The wacky world we live in has tax incentives for luxury cars that run on electric power rather than gas. No one says anything about how it’s not fair or the rich are screwing the middle or lower classes. Yet, that’s exactly what happens when the government allows a tax break to be had when purchasing a Tesla. I guess if it’s ‘green’ then you transcend class warfare.
As an investor, the hypocrisy really doesn’t matter. What matters is what moves the needle. The needle being the market. Currently, Tesla is a company that can move the needle so to speak. Tesla isn’t a world in of itself. Tesla is part of a much larger trend. It’s electric.
Electric vehicles are a trend. Tesla is a bellwether. Now you could stop there and fix your sights on Tesla or some other electric auto maker, but why would you stop at square one? Go another step or two down the road…literally. What you need to focus on are electricity producers; power companies. Electric cars are a very small portion of the auto market right now. In the future it is almost a given that their share will grow considerably. They will become a sizable minority in the world of vehicles.
As the mass of electric vehicles on the market expands, so does the need for more and more electricity. This translates into a catalyst for growth within electric power producers. Investors see growth as value and will pay a premium for growth. This is true especially when the certainty of growth is high.
You don’t need to run out and buy Southern Energy or some other power producer tomorrow. This is a more gradual trend. Wait until a basket of desired stocks trades at a discount that you’d only dream of, then grab on.
It’s a changing world, especially when you can talk about growth in a core value investment sector.