Issue link: http://resourceworld.uberflip.com/i/107613
insights & investments E r ic H oe sg e n & D e nnis H oe s g e n ITVs and EVs D o you remember what TVs looked like 10 short years ago? A major breakthrough in television technology was the transformation from cathode ray tube to flat screens. This important development was the catalyst that allowed manufacturers to focus on efficiency and design – refining size, shape, thickness and clarity over the years. Costs have come down enormously, and now flat screens are ubiquitous. In our opinion, the importance of recent Electric Vehicle (EV) technological milestones is comparable to those early developments of flat screen technologies, and as such, similar exponential growth is likely to come. Electric vehicle automakers had an excellent year in 2012. The growth in sales seemed inevitable when considering the age of the NA fleet is almost 11 years. US vehicle sales totaled 14,439,684 units, which was up 13.4% from 2011. Hybrid vehicles represented 434,498 of these units, up 61.4% from 2011, with all-electric vehicle sales for 2012 totaling 53,172 units, up 198% from 2011. Here is where the sales came from: Toyota (TM) sold 235,000 hybrids, led by the PRIUS; GM (GM) sold 23,461 units of the VOLT; Nissan sold 9,819 units of the LEAF. But the real excitement came from Tesla (TSLA). The Model S broke through several major technological hurdles surrounding vehicle range, and re-charging times. The Model S can travel 450 km without needing to be charged, and the company also offers a supercharging model that charges 225 km of range in 30 minutes. These cars are fast, and sexy. They were recently awarded The 2013 Motor Trend Car of the Year. The Model S is one of the quickest American four-doors ever built. It drives like a sports car, eager, agile and instantly responsive, but it's also as smoothly effortless as a Rolls-Royce, can carry almost as 22 www.resourceworld.com much stuff as a Chevy Equinox, and is more efficient than a Toyota Prius. By any measure, the Tesla Model S is a truly remarkable automobile, perhaps the most accomplished all-new luxury car since the original Lexus LS 400. The Tesla's electric powertrain delivers the driving characteristics and packaging solutions that make the Model S stand out against many of its internal combustion engine peers. But, it's only a part of the story. At its core, the Tesla Model S is simply a damned good car you happen to plug in to refuel. In a Global and Mail special publication, it was stated that "While the EV market is still searching for traction, analysts estimate a gradually accelerating market of anywhere from 10 to 25% of the global car market by 2025 – up from 0.1% in 2011." This is an incredible and exponential growth expectation. For those of you with exposure to the auto sector in your equity portfolios, the past six months have looked like this: [see chart: CARZ (Automotive sector ETF)]. So, the opportunities that do exist are in the exploration and development stage. We have a full analyst publication with price targets that we may share with you if you give us a call or email request. Speculative Investment Opportunities: lithium-ion batteries / lithium & graphite One of the ways to make a leveraged investment in this market is by purchasing companies involved in the exploration and development of commodities required to build the lithium-ion batteries used to power the Electric Vehicle (EV). The two main inputs are lithium and graphite. Unfortunately, there are no publicly traded graphite or lithium producers, altough there are a number of projects in the exploration and developmental stages. (Talison lithium (TLH) is producing, but the company is being bought out by a private Chinese firm for $7.50 and will most likely be delisted) n february 2013