An investors POV! RS ----- Forwarded Message ----- From: Energy and Capital <[email protected]> To: [email protected] Sent: Wednesday, 28 December 2011, 15:34 Subject: Don't Buy An Electric Car! Forward to a Friend Having trouble viewing this issue? Click here.Refer a Friend to Energy and Capital. Don't Buy An Electric Car! By Jeff Siegel | Wednesday, December 28th, 2011 “I'm spending a fortune on gas,” he told me after throwing back his second glass of some very powerful eggnog. My cousin, who owns a small HVAC company just outside of Richmond, drives 110 miles round-trip six days a week. He used to live closer to his office, but he decided to move out to the country in 2006. And while his house and adjoining 12 acres are blanketed with peace and quiet, his daily commute is one that I wouldn't wish on anyone. And of course, any time gas prices head north, he feels it. But these days, it's a little worse... His business has been struggling for the past couple of years. He's still profitable, but he's not pulling in the kind of scratch he saw before the recession took hold. He had to lay off some staff and he's putting in more time at the office. His dream of early retirement is on hold for now. So I was surprised when he told me he wanted to get an electric car... Advertisement By 2015 there will be more than 1.3 million electric cars on the road... And nearly every one of them will require lithium. Most of it is expected to come from here: And there's enough at this one spot to boost the value of this company's stock by 3,000%. But don't take my word for it... Click here and see the numbers for yourself! Now is Not the Time My cousin is a smart guy. He started his own business when he was 22 years old. He had one used truck, a lot of borrowed equipment, and no desire to work for anyone but himself. At 25, he landed his first major job for a commercial developer. He reluctantly took on some debt and hired a few people. By the time he was 28, he had a small fleet of trucks and more than 20 full-time employees. He's a self-made man who pays for pretty much everything in cash. And he definitely didn't need a loan when he bought his $480,000 home. So I couldn't understand why he would want to buy an electric car to get to and from work every day. He's read all the data, and knows that unless he goes for a high-end Tesla Roadster (which I know he doesn't like because it's too low to the ground for him), there is currently no electric car on the market that can give him an all-electric range of 110 miles. He could go for a Chevy Volt, which would give him about 35 to 40 miles in all-electric mode before it starts running on gas... But he wants all-electric. Said he's tired of spending his money on an addiction that makes our nation weak. In any event, I told him not to buy an electric car right now, because it simply could not provide the all-electric range he requires for his daily commuting. Now if you're a regular reader of these pages, you know I'm not typically one to dissuade anyone from getting an electric car. But the bottom line is that right now, if you're not one of the more than 70 percent of the daily commuters that drive less than 40 miles per day... An electric car is not for you. (According to the Bureau of Transportation Statistics, more than 70 percent of U.S. commuters drive 40 miles per day or less.) Of course, that won't be the case next year. At $5 a Gallon... After confronting the reality of today's electric offerings, my cousin agreed that now is not the time for him to get an electric car. But come next year, he may be first in line for a Tesla (NASDAQ: TSLA) Model S. Expected to hit the streets in mid-2012, The Tesla Model S can get him from 0 to 60 in 5.6 seconds, reach a top speed of 125 mph, and allow him to travel about 150 miles on a single charge — more than enough for his daily commute. This car, however, will cost him about $50k. His current car, a Toyota Avalon, ran him only $31k when he bought it. That's a $19,000 difference in price. Certainly nothing to brush off. But consider this... This year, my cousin will have spent about $3,600 on gas. If gas prices average out the same price over the next eight years (which you know is nothing more than wishful thinking), he will spend $28,800 on gas. Including the cost to fill up, his $31,000 Toyota will actually cost him almost $60,000 to drive. Advertisement Is There Such a Thing as Negative Unemployment? There's a place in the heart of the United States where there are more jobs than people. Where a teenager with a blank sheet for a resume can move — and a week later... be working a $90k/year job. What's driving this boom is bigger than just a small town, a zip code, or a single state. It's an industrial expansion the likes of which we haven't seen since the early 20th