The electric car market is growing. And while the turn is costly, we could be next to a tipping base.
The figures for January on UK new vehicle sales is pretty disturbing. New registrations reduced last year by more than 7%. There are many explanations for that–changing emission laws and fewer people dropping out of finance offers (and thus switching to new designs). Diesel sales declined by over a third, while gasoline car sales fell by close to 10 percent. Yet one silver lining was there. Demand for electric cars partially or entirely increased. The quantity of new electric battery-powered vehicles that hit the roads drastically improved, with sales of different types of hybrids vehicles still rising steadily.
In the US, Tesla–king of the electric-car manufacturers (for the time being)–has had its shares making an extraordinary run. Since the year turned, the share value has doubled. The stock is in some mania stage. I can’t pretend to understand this. But I’m not going to complain–it’s a significant holding in Scottish Mortgage, one of our top investment trusts.
A new story came earlier this week in which the Financial Times revealed that Japanese car producer Nissan might double production at its Sunderland factory should we conclude with a “no-deal” Brexit and sanctions by the end year. It appears that Nissan is examining one option (although the car group denied the story) to shut down its European continental plants and put much focus on taking the UK market. Nissan manufactures the Leaf, Britain’s most popular electric car. As we discover, a revamped Leaf has recently concluded the biggest independent driving test on UK roads–the car driving 230 miles through British streets with no accident.
Why do I mention all of this to you? Well, such stories come in a week when Britain’s policymakers are banning every new vehicle with an internal combustion engine –including hybrids (those with batteries and petrol or even diesel engine), by 2035. Call me a cynic, but that would be something that makes a major political employer–one with a leading role in the development of electric cars in Britain, say –think of upping sticks again, even if Brexit does not go as it wants.
Sure, two and two can quickly come together, and five comes up. Nonetheless, whatever the particulars of the Nissan case, a combination of influences–from political gain to technological advancements, to real consumer demand –may generate a tipping point for electric cars.
For stakeholders, what does that mean? I choose to invest in “anti-bubbles” –properties ignored like perhaps oil major BP–whenever it gets to bubbles. But I would recommend that our readers hold to their Scottish Mortgage ownership as a protection against my involvement and a gamble on technology.