Electric Vehicles Move to the Passing Lane


The hype surrounding the electric car business was always a little ahead of its time. There needed to be more cars made available to consumers and a wider range of chargers on the road. But recent developments have me thinking we may be turning the corner to a sustainable EV business, the first major shakeup in transportation in 100 years.

It's all about the cars
Led by Tesla Motors (NAS: TSLA) the industry is starting to sell some very compelling vehicles just as the hype around electric vehicles dies down and we can finally get to business.

Tesla's Model S hits showrooms late next month, ahead of schedule for a change, offering a family vehicle that can go nearly 300 miles on a charge. The Model S Signature series is already sold out and customers are clamoring to test out the new ride. Mix in the Model X and Tesla has mad electric vehicles sexy, versatile, and relevant. The best sign for this industry however is that other competitors are starting to join the party.

Fisker Karma reaching customers... finally
After years of delays, Fisker has apparently gotten its act together and started delivering vehicles. The company said earlier this week that it had delivered 1,000 Karmas and generated revenue of $100 million.

The timing couldn't be any better for battery supplier A123 Systems (NAS: AONE) , which has been teetering on the brink for the last year. It has tied a lot of its hopes to Fisker and until now the company has only disappointed.

With the Fisker Karma now on the road the high end of the electric vehicle market has two strong contenders. Probably more than we can say for the middle market.

The big dogs test the waters
Right now the EV market is split between high-end performance machines from Tesla and Fisker and unstylish concepts from the big automakers. Ford (NYS: F) , GM (NYS: GM) , and Nissan have dipped their toes in the EV waters but have so far kept to practical vehicles that haven't sold well at all. Just 1,462 Chevy Volts were sold in April and the Leaf sold an anemic 370. Ford will follow on with the Focus Electric but with Tesla and Fisker selling briskly, a change in strategy to appeal to higher-end customers seems like a better move than these vehicles.

At least the major automakers are making an attempt and as a charging infrastructure is built out and they design more appealing vehicles the industry should turn the corner.

Infrastructure is coming along
Aerovironment (NAS: AVAV) recently opened 10 more charging sites in Washington that will extend the West Coast Electric Highway all the way to Canada. Most of the new chargers can charge an empty electric vehicle in as little as 30 minutes, making inconvenience a thing of the past. Soon the company will help expand charging on Interstate 5 all the way from Canada to Mexico.

There are also charging networks being assembled by companies like ChargePoint and Plugshare, which show charging stations dotting the country. They're popping up in parking garages, malls, and parks around the country, making charging EVs more convenient. As more infrastructure is built another barrier to wider adoption of EVs is broken down.

The revolution is here
Don't look now but the electric vehicle revolution will take some major steps forward this summer. I saw a Fisker Karma rolling down the street a few days ago and later this summer it wouldn't be surprising to see a Tesla Model S or two. As these cars become more common people become more comfortable with them, charging infrastructure will expand, and we'll have a full-fledged revolution on our hands.

Tesla is the one pure play in electric vehicles that I would be willing to bet on right now. Despite the company expecting to lose money for the foreseeable future I like the vehicles it is making and execution has been superb so far. I'm adding an outperform CAPScall to My CAPS page to back up the pick. Tesla is also one of those companies that has built its success on American manufacturing, something our analysts think will be a trend in the future. Check out our report "The Future is Made in America" for three more companies that will benefit from this trend.

At the time thisarticle was published Fool contributorTravis Hoiumdoes not have a position in any company mentioned. You can follow Travis on Twitter at@FlushDrawFool, check out hispersonal stock holdingsor follow his CAPS picks atTMFFlushDraw.The Motley Fool owns shares of Ford Motor and Tesla Motors.Motley Fool newsletter serviceshave recommended buying shares of General Motors, Tesla Motors, Ford Motor, and Aerovironment.Motley Fool newsletter serviceshave recommended creating a synthetic long position in Ford Motor. The Motley Fool has adisclosure policy.
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Originally published