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BY: David Fessler, Energy & Infrastructure Strategist


“How?” you ask? Simple: with the coming generation of battery electric vehicles (BEVs).

Now before you prepare your “don’t tell me how to run my life” barbs, let me go on record: I could care less whether or not you buy a BEV.

I’m also not interested in your views about global warming, politics, or whether or not you believe Elvis is dead.

This is about simple economics, and about making money. This is something every investor – at least those who are ultimately successful – understands…

Battery Electric Vehicle Pros and Cons

We’ll get to the moneymaking part in just a moment. Let’s start with a few BEV pros and cons.

First the pros:

  • Say goodbye to the gas station: BEVs don’t require any gasoline at all.
  • Using a BEV reduces America’s dependence on foreign oil.
  • Foreign oil aside, BEVs cost the equivalent of about $1.20 a gallon to operate.
  • Depending on where you live, you’re not contributing to global warming (if this is even something you care about).
  • They’re quiet and non-polluting.
  • BEVs require much less maintenance than their fossil fuel-burning counterparts.

Now let’s take a look at the cons of BEVs:

  • Widespread BEV charging infrastructure doesn’t exist… yet.
  • BEV batteries (mostly lithium-ion types) are very expensive: They currently represent half the cost of the car.
  • BEVs are pricey. The government is trying to speed up the adoption rate via tax incentives.

But government subsidies aside, there’s another reason – perhaps the most compelling of all – to own a BEV. It could quickly change the overall economics and make subsidies completely unnecessary. Let me explain…

The Problem With Peak Load Demand

One of the biggest problems electric utilities have is providing enough power fast enough at times of peak load demand. It takes time to fire up a large generating station (sometimes days).

Peaking plants – those that are used only at times of high load demand – are usually very expensive to run. Most of them operate on natural gas, and the utility pays top dollar for it on the spot market.

As a result, most utilities generate more power than they really need to provide at any given time. This is expensive and ultimately increases costs to the utilities, which it passes on to its customers.

Turning Your Parked BEV into An ATM

What if a utility’s computers could tap sources of stored electrical power located all around its service area? Even better, what if it could do it virtually instantaneously?

Vehicle-to-grid, more commonly known as V2G, will soon make that a reality. Utilities will be able to tap into a BEVs stored energy in its battery when the car isn’t being used. It will all be based on the BEV owner’s driving schedule.

Like any car, BEVs are parked 95 percent of the time, on average. I drive less than an hour a day. Since I work out of my home, most days it’s less than 15 minutes if I’m not running any errands.

But the best part is that the utility will pay BEV owners for the privilege of supplying it with power. How much will you get paid? It depends on the time of day, and the utility’s demand at that time.

ECOtality: The BEV Charging Station Pure Play

The only real pure play on BEV charging stations is ECOtality, Inc. (Nasdaq: ECTY). The company recently announced its second-quarter results. Revenue for the second quarter grew 40 percent to $6 million, from the $4.3 million reported in the previous quarter.

The company installed 1,892 charging stations in the quarter, and over 3,000 since the beginning of 2011. CEO Jonathan Read commented on the company’s progress:

With sales of electric vehicles rapidly increasing, we are uniquely positioned to take advantage of the corresponding high demand for electric vehicle charging stations.

“ECOtality has currently installed over 3,000 charging stations for the EV Project alone as we are deploying charging stations in parallel with the rollout of plug-in electric vehicles.

“The increase in second-quarter revenue is primarily the result of the continued deployment of residential and commercial charging stations, both inside and outside the EV Project.”

ECOtality’s still not making a profit, but the BEV rollout is still very much in its infancy. As sales of BEVs continue, charging stations will begin popping up everywhere. That will only mean more business for a company that’s well positioned to take advantage of the BEV ramp-up.

The prospect of making money while your BEV is parked isn’t something your fossil fuel vehicle is capable of. That could just be the game-changer that sets BEVs off on a tear, and shareholders of ECOtality smiling.

Good investing,

David Fessler

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