Readers Love Electric Cars
Apparently readers love the idea of electric cars.
Two days ago I wrote Electric Cars - the Future or a Distraction, and soon after your emails started pouring in. In fact, as I write this on Wednesday morning my inbox continues to alert me to new responses! I have to say, I love hearing from readers and in particular found it interesting that so many are staunch supporters of electric vehicles.
I thought my article was fairly balanced on the pros and cons of electric cars and the subsidies that green energy solutions depend upon. Most of the emails I received were from readers with a similar perspective. But some glossed over the reality that the vast majority of our electricity does not come from clean sources.
I think, and I hope, that readers are aware of the strain that a new generation of electrical vehicles would put on our energy grid. Consider how much more coal would need to be burned if even 10 percent of Americans traded in their gas guzzlers for a Tesla, Nissan Leaf, or Chevy Volt.
Now don't get me wrong - I am not saying that we should not move toward electric vehicles. I support the movement, and government programs to assist their future viability. As I wrote previously, "Sectors like agriculture, railroads and oil have been the beneficiaries of government subsidies for decades. Strong political will could ensure that clean energy fuels and cars receive the same support. Denmark, along with a host of other nations, has shown that it can be done."
But it needs to be done with keen awareness that from a pure economic
standpoint, early adopters are footing the bill. That's great when it's a
conscious decision (and if people can afford it), but not if consumers go
out and buy an electric car on the premise that they will immediately
save money. To be sure, some will - depending on their driving habits.
But others won't. I just don't want people making poor investments with
their hard earned dollars.
Doug L. wrote:
"Have you seen 'Who Killed The Electric Car', if not you should rent it and watch it. If GM would've stayed the course of producing electric cars they would not be in the shape they are today. I just purchased stock in Tesla today. We'll see how the oil spill helps drives this stock."
Doug's sitting on a nice gain, hope it holds up for him. I'm glad that he is also aware of the positive momentum that the BP oil spill is likely having on Tesla's stock. I did see Who Killed the Electric Car - it was a fine example of one of the biggest blunders of corporate decision making on record. But also a great example of failed political will - had California policy makers not run for cover GM may have kept the EV1 program alive. Corporate leaders, and elected officials, need to work together to move energy efficiency initiatives away from 'flavor of the month' ideas, and toward long-term programs. Then companies and consumers will know what they can count on - and make investment decisions accordingly.
***I approach Tesla's debut as a publicly traded company with that same cautious optimism. I'd love to see the company become a roaring success - but I also want my readers to earn money on their investments.
So far, I've been dead wrong on Tesla's stock. After just two days of trading the stock has already soared 25 percent from its open of $19.00. Even more impressive, this gain has come over two days when the S&P 500 has fallen 4 percent. Clearly the stock is benefiting from the same strong support for electric vehicles that many of you feel.
Again, from my previous article I wrote,
"...alternative-energy stocks trade on sentiment and future opportunity and in the wake of BP's oil spill, people want an alternative. In this case, sentiment reflects confidence on continuing to support alternative energy companies through subsidies. Subsidies mean cash flow, and every analyst knows that a company's stock price is fundamentally driven by the promise of future cash flows. The timing of Tesla's IPO, in the recent wake of the BP disaster, could help the new share's trade higher on sentiment alone."
My point is this: we should support alternative energy solutions, like electric cars, because we need to try to move toward a more energy efficient future. And innovation is a process - without a starting point, and missteps, we'll never get closer to our goal.
Mitch wrote:
"Unless America wants The Deep Water Horizon situation to be a yearly event, I don't see electric vehicles not becoming the norm in society. We can't afford not to try."
I agree Mitch - but we need to have a diversified approach.
Our desire to move toward cleaner, greener energy solutions doesn't mean that every publicly traded green company is a good one to invest in. Fundamentals still matter, and if investors take a hit on shares of companies like Tesla they are less likely to support future clean energy initiatives.
Tom B. wrote:
"I invested in a company called Unique Mobility some years ago on the IPO. They are involved in electric motors and are now traded under the symbol UQM. They have done nothing over that time but lose money and their stock price shows it. Maybe things will change, but it is a long, slow progress until there is an economic reason for the product. Until then, it is nothing but a fad. That said, we may be nearing that point when oil prices resume move up."
Tom's experience is one I'd like you to avoid. Thanks for the perspective Tom, hope UQM turns it around.
Jim wrote in:
"Don't have a Tesla, but I do have a BMW/MINI E! I'll give you a ride anytime! It's by far the most FUN driving experience I've ever had - 15,000 miles in the first year, now working on the second year. 100 to 125 mile range has been more than adequate in my daily use in the greater Los Angeles sprawl. And this is WITHOUT an established charging infrastructure. Just using the electricity that is already available (it's everywhere you know). I will be looking for an Electric (BEV) as my next car and am eagerly waiting for the Model S!"
Sounds like Jim's loving his electric Mini, and I must admit when a friend pulled up in her convertible Mini the other day I wanted to go for a spin.
Let me know when you make it to the north east Jim!
***Here's the deal guys - I want to find you profitable investments, and entertain you in the meantime. Tesla is a great story, and by all accounts makes a simply amazing product. It's also run by a man, Elon Musk, who has a track record of success. He founded PayPal and sold it to eBay in 2002. He pocketed $21 million with Tesla's IPO.
If you want to buy an electric car, or shares in Tesla - go for it. Just be sure you can afford it. Only then will you enjoy your purchase.
