Generation RENEW:  The EV Learning Curve 

 

If you haven’t heard, electric vehicles are taking over the world. This transition will bring a sharp learning curve for John and Jane Q. Public since for a hundred years they have traveled to the local gas station to “recharge” their horseless carriage.  As the prior historical reference suggests, John and Jane proved capable of learning new behaviors in the early 20th century when the horseless carriage (aka, automobile) entered the scene, and we’re confident they and the gentleman below will also learn how to properly charge his electric vehicle as this mode of transportation takes over.

 

 

The good news is we have time to learn. On January 28 General Motors (GM) announced it will end production of all diesel and gasoline powered cars, trucks and SUVs by 2035, and shift its entire new fleet to electric vehicles.  The haters will shout a transition to electric vehicles simply transfers emissions from the vehicle to the power plant. This misses the point, as even a transition from inefficient oil-based vehicles to electric vehicles supported by efficient natural gas power plants will meaningfully reduce emissions. Taken a step further, forecasts like the below from the U.S. Department of Energy predicting a dramatic increase in electricity produced from renewable energy would mean even greater emission reductions.  Yet this is all pointless if society doesn’t make it easier for John and Jane Q. Public and the gentleman above to “recharge”.

 

Source:  U.S. Department of Energy (DOE)

 

History suggests the largest promoters of electric vehicles will be the charging stations themselves. Gasoline vehicles didn’t really take off until society made it easy to fill their tanks.  It’s as if gas stations were the biggest and best billboards for promoting the adoption of the gasoline vehicle, and similarly electric vehicle recharging stations will play a similar role in this transition.  So, when we see a Wall Street Journal article (“Electric-Vehicle Charging Hub to Park Itself in New York City”) promoting the construction of recharging stations we get excited.  When we see multiple public stocks dedicated to the buildout of charging stations, or a fellow Eagle colleague explain how he planned and successfully executed a 700-mile trip in his Tesla to a vacation spot we get excited.  There is a will, and we are increasingly seeing the way.  Our guess is in five years you won’t be more than ten miles from a high-speed battery charging station, and a recharge will take less than ten minutes.  Forget GM, Paris, and California, the best advertisement for electric vehicles is going to be right on the side of the road.

 

Source:  Wall Street Journal

 

 

RENEW Performance Tracker 

Source:  Bloomberg.  *Please review disclosure information at the end of this post

 

Renewables Roundup

 

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Michael Cerasoli, CFA

Michael leads the Renewables effort at Eagle Global Advisors, including the development of active and passive strategies, and portfolio management. He is also the Co-Head of the Energy Infrastructure team and Co-Chair of the Energy Infrastructure Investment Committee.  He shares Portfolio Manager responsibilities for the firm’s four separate Energy Infrastructure strategies. Prior to joining Eagle in May 2014 Michael was employed by Goldman, Sachs & Co. for ten years where he covered Midstream for seven years and small/mid cap Oil Services for three.  Prior to Goldman, Michael worked for three years as a sell-side equity trader at various Wall Street firms. He earned bachelor’s degrees in Economics and History from Union College, and an MBA from the Hagan School of Business at Iona College. Michael holds the Chartered Financial Analyst designation.

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Curt Pabst

Curt is a Managing Director in the Energy Infrastructure Business, a member of the Energy Infrastructure Investment Committee, and co-head of the Renewable Energy Business at Eagle Global. Prior to joining Eagle, Curt held a similar position at an Midstream Energy-dedicated asset management firm in Dallas, Texas. He has 39 years of investment experience. He has served as a partner/principal in both a hedge fund of funds and a venture capital fund. Curt earned his BA in Economics from Grinnell College and a professional certification in Energy Innovation and Emerging Technologies from Stanford University.

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