Electric Cars and the Fixed Cost Conundrum

John Petersen Later this month, Tesla Motors plans to launch its initial public offering and sell about 12% of the company for $200 million. If the IPO is successful, Tesla's stock will trade on the Nasdaq Stock Market (TSLA) and its initial market capitalization will be roughly $1.5 billion. Since the IPO has spawned a series of analytical articles from better writers, I'll avoid the temptation to analyze the deal terms and focus on product issues instead. Like their cars, Tesla's IPO will undoubtedly attract vanity investors, the philosophically committed and the mathematically challenged. The more cautious element...

Energy Storage: Q-2 2012 Review and Analysis

John Petersen While I jumped the gun last week and published my third quarter outlook for the energy storage and vehicle electrification sectors early, it's worthwhile to take a look back and see how my tracking list of companies performed over the last quarter and examine the past to see what the tea leaves in the bottom of the cup portend for the coming quarter. So without further delay I'll present my price performance table for the second quarter that ended on Friday. Q-2 was a dreadful quarter for Maxwell Technologies (MXWL) and ZBB Energy...

Shipping Panic Creates Preferred Arbitrage Opportunity

Tom Konrad, Ph.D., CFA Seaspan Worldwide has several classes of publicly traded securities, with different claims on its income streams. The company owns container ships leased under long term contracts to shipping companies.  The shipping industry is in a massive downturn, raising concerns about its customers' ability to pay. The company's preferred shares have sold off more than half as far as its common stock- far more than justified by its relatively low risk. There exists a 5.5% yield opportunity to buy the preferred and hedge the risk by buying puts on the...

When Airlines Run Out of Fuel

Green Energy Investing For Experts, Part IV Tom Konrad, CFA Mass air travel is incompatible with a sustainable economy.  Air travel is energy and capital intensive, creates a gigantic carbon footprint, and is likely to  remain dependant on the high energy density of fossil fuels much longer than surface transport.  As such, it is a prime candidate for the short side of a clean energy portfolio. I'm writing this post on a United Airlines (UAUA) flight from Baltimore to Denver in a seat that cost me $99, plus $15 to check a bag.  One sign of the economic...

PHEVs and EVs; Plugging Into a Lump of Coal

John Petersen Since I've stirred up a hornet's nest over the last two weeks first by debunking the mythology that PHEVs and EVs will save their owners money and then by showing how PHEVs and EVs will sabotage America's drive for energy independence, I figured I might as well go for the triple-crown of harsh realities by showing readers that in the U.S., where 70% of electricity comes from burning hydrocarbons, PHEVs and EVs won't make a dent in CO2 emissions. They'll just take distributed CO2 emissions off the roads and centralize them in coal and gas...

The Best Peak Oil Investments: Ten Electric and Hybrid Car Stocks

Tom Konrad CFA Tesla Motors (TSLA) is not the only electric vehicle (EV) stock.  Here are nine other public companies helping to replace petroleum with electricity in our cars and trucks. Early in this series on the Best Peak Oil Investments, I put together an in-depth comparison of alternative fuels.  I concluded that the best prospect for displacing oil in the long term is electricity supplemented by biofuels.  Vehicle Electrification is likely to come to dominate the transportation sector because only renewable electricity can supply energy on the scale that we currently use for transportation with limited...

The Time is Right for Gas-guzzler to Dual-mode EV Conversions

Since early 2008, Axion Power International (AXPW.OB) has been quietly developing an experience base and building grass roots support for a gas-guzzler to dual-mode EV conversion initiative that has the short-term potential to transform up to 120 million gas-guzzling pickup trucks, sport utility vehicles and vans into gas sipping EV-50s. If recent articles from sources as diverse as The Daily Green, Edmunds Green Car Advisor and the Environmental Defense Fund are reliable indicators, the initiative is rapidly gaining ground. The concept is simple – add electric power trains and battery packs to America's least fuel-efficient vehicles and give...

Valeo February Update (Ten Clean Energy Stocks)

I'm trying something different and doing quick updates on individual stocks in my 10 Clean Energy Stocks model portfolio as I have time to write.  The portfolio as a whole has been accelerating with the instant torque of an electric vehicle this year (details here.)  I thought I'd start with the company that's newest to my readers, Valeo SA (FR.PA, VLEEF) 12/31/18 Price: €25.21/$28.20.  Annual Dividend: €1.25. Expected 2019 dividend: €1.25.  03/4/19 price: €29.13/$33.00.  YTD gain: 15.5% Euro/ 12.8% USD. I added this stock to the portfolio because it has great technology and and improving market share, but weak industry growth and overoptimistic management projections in 2018...

