target date to develop core solid state technologies and ultimately aims to lower battery pack cost and reduce charging time to 10 minutes.
Japan took the early lead in the solid state race – NEDO previously worked with material makers on solid state battery research.
A majority of patent applications for solid batteries are from Japanese companies.
However when it comes to the current Li-ion battery market Japan is falling behind.
Long time leader Panasonic is expected to see its global market share drop to 16% this year (2018), down from 44% in 2014.
The new king of batteries is China’s Contemporary Amperex Technology (CATL). It’s recent IPO on the NASDAQ has proven tremendously successful (up 44%)
CATL’s batteries, which are primarily using LiFePo and NCM chemistries in prismatic cell formats, have been mostly going to electric bus production and plug-in hybrids,
They recently signed a supply contract with SAAB successor National Electric Vehicle Sweden (NEVS) in order to enable the production of hundreds of thousands of all-electric cars per year.
Apple has also been rumored to be in talks with CATL.
So we could buy some shares in that company!
However for a medium to long-term balanced portfolio my investment play is to buy a position in a mining fund
All the major global mining companies are represented in a fund such as the one I really like – Blackrock World Mining
These types of batteries, known as NCM or NMC will need massive amounts of three active materials; nickel, manganese and cobalt, .
If we take the example of nickel – Australia has the largest resources – see here for global reserves by country.
Both Rio Tinto and BHP Billiton are behemoth Australian centric mining companies and look set to gain significantly.
Glencore has major copper interests.
I am suggesting this fund should be in your investment portfolio.
If you are an expat in China, Taiwan or Macau then this should be held in a tax protective account.
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