You'll be Driving an Electric Vehicle Sooner Than You Think

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The biggest oil companies in the world want you to believe that electric cars are inferior to their gas-guzzling counterparts. Recent reports by ExxonMobil (NYS: XOM) and BP (NYS: BP) say that few, if any, of you will see electric cars outnumber gas vehicles in your lifetimes. However, recent breakthroughs in electric powertrain technology tell a different story. With or without biased reports, disruptive innovation ultimately leads to change.

It's important to understand that oil behemoths like Exxon and BP get hundreds of billions in backing each year, which is put toward new and expensive oil projects. It would be much harder for these companies to validate those investments without optimistic reports on the demand for oil in the future.

A sponsored opinion
So it's hardly a surprise that Exxon, the biggest oil and gas company in the world, says that in 20 to 30 years only 5% of the world's cars will be electric. BP voiced a similar outlook. According to Reuters, the company's CEO said, "Oil will remain the dominant transport fuel and we expect 87% of transport fuel in 2030 will still be petroleum based."

Someone should tell big oil that its self-serving opinion clashes with government initiatives aimed at green technologies and independence from foreign energy. Less biased reports project a brighter future for electric vehicles, or EVs. Data from Deloitte suggests that by the year 2020 a third of all cars purchased in developing countries will not be powered by an internal combustion engine.

The not-so-distant past 
To put this in context, let's take a realistic look at the automotive industry. The past few years, the industry's been in peril. A struggling global economy put the brakes on consumer demand and led to industry-wide restructuring. One of the nation's largest automakers, GM (NYS: GM) , filed for bankruptcy protection at the height of the financial crisis and only recently swerved back on track. Today, the industry is making a steady recovery. GM recently returned to profitability after being bailed out by taxpayers in one of the largest restructurings in U.S. history. But now the company faces new challenges, including a race to make more fuel-efficient vehicles.

The cost of gas isn't going down. In fact, according to the U.S. Energy Information Administration, American drivers will pay an average of $3.55 per gallon this year for regular-grade gas. That price is expected to increase to $3.59 in 2013. With fuel prices spiking, energy alternatives are starting to look a lot better.

Admittedly, I'm coming down pretty hard on the oil companies. But, the truth is, until recently I wouldn't even entertain the idea of driving an electric car. However, that's changed. Today, I can't wait to drive one electric vehicle in particular: the Model S sedan by Tesla Motors (NAS: TSLA) . Like many fans of EVs, my change of heart was influenced by more factors than the volatile cost of gasoline.

The not-so-far-off future
Soon, you too will be longing to get behind the wheel of one of the new performance driven EVs. Electric technology companies such as Tesla are shifting the competitive landscape of the automotive industry. Tesla's not building toy cars or asking drivers to sacrifice performance. The zero-emission-car maker is gearing up for the launch of its Model S -- a seven-passenger car capable of accelerating from zero to 60 mph in 5.6 seconds.

With a $49,000 price tag (after the $7,500 EV tax cut), the Model S appeals to a much broader market than Tesla's Roadster sports car. The Palo Alto-based company is pushing the technology envelope. The company currently supplies powertrain components to traditional automakers like Daimler and Toyota. Cash from these relationships should help Tesla's liquidity as it invests in upcoming vehicle launches.

For a start-up trying to make it in the auto industry, Tesla's stock is gaining speed as well. Shares of Tesla are up 54% since the company's IPO in 2010. Not bad, considering shares of GM are down more than 30% following its 2010 IPO.

Nevertheless, there will be significant challenges on the road to profitability. Specifically, Tesla needs to ramp up production volume in record time if the company wants to meet its manufacturing target of 20,000 vehicles per year by 2013. Investors able to handle moderate risk would be wise to get in on this growth stock before it takes off. Tesla is redefining the green tech space and building electric cars that people want to drive. It's only a matter of time before many of us are driving cleaner cars. For these reasons, I'm giving Tesla the green thumb on my Motley Fool CAPS account.

An alternative offer
Tesla could revolutionize the auto industry and change the way we power our vehicles. However, this could be years in the making. If you're not ready to drive into the sunset with Tesla's shares, I encourage you to learn more about another disruptive innovator in "The Next Trillion Dollar Revolution." Thousands have downloaded this special free report, so click here for instant access.

At the time this article was published

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