The Obama Fast Track for HEVs

John PetersenToday I'm going to begin with an apology because I've done a terrible job of describing the basics of hybrid electric vehicle (HEV) technology for energy storage investors. Many of my earlier articles dove straight into the mind-numbing details of battery technology without first providing an overview of what those batteries will be used for. In other words I'm guilty of putting the cart before the horse. It's time for me to make amends. While the differences between HEV technologies have always been important to automobile manufacturers, the public's understanding of those differences is limited. That...

Aggressive New CAFE Standards; The IC Empire Strikes Back

John Petersen Last Friday President Obama and executives from thirteen leading automakers gathered in Washington DC to announce an historic agreement to increase fleet-wide fuel economy standards for new cars and light trucks from 27.5 mpg for the 2011 model year to 54.5 mpg for the 2025 model year. While politicians frequently spin superlatives to describe mediocre results, I believe the President's claim that the accord "represents the single most important step we've ever taken as a nation to reduce our dependence on foreign oil" is a refreshing example of political understatement. After three decades of demagoguery, debate,...
transit ridership

Earnings Roundup: Covanta, NFI Group, Green Plains Partners

by Tom Konrad, Ph.D., CFA Earnings Season Continues Below are three more updates on second quarter earnings which I've been sharing with my Patreon supporters.  If you'd like to support my writing and see those thoughts in a more timely manner, consider becoming a patron. becoming a patron. For everyone else, I'm reprinting those thoughts below. Covanta Earnings (published August 2nd) Waste to energy company Covanta Holding Corp (CVA) saw most of its business recovering towards the end of the second quarter.  Management is reluctant to predict if the positive trend will continue into the third quarter and for the rest of the year, but...

Portec Rail Products Beats Estimates, Gets Clobbered

Portec Rail Products (PRPX) released  fourth quarter results on Thursday, comfortably beating analyst expectations.  The stock promptly dropped 18% to just below $5, continuing a two-week decline from around $7.50. I'm baffled.  Although the rail freight industry is a victim of falling oil prices (which means they lose market share to trucking) and the overall drop-off of the transportation industry, this is not news. Portec has several things going for it.  The company has a strong balance sheet, with current assets exceeding total liabilities, and strong cash flow from operations.  Total revenue is down slightly from last...
Westport HDPI

Westport Fuels Natural Gas Conversion

Earlier this week Westport Fuel (WPRT:  Nasdaq) reported financial results for the quarter ending September 2018.  Based on British Columbia, Westport is a developer and manufacturer of clean fuel systems for both fossil and renewable fuel sources.  It has taken some years, but Westport management has worked hard and overcome a number of obstacles to bring a mix of engines and systems capable of handling various fuels such as natural gas, hydrogen and liquid petroleum gas. Revenue jumped to $65.5 million in the September 2018, quarter delivering $4.3 million in cash earnings.  The company’s relationship with truck engine manufacturer Cummins (CMI: NYSE) is proving to be...

Oil & Alt Energy Redux

Charles Morand Last week, I conducted an analysis showing the lack of evidence supporting claims that oil and alt energy returns are strongly correlated (claims that sometimes come from outfits as reputable as Bank of America Merrill Lynch).     I don't want to belabor this topic but I thought I would post the results of another, similar analysis I conducted following comments I received on how to improve the first one. In a nutshell, the comments suggested I do the following: 1) Look at daily correlations or even smaller periods, as "common knowledge" market...

Saviors and Saboteurs in Alternative Energy

John Petersen Last week Societe Generale published a thematic research report titled "A new world order, when demand overtakes supply" which examines the macro-economic and demographic trends that will transform the global economy over the next 20 years. It mirrored the theme of Jeremy Grantham's April 2011 quarterly letter titled "Time to Wake Up: Days of Abundant Resources and Falling Prices Are Over Forever" and did a great job of summarizing an issue I touched on in "How PHEVs and EVs Will Sabotage America's Drive For Energy Independence." In the words of Societe Generale: "So, while...

Report: Electric Cars Cost Less (But watch the assumptions)

Tom Konrad CFA Pike Research just released a report on the Total Cost of Ownership of Alternative  Fuel Vehicles for Fleet Operators.  The report compares the purchase price plus lifetime fuel cost of mid-sized cars available in the US. Although the authors hesitate to declare any alternative fuel the cheapest option, the chart below clearly shows that the “BEV-100″ (Battery-Electric with 100-mile range, a.k.a. the Nissan Leaf) to be the least expensive option even at high electricity prices ($0.14/kwh) and low gas prices ($3/gallon.)  However, the Leaf only has a clear lead when the $7500 tax...
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