April 17, 2017

Calling the Market Top

I saw the future once. I did not act, but I bet it was a good stock pick.

It was clear to me in the early 00's that Hyundai Motor Corp was poised to climb a tier and become a serious competitor. I was rather impressed with their design, and the sequence of models they were rolling out seemed well-considered. Their extended warranty addressed uncertainty customers may have held about quality and reliability. "These guys have got it together," thought 2003 me. The 2007 price was 56.70 and it is 120 today. That's not bad but not Facebook.

I'm calling "hold" or "sell" today, though:

YONGIN, South Korea -- Hyundai Motor Group's plans for green cars are a costly array of hybrids, plug-ins, pure electrics and fuel-cell vehicles for both the Hyundai and Kia brands.

But the automaker's eco-car czar, Lee Ki-sang, expects a technological shakeout between 2020 and 2025 that will make it clearer whether a post-lithium ion battery breakthrough is on the horizon.

I fear they are over-committing to the eco-sector. At the risk of preaching to the choir, I'm rather impressed by the muscle sector. Those who've bet on abundance have beat those who bet on scarcity.

It could change. But I am not loading up on eco-car manufacturers.

Oil and Energy Posted by John Kranz at April 17, 2017 6:10 PM

Here's the thing about "eco-cars" - see if it affects your calculus:

The ones that add an electric motor to a petrol power plant are, often, more economical AND more powerful. There's a full collection of hybrid models from the top-end performance brands: Porsche, Audi, Bentley, Ferrari, etc. When you compare a pure torque electric drive motor to a turbocharger, for example, the latter comes up short. There's no such thing as "EV lag."

And another data point for you is this: Fiat-Chrysler chairman Sergio Marchionne said that by 2025, 90 percent of all new FCA vehicles will be some sort of electric hybrid.

A funny thing happened on the way to government distorting the market to make hybrids more readily available - the tech and the economics made them market winners.

Posted by: johngalt at April 17, 2017 7:31 PM

Perhaps. That's not how I read the article, but if the company is as savvy as I thought, maybe that is where they're headed.

Posted by: jk at April 18, 2017 9:51 AM | What do you think? [2]