What's The Best Way To Invest In Solar, Storage And Electric Vehicles?

In a new report, Bernstein analyst Mark Newman took a look at the solar, storage and electric vehicles industry following the firm’s global research tour. Newman believes that these three areas provide powerful long-term investment opportunities, but stock picking is extremely important.

Disruptive Power

Newman believes that solar, energy storage and electric vehicles have major disruptive power when it comes to the fossil fuel industry.

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“If these technologies are going to grow in scale to disrupt a $3 trillion energy market, a $2 trillion auto sector and toughly $1 trillion in market capitalization in utilities market, it must also be the case that the solar, energy storage and electric vehicle space must achieve (or have a roadmap to achieve) a return above the cost of capital in order to attract investment and scale,” he explained.

Solar Installers

Newman believes that it will become increasingly difficult for solar project to developers to capture value. He sees increasing competition among installers and the potential for outside competition coming from utility companies, which have strong balance sheets and industry knowledge.

Energy Storage

Newman sees developments in the science of cathodes, anodes and electrolytes driving down the cost of lithium-ion batteries and increasing their longevity and storage capacity. In addition, competing technologies, such as flow batteries, are playing an increasing role in the space. However, Newman sees lithium-ion as a potential “winner-takes-all.”

Electric Vehicles

For now, the most economic option for consumers is plug-in hybrid vehicles. However, Newman believes that pure electric vehicles will eventually be the better-performing, lower-cost option of choice.

Stock Picks

Bernstein views lithium-ion battery makers as the most likely major long-term beneficiaries of the move away from fossil fuels. The firm names Tesla Motors Inc TSLA as one company that is well positioned in the space.

Disclosure: The author holds no position in the stocks mentioned.