Taking Back the Driver's Seat

The automotive industry had been put into a unique position not just because of the pandemic, but because of changing trends throughout society as a whole. 

The pandemic is in retreat in the U.S. and more states are lifting restrictions. That means people are getting back out on the road and traveling. Even if they aren’t traveling, people who left urban centers for more spacious, less walker-friendly suburbs are getting behind the wheel. 

This has caused a demand for cars that’s going to offset the down year the auto industry had in 2020. We’re already seeing the effects today. 

I’ve seen plenty of anecdotes of people selling their used cars to dealers for prices far higher than they felt they were worth. In some cases, people have been selling their cars for more than what they paid. 

As someone potentially looking to replace my own car within the next few months, I’ve been shocked to see that used car prices aren’t that far off from the prices of new cars of the same model.

When you throw in the fact that chip shortages mean fewer new cars are rolling off assembly lines, many consumers have no choice but to take what they can get until the industry recovers. 

This increased demand is coming at a time when governments all over the world are tightening emissions regulations to curb climate change and the car manufacturers are doing what they can to keep up. 

Just about every major car company either already has at least one electric car in its lineup or will be introducing one over the next few years.

Dodge, known for cars like the Challenger, Charger, and Viper among others, recently admitted that the era of the V8 engine is ending thanks to emissions regulations. The company stated that it’s going to use this shift to commit to converting its cars to being battery-powered while promising that its future offerings are going to be just as exciting as many of its current high-end models.  

During an investor event earlier this week, Ford revealed that it plans to generate 40% of its global vehicle sales from electric cars within the next few years. This is backed by over $30 billion in investments and puts the company on the path to challenge its rivals in the space when it comes to electric vehicles. 

These companies are working to get in on the ground floor because they see the change is coming. A survey conducted in July and August of 2020 gauged consumer interest in electric vehicles and found that 71% of respondents said they would consider buying one in the near future. 

That survey showed the biggest barriers many people cited when it comes to owning an EV are range and availability of charging stations. The industry is taking care of the former and the government is set on taking care of the latter. 

With electric vehicles still being niche, many people don’t realize that batteries have gotten better over the past few years with improvements in the engineering of battery systems, changes in form factor, and new developments in thermal management. This means that electric vehicle batteries have seen increases in efficiency since they were first introduced.

On the topic of charging infrastructure, it plays a role in the infrastructure bill that President Biden is currently fighting for. While the final price tag of the bill isn’t yet known, every proposed version of it so far includes some spending on roads, bridges, and yes, charging stations for electric vehicles. 

Before winning the election, Joe Biden campaigned on putting more electric vehicles on American roads. The idea behind it is to address two major challenges of the next few years: climate change and growing economic competition with China. 

He, and many other lawmakers, realize the importance of aggressive infrastructure building that will keep America competitive. That’s why you hear so much about infrastructure and electric cars, and will continue to for years to come. 

It’s all part of a plan that will help the country to thrive in a changing landscape as the automotive industry recovers and demand for automobiles increases. 

The roadmap for electric vehicles, charging infrastructure, and the technology to support these innovations is coming together. 

And that means investment opportunities are coming right along with it. 

One little-known stock, in particular, is set to take off when this technology does. 

Getting in on it now can be the difference between coming out ahead and getting left behind.

Keep your eyes open,

Ryan Stancil
Editor, Daily Profit Cycle

Ryan Stancil is an editor and regular contributor to Daily Profit Cycle. He’s been active in the financial publishing industry for more than half a decade, offering insights and commentary on technology and geopolitics to help readers make sense of the constantly changing landscape and how it affects their investments. His readers appreciate his "tell it as it is" writing style, where he always offers a fresh new perspective on what's happening in the market and leaves nothing unsaid.

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