Skepticism of electric cars melts a bit more with each new announcement from auto makers. But if they are ever to displace gasoline engines, they must not only keep innovating but outrun fossil fuels where productivity also keeps advancing.
There’s no disagreement from us on the underlying thesis of this article by the Wall Street Journal — that until either gas prices go up or battery prices go down, it’s still going to be cheaper to own and operate a combustion engine car. Economic 101 right there.
But this is where thematics come into play — remember an investment theme is a sustainable market shift. It’s a change that shapes and impacts consumer behavior and, in turn, forces companies to make fundamental changes to their business in order to succeed. You can go here to download a full report on what is thematic investing and the themes we are currently tracking. It’s free, so go ahead and download it now.
And so, when we look at the landscape today through our thematic lens, we potentially see a different narrative begin to emerge. We see two investment themes with considerable tailwinds that could transform consumer behavior and force the adoption of electric cars: the Aging of the Population theme and the realities of declining vision and mobility among older Americans that goes with it, and the Disruptive Technology evolution of self-driving cars.
Here’s what we mean . . . the Baby-Boomer generation is, and will always be an independent generation and as their vision fails and their ability to drive declines, they will naturally place demand-side pressure for autonomous car technology. They’ll want a car that can take them where they want to go, when they want to go. And a self-driving car can’t fill itself up at the gas station. Boom, there’s your outside thematic force. Of course, there are other pressures as well — which comes in the form of regulation — and things like France passing legislation that bans the combustion engine can also change the landscape.
So yes, cheap gas and expensive battery technology will keep electric cars in the upper end the price paradigm — but that doesn’t mean another outside force will change the demand for such expensive vehicles. Remember, the Baby-Boomers are the wealthiest generation in history and many of them have no inclination of leaving their wealth to the government . . . or their kids.
Listen below to our podcast on the evolution of the self-driving car: