How One U.S. Manufacturer is Turning the Tables on Chinese Auto Makers
by Alexander Moschina, Investment U Research
February 11, 2011
China has a big problem…
According to a 2007 report, more than 30 million tons of carbon emissions are released into the air each year.
And between 2007 and 2009, that number increased 23%. That makes the country number one in global CO2 emissions.
Worst of all, as the industrial economy grows, so will China’s pollution levels. So out of sheer necessity, the country has risen as a leader in green technology research.
To date, it has invested $1.3 billion in electric vehicle (EV) R&D. Plus, over the coming years, the Chinese government plans to pour billions more into the industry.
The goal? To increase the number of green vehicles on the road to more than one million by 2015. It’s the “foremost priority” according to the country’s new five-year plan.
Considering BYD Company – one of the Asia-Pacific region’s largest automobile manufacturers – sold only 417 electric cars last year, China will have to make a very big push.
And one U.S. company will collect massive profits as a result…
Ener1 Partners With a $10-Billion Chinese Leader
For nearly a decade, New York-based Ener1 Inc. (Nasdaq: HEV) has manufactured lithium-ion batteries. Its products have powered hybrid Volvos, Nissans and Toyotas; everything from the Prius to a line of electric-powered buses.
Then, on January 18, the company signed a deal with Wanxiang, the largest auto-parts supplier in China. The two will produce the Zhejiang Wanxiang Ener1 Power System, set to go on sale in just a few months.
This will instantly make Ener1 battery packs a key component in Chinese electric vehicles. The announcement sent Ener1 shares soaring more than 60% in early trading.
But it’s only the beginning…
Ener1 to Explode as China Becomes the “Most Important” EV Market
According to Thomas Weisel analyst Dilip Warrier, “China is quickly becoming one of the most important end markets for companies levered to the [electric vehicle] supply chain.”
And if its Five-Year Plan succeeds, the country will immediately dominate 35% of the global EV market. Plus, in less than ten years, China plans to produce these vehicles at an annual rate of one million.
So it’s no surprise that Ener1 CEO Charles Gassenheimer was so bullish on partnering with Wanxiang. “A combination of industrial policy, explosive growth potential and vision make [the deal] a winning proposition for both sides,” he said.
Over the coming years, the company’s business should ramp up significantly. And as China strengthens its bid for the number one producer of electric vehicles, Ener1 is set to explode.
Good investing,
Alexander Moschina
Any investment contains risk. Please see our disclaimer.
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