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Where to invest if you believe the rise of Electric Vehicles is inevitable

24 August 2018 1:01 PM
Tags:
Google
Anglo American Platinum
Alphabet
Glencore
Old Mutual
Alphabet inc
electric vehicles
Electric Vehicle
EV
EVs
continental
Old Mutual Private Client Securities

Glencore, Google and Continental... that's where! Anglo American Platinum? Not so much, says Old Mutual's Andrew Dittberner.

It’s utterly inevitable – the demand for electric vehicles (EV) is set to boom, offering lucrative opportunities for investors.

Just as the internal combustion engine displaced horses as the means to propel vehicles in the late 1800s, the electric engine is set to be the largest disrupter in the automotive market 120 years later.

Andrew Dittberner, Old Mutual Private Client Securities

Where to invest if you believe the rise of EV is inevitable

The increase in the number of electric vehicles is contributing to the soaring price of cobalt – a key ingredient in the lithium-ion batteries used in electric vehicles.

According to Bloomberg, Samsung has joined Apple in taking an unprecedented step by reportedly negotiating directly with a mine in the Democratic Republic of Congo to secure cobalt supplies.

The element is an essential component in the rechargeable batteries used in smartphones, but increasing competition — mainly from electric car manufacturers — has made an already-scarce element even more valuable.

Andrew Dittberner, Old Mutual Private Client Securities

Buy Glencore shares?

Dittberner says Glencore is a potentially lucrative investment.

It is a major producer of copper, nickel and cobalt, all critical elements in the manufacturing of electric vehicles.

Glencore recently agreed to sell around a third of its cobalt production over the next three years to Chinese battery recycler GEM Co Ltd.

Currently, the largest purchaser of cobalt in the world, China, is vying to be the leading manufacturer of electric vehicles. The deal between Glencore and GEM will see China purchase 50% of the global supplies of cobalt by the end of 2018.

Andrew Dittberner, Old Mutual Private Client Securities

Not convinced EV is imminent? You may want to consider buying Anglo American Platinum.

Anglo American Platinum is the world’s largest producer of platinum.

The company is not positioned to benefit directly from the onset of electric vehicles.

If, however, the adoption of EV takes longer than many anticipate, it will continue to benefit from the ongoing demand for platinum used in catalytic converters (exhaust emission control devices) of petroleum and diesel-powered vehicles.

Other stocks to watch - Alphabet (Google) and Continental

It may not be obvious, but Alphabet (Google) and Continental will also benefit from the ongoing transition to an all-electric motoring future.

Alphabet is investing massive amounts of capital in the autonomous vehicle market.

Continental produces technologically enhancing products ranging from electric mobility and automated driving components to vehicle infotainment systems.

The Electric Vehicle Initiative (EVI)

Ten countries are currently members of this initiative – including China, the United Kingdom, the United States and South Africa – representing the vast majority of the global EV market.

It aims for a 30% market share for EVs in the member countries by the year 2030.

Many car manufacturers have committed to phasing out petrol and diesel-only vehicles.

Dittberner, however, believes that investors should treat the transition as a longer-term, global megatrend, as opposed to an overnight development.

An all-electric future is certain, but the timeframe is not.

Get the 10 most-read articles of the week from Bruce Whitfield’s The Money Show, emailed to you every Friday morning:


24 August 2018 1:01 PM
Tags:
Google
Anglo American Platinum
Alphabet
Glencore
Old Mutual
Alphabet inc
electric vehicles
Electric Vehicle
EV
EVs
continental
Old Mutual Private Client Securities

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