Investors who follow me know that I am passionate about tech, and lately the focus has been on clean tech especially with regards to the automotive industry. The intersection with mining and tech presents unique opportunities to amateur and seasoned investors alike. The supply chain is an extremely lucrative one with intense pressure on raw materials needed to produce in accordance with projections.
But I always caution investors, amidst promotional coverage on movements toward clean technology, it can be difficult to navigate the truth in any statement. The recent claim of Volvo of full electrification is a shining example. Closer inspection revealed vehicles would in fact be hybrids and not fully electric,[1] the campaign was a success. No less than two weeks later other European automotive manufacturers released similarly optimistic claims.[2]
This comes on the heels of two considerable government-influenced variables making a splash in the market. First is the ban of internal combustion engines, recently promised by the UK and France respectively with the target of 2040.[3] Second is the inability to sell electric vehicles without a subsidy, recently demonstrated in Denmark,[4] a wealthy country with a known enthusiasm for clean technology.
Essentially, this information presages a bind which governments and manufacturers find themselves in. Subsidizing electric vehicle adoption, and building the requisite infrastructure is a considerable investment which can only be realized with a foreseeable end to ICE production. The failed experiment in subsidy removal in a relatively strong EV market, with the decision to ban ICE production beyond a certain time frame is concerning from a long term investor standpoint. In my experience, it suggests a lack of confidence and a sense of desperation.
Reflecting on the limited adoption, and desperate measures employed to enforce the transition, it would be reasonable to conclude early predictions were far too optimistic. But thistoowould be short sighted. The best indication of the EV breakthrough occurs much further afield, as it turns out, where we might least expect it.
The decision of Saudi Arabia, the world’s largest oil producer, to invest a significant percentage of its sovereign wealth fund in tourism and economic development with the stated intention of moving away from oil was unexpected.[5] This is not a back burner type of economic development used to supplement oil income, it is a wholesale reorientation in Saudi Arabia to prepare for a global economy no longer dependent on oil. If you were to tell me the Saudis were making the switch to electric ten years ago I would be shaking my head in disbelief.
That is why I’m informing investors to look beyond the superficial negative signs and doubt being expressed. The big players are making moves without making a lot of noise, and as the saying goes: the lion need not concern itself with the opinions of sheep. One company making a noise in the lithium space is MGX Minerals website www.mgxminerals.com As most are aware, lithium is needed in electrical vehicles. I have written about this cutting edge company may times before and it is no wonder it is my favorite company. We are living in revolutionary times and the astute investor could be handsomely rewarded.
Happy Investing!
Dr. Kal KoTECHa
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[1]https://www.forbes.com/sites/michaeltaylor/2017/07/05/most-of-what-youve-read-on-volvos-electric-car-strategy-is-badly-misleading/
[1]https://electrek.co/2017/06/26/vw-electric-cars-i-d-lounge-and-i-d-aeroe/
[1]https://www.thedrive.com/news/12859/u-k-to-ban-internal-combustion-engines-by-2040
[1]https://www.bloomberg.com/news/articles/2017-06-02/denmark-is-killing-tesla-and-other-electric-cars
[1]https://www.bloomberg.com/news/articles/2017-08-06/saudi-arabia-builds-cities-in-the-sand-to-take-economy-past-oil
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