Every time we talk more about how the automotive industry is about to evolve with the arrival of the electric car and how this effect will affect the market. BNP Paribas has made a report on how the capabilities of the electric car to break into the market and what are their strengths and weaknesses.

The neutral (or breakeven) represents the breakeven point for an investment which starts monetized, since research and investment company begin monetizing. Currently the electric car has a level of negative neutral, ie it is not profitable. But this may be changing, according to the study, over 2020It could surpass the breakeven point , and even marginal costs could be much lower than diesel cars.

Why many companies are prioritizing are prioritizing investment in electric car technology, even if this means sacrificing profits today for greater profitability in the future.

Technological, political and commercial factors are gradually allowing there is a critical mass of electric vehicles to convert its development into something profitable and allows the evolution of electric motors. 

For electric cars the previous ingredients for mass adoption have proven elusive for decades. But now it seems that begins to give everything for electric cars thrive. Economic factors and battery production is ideal for enhancing the mass production of electric vehicles point.

To date, vehicle manufacturers have focused on improving combustion engines , which reduce CO2 emissions had a reasonable cost. But it is increasingly difficult to reduce the costs of internal combustion engines and added that further research on the electric motor reduces cost, gives us a convergence in the manufacturing costs of both engines.

As we see both trends have opposite growth. Most research on electric motors reduces its cost, which makes prices converge both engines and electric motors become more attractive from the point of view of profitability.

It is estimated that since 2025, more benefits will build electric cars that diesel cars.
Tesla is the only car builder that integrates virtually the entire chain of production electric car. But for other manufacturers, must to turn to suppliers for vehicles. European suppliers must adapt in order to continue supplying components to electric cars. Companies such as Valeo and Continental have much of their capital at risk with the rise of the electric motor, but can also be adapted to take key opportunities for business development of this industry.

Electric cars require many more semiconductors, which again could be a boost for suppliers such as Infineon and STM will benefit from the electrification of the automobile. (the average dollar per vehicle semiconductors is currently $ 350, with electric cars would be in an average of $ 700 per vehicle).

It is estimated that STM is entering this market through its technology SiC (Silicon Carbide) which is expected to reduce costs by 20% and leading in the development of this new technology. 

Lithium batteries is the flagship component of electric cars. The batteries will suffer major improvements in the coming years to be able to store much more energy. But an increase in demand for electric cars, will make the demand for batteries is also triggered. 

As shown in the graph, it is estimated that the current supply of batteries will be insufficient in just a few years, so that companies that are well positioned receive high demand. 

According to estimates, in 2030 the battery market will generate revenues of more than 160 billion dollars a year. Battery manufacturers like Samsung and LG Chem may be two battery suppliers that meet the high demand.

How lithium in the world?

It is estimated that the global lithium reserves should be sufficient to meet the first shock of the exponential increase that can undergo this material. Although estimates say that by 2030 one million tons per year demand, which should be increased world production, and according to studies of existing mines, would lithium until 2050. 

This coupled with greater acceptance by electric cars, and a willingness to pay more for an electric car, makes this industry is evolving.

Funds or ETFs with positioning or bias towards this segment of the car?

I feel that the basic chemistry of the batteries will not change much. So there will be measures to cut costs in the supply chain through efficiency.

If you increase the energy density could also convert the battery in a Galaxy Note 7. The reliability and safety of batteries is most important. You can have cheap batteries that fail.

I have the impression that what we will see competitors Tesla torching their cars.

Mobileye Tesla left behind after a client killed because Mobileye camera and sftware not see a truck dazzled with the sun. Those cameras will be used by competition from Tesla.

The truth that I could perform a comprehensive search to ETFs that meet these characteristics. First Trust Nasdaq Global Auto ETF is an ETF comprising traditional automotive companies like GM and Toyota.

I opened a thread in the forum to see if someone comes up with something, and I put the actions that I believe may be involved. I leave the link:

https://www.rankia.com/foros/bolsa/temas/3463836-cuales-pueden-ser-sectores-auge-causa-coche-electrico

Companies like Samsung / LG or Albemarle may revalue if they can eventually adapt to the new needs competitively, so creating a small portfolio with these types of actions for the long term could be interesting.

See if someone who knows a fund that already does or says something ETFs.

Comstar Hello, well you’ve published many articles talking about this sector. From what I’ve seen, the quality and reliability of batteries is currently one of the main problems, and this is still today one impediment to current electric cars may have greater autonomy as they perform battery over 300-400 kms means a great loss of reliability (keeping the rest the same characteristics as dimension).

This sector obviously needs a very large investment in R & D. Tesla is currently the main player in this new scenario because it is the pioneer. From here we have to see if battery suppliers that meet the expectations are formed, but being a mine that big money that open, would not rule out that in a relatively short time (talking in years) will begin to optimize batteries effectively.

Panasonic and Tesla teamed up to create the gigafábrica. Gigafabrica and points to a Super optimization, both economies of scale by reducing transportation time and costs decline of inventories and customs state and bureaucratic hassles. Over that will cost, on the CAPEX needed to achieve it .

Not impossible, but difficult.

Comstar good.

Regarding the issue of electric cars, I think it really does not advance sufficiently since the oil lobby is not interested. Furthermore moreover also I believe that the mains current is not ready to supply sufficient supply that would load all vehicles.

I think the issue of batteries is more than salvageable question from the technological point of view

regards

investments being made in electric cars are amazing … in a few years can change everything and I’m talking about 2 to 4 years. I would not buy me a car burning now with a rapidly changing and restrictive legislation. You can not travel on cities, raise taxes, fuel will be expensive … well, better to wait and buy an electric, or buy now one type of Renault Zoe 400 km of autonomy … This is already electric.