century. And it's about to change everything. Click here to learn more about it. Of course, you still have to fill up an electric car, too — just with domestically-produced electrons instead of 87 octane. We looked at my cousin's cost per kWh, and figured it would cost him about $10,500 for battery charges over the course of eight years. That brings the total cost on the Model S to about $60,500 for eight years of operation. He's definitely not going to save a ton of money buying the Model S, but he's also not swayed. For him, the convenience of “filling up” while he sleeps — and the ability to hedge against oil spikes — is well worth it. Of course, he's also quite wealthy, so dropping $50k on a car isn't a big deal for him. But for most folks in this country, $50k is a lot of money. And a lot more than most are willing to spend on a vehicle. That being said, I did come across a very interesting Deloitte report earlier this year which indicated that at $5.00 a gallon, most Americans would be willing to buy an electric car. Despite increased oil production in the United States and Canada, by the end of 2012, we will be paying no less than $4.00 a gallon. By 2014, we'll easily be at $5.00. So will there be even more interest in electric cars at that price? Certainly the major automakers are betting on it. Every major automaker today either has an electric car on the road, in production, or in development. And although Tesla isn't considered a “major” automaker, there have already been 6,500 preorders for the Model S. One analyst at Pacific Crest Securities noted he expects 13,000 Model S preorders by the end of the first half of 2012. He also believes the stock could touch $42 a share within the next year. I don't know if either will happen. But I do know that the Silicon Valley agitator has sold more than 2,000 of its $110,000 Roadster, and it will likely sell out completely next year when it sells the last of a limited 2,500-unit run. Not bad for a little startup that started selling a six-figure electric car during one of the worst economic meltdowns in history... Bottom line: Tesla's not really a company I would bet against. To a new way of life and a new generation of wealth... Jeff Siegel @JeffSiegel on Twitter Jeff is the co-founder and managing editor of Green Chip Stocks, an independent investment research service focusing primarily on alternative energy and organic & natural food markets. He has been a featured guest on Fox, CNBC, and Bloomberg Asia, and is the author of the best-selling book, Investing in Renewable Energy: Making Money on Green Chip Stocks. For more on Jeff, go to his editor's page. Related ArticlesElectric Car Investment Opportunities Lithium Investment Opportunities Volt Owners Speak Nissan LEAF Sales Soar
From the Archives...Domestic Oil to Reign in 20122011-12-26 - Jeff SiegelEnergy and Capital's Weekend Edition2011-12-24 - Nick HodgeMore Gains Ahead from Surging Follow-On Growth2011-12-23 - Andrew MickeyGreat Timing Beats the Market Every Time2011-12-22 - Nick HodgeBut Canada is Still America's Largest Supplier2011-12-21 - Brian Hicks Economic Releases for the week of Monday, December 26th, 2011:Dec 27 - Case-Shiller 20-city IndexDec 28 - MBA Mortgage Purchase IndexDec 29 - Chicago PMIDec 29 - Pending Home SalesDec 30 - Chicago PMIDec 27 - Consumer ConfidenceBrought to you by Wealth Daily This email was sent to [email protected] . You can manage your subscription and get our privacy policy here. Energy and Capital, Copyright © 2011, Angel Publishing LLC, 1012 Morton St, Baltimore, MD 21201. All rights reserved. No statement or expression of opinion, or any other matter herein, directly or indirectly, is an offer or the solicitation of an offer to buy or sell the securities or financial instruments mentioned. While we believe the sources of information to be reliable, we in no way represent or guarantee the accuracy of the statements made herein. Energy and Capital does not provide individual investment counseling, act as an investment advisor, or individually advocate the purchase or sale of any security or investment. Neither the publisher nor the editors are registered investment advisors. Subscribers should not view this publication as offering personalized legal or investment counseling. Investments recommended in this publication should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company in question. Unauthorized reproduction of this newsletter or its contents by Xerography, facsimile, or any other means is illegal and punishable by law. Please note: It is not our intention to send email to anyone who doesn't want it. If you're not sure why you're getting this e-letter, or no longer wish to receive it, get more info here, including our privacy policy and information on how to manage your subscription.