Future Looks Bright for Electric Cars

A massive boom in the electric car business might be right around the corner. Two recent news stories indicate that the market for such vehicles might expand dramatically in recent years.

Ford (NYSE: F) has discovered that getting internal combustion engines to comply with air-pollution and fuel-mileage regulations is much harder than previously thought. Around 40% of the new models of the popular F-150 pickup truck failed to meet federal standards for fuel mileage, Bloomberg reported.

That’s a big problem for Ford because the F-150 is its best-selling vehicle in North America; accounting for 31% of its home market sales. To make matters worse it was the larger more powerful models customers like best that were more likely to fail the tests.

That indicates a new technology is necessary; and electrics are the probable candidate. Currently electric vehicles are the autos that can produce the speed and power drivers want, without burning up huge amounts of fossil fuel or generating a lot of pollution.

The failure to meet fuel economy standards is one reason why Ford is planning to invest $4.5 billion in electric vehicle technology. Electric vehicles are basically exempt from fuel-mileage and air pollution regulations. If Ford were able to develop an electric F-150 that delivered the same performance as the gas and diesel models; it would own the truck market.

Now that Tesla Motors (NASDAQ: TSLA) has proven electric vehicles can rival gas or diesel cars in performance, a number of companies are investing in them. Not coincidently, Volkswagen (OTC: VLKAF), another company that has had trouble with air pollution regulations is also making a massive commitment to electric vehicles. VW is planning to invest $11 billion develop its answer to Tesla’s Gigafactory for electric batteries.

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Germany wants to Go All Electric

The governments of two of the world’s largest nations; India and Germany, want to make their roads all electric.

The Federal Republic of Germany wants all new vehicles registered in the year 2030 to be electric, Investopedia’s Adam Hayes reported. The Germans want to have at least six million electric vehicles on the road by that year. German Chancellor Angela Merkel has pledged subsidies for the purchase of electric cars.

One German automaker; Volkswagen has responded this in a big way. VW’s CEO Matthias Mueller recently announced Together Strategy 2025, Yahoo reported. Under the plan Volkswagen will rollout 30 models of electric vehicles and sell two to three million electrics a year by 2025. Not to be outdone; Daimler (OTC: DDAIF) is planning to roll out an electric Mercedes with a 310-mile range in October.

India also wants to go Electric

India’s government wants to follow Germany’s lead and have all electric vehicles by 2030, Hayes noted. The country’s Power Minister even thinks the government could give electric cars away with no down payment.

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That’s a potential boon to Tesla and Volkswagen, because India is the second most populous nation on Earth; and one of the world’s fastest growing economies. It is also real bad news for oil producers; some of which are having a hard time making money.

Electric Vehicles not Altruism

The desire to go electric is not rooted in altruism or a concern for the environment. If countries like Germany and India can go electric they can avoid exporting tens of billion dollars in revenues to oil producing countries; like Russia, Saudi Arabia and Venezuela every year.

Another advantage is that the vehicle fuel supply will not be vulnerable to terrorism, or OPEC. Such strategic considerations will undoubtedly drive other countries like China to go all electric.

There are of course many questions her including: where will the electricity come from? Since much of the power is currently generating in coal-burning plants that could be a real problem.

Despite that it looks as if the electric vehicle is the car of the future. Invest accordingly folks and stay away from Tesla stock, far, far away if you want to make money.