Hi Sam. How are you doing? Any thoughts about when semi-equip turns up?
In 2008, I added these investing rules:
don't depend on the U.S. consumer
diversify into foreign companies
dividends matter
Toyota owns the hybrid niche, with other Asian and European companies a distant second, and the U.S. auto companies way behind them. It isn't a very big jump, from hybrid to plug-in hybrid, so I expect Toyota will dominate the plug-in hybrid niche.
Toyota owns 60% of the company that makes their batteries. Toyota is the world's best auto manufacturer, and their balance sheet will allow them to pour resources into new tech like batteries, in a way that is unavailable to GM or Ford. So, Toyota is ahead, and all indications are, they will stay ahead.
Battery-only cars won't work, until:
1. a car can go 300 miles on a single charge, and
2. the battery can be recharged in 3 minutes.
This is at least 10 years in the future.
The problem with battery-replacement, natural-gas, and other plans, is the chicken-and-egg dilemma. NG (Natural-gas) cars don't work, unless most refueling stations can sell NG. But nobody will build those refueling stations, until there are already lots of NG cars on the road. These technologies only work, if an entire region invests huge amounts of money, to replace and retrofit the entire existing infrastructure, all at once. That's unlikely, except in rare situations (an island like Hawaii might be an example).
Evolution, not revolution, is the future of the global auto industry. The first generation of plug-in hybrids will only go 10 miles on battery-only power, and then the IC (internal combustion) engine will start up. That distance will slowly increase.
At the moment, I have no investments in battery tech. My inclination is to buy TM (Toyota), sometime later in 2009 or 2010. At a stock price of 58, it pays a 5% dividend. I haven't bought yet, as I think there is lots and lots of pain to come, for the auto industry. There is global installed capacity to make 90m cars today, but only about 60m cars will be sold in the world in 2009. And the upswing off these lows will be very gradual. So, as a rough guess, I think 20m in capacity needs to be taken out, before supply and demand come into balance. Until then, nobody is going to make much profits. |
