The Luxury Within Green Investing

As governments pile into the green economy with red debt, investors have the choice of where to play. One of the most prolific investing areas would appear to be the investment in renewable energy usage, as the image of helping green up society is demonstrable. Not only is electrical car manufacturing being portrayed as helpful to the environment, but it also has the societal enjoyment of their clients directly showing themselves as green investors. This is powerful stuff, finding the luxury within green investing. Whether it is the Mercedes interior below, or the Tesla 100d, or the Hummer, it is very clear that the manufacturer approach is not to bring the Prius as the front runner of the main street electrical parade. These premium autos are where the auto manufacturers want to find the profits from the luxury within green investing. Notice Mercedes linkage in this ad – Electricity as Luxury!

Electricity as Luxury

Photo: Mercedes.com

 

Recently GMC announced the Hummer, the 1000 HP beast for truck lovers. All that macho framing takes out all that is a problem (perceived or real) with the EV scene for old industry thinkers. Batteries will propel the car quickly and unreservedly over meaningful distances. Not like a Prius with energy conservation on the dashboard full time, but with large style and large power and in-your-face boldness.

 

The industry is framing the electric vehicle as the new route to luxury, and image, and socially conscious investing. As they start the marketing barrage, people investing in their personal style are attracted to the imagery. As Mercedes hints below, this is all part of the luxury within green investing using words like ‘refined’ and ‘greater torque’ and ‘acceleration’.

Greater Torque, Power, acceleration ad from Mercedes

Photo: Mercedes.com

But the second important component of this electric vehicle marketing race for attention is big power. We had lots of acceleration and torque with big internal combustion motors before. However, under the green banner, examples include Tesla’s Extreme Mode, or the Hummer’s 1000 Horsepower beast.

Picture of GMC Hummer Electric Vehicle

Photo: GMC.com

We can add in Hyperion’s 1000 HP / 1000 miles in a sports car and we’ve got ourselves staring into the heady days of the 70’s automobile industry. Clearly they are targeting Luxury within Green Investing. This is the manufacturers dream. Cars that used to pollute can now be heralded as environmentally wonderful.

Picture of Hyperion XP-1

Photo: Hyperion.inc

When Ford made their version of a premium sports car, they targeted performance with luxury in the Shelby GT 500 fuel burner at 700 HP. This is the positioning of luxury with horsepower once again. All the brands do it. Whether it was the Mercedes AMG e63, the BMW M series, or up in price to names like Ferrari, luxury was always positioned with horsepower.  The top of the line Audi SQ5 Sport SUV gas guzzler is 349 HP. Anything in the 300 horsepower range is lots of power, but again, the positioning of lots of horsepower with luxury has always been there. GM with the Corvette or Cadillac are more examples.

This beautiful picture of a California coastline which links the clean environment to clean electric power consumption is the new dream. It is the epitomy of the luxury within green investing. That is marketing marrying the concepts together.

As this is Ford’s new electric entry of the Mustang lineup, it is clearly positioned in a premium way as they move the Mustang brand from car to SUV. It is putting out a relatively big 346 HP. What is interesting is this SUV (346) snuggles up to the horsepower output of the premium tier Audi Sport luxury horsepower(349) which was considered hard on the environment in terms of fuel consumption. The electric setup is on its way into our lives. But the inducement currently is big horsepower within the green socially beneficial imagery. The large horsepower is the luxury within green investing.

Picture of Ford Electric Mustang in front of the california coast line.

Photo: Ford.com

The new view, the luxury within green investing, has currently deliberately buried the long-held concepts of fuel mileage and conservation. As the marketers continue to position horsepower as a premium offering, we must look at what was going on a few short years ago. Governments were all about fuel mileage and manufacturers had to manage their fuel mileage ratios on a company wide basis. We might all remember when Arnold S. changed from his Hummer to the Prius, to reflect the California mantra. What is readily apparent, is that the manufacturers can put as much horsepower/ power consumption into these new cars as they want to, without government push back it seems. The consumption of power seems irrelevant. This leaves us with a new mantra for the luxury within green investing. We can seemingly buy all the horsepower we want and still be green investing. That is pretty interesting as the governments jump on board.

How do we profit from luxury within green investing?

There are multiple ways to approach this.
1) If the automobile industry is about to enter the heady days of muscle car marketing using images of clean investing, we have definitely got a bright window of fun. Being tied to low horsepower, econo cars with minimal margins was hardly a background for big upside.

An example of this is the Ford chart. We could pick any manufacturer, I just have a longer history of Ford’s stock price, so let’s use that. Are we on the cusp of breaking this downtrend? I think so! The luxury of green investing is staring at us, right here.

Chart of Ford Stock breaking above a downtrend

2) For everything going on at the showroom, there are lots of considerations that have to go on behind the scenes. Suppliers into the auto companies can be a big boom. Take the chart with the same time frame as Ford above and put it on a major auto parts manufacturing company like MGA. This chart is ready to break out to all-time highs. What could be better than owning the auto makers? How about this chart? As the investor, we have choices for the luxury of green investing. This has nothing to do with the luxury within green investing, but clearly this chart is a lot better than the ford chart above. That’s the kind of luxury within green investing I like.

Auto Part Company Magna has a stronger stock chart than the Manufacturer Ford

3) There are other opportunities breaking out. One example is if the large horsepower is going to show up all over with the ads saying bigger torque, and faster acceleration we are going to need a lot more power. To me, I want to see ideas that are setting up to go meaningfully higher.  But the only way I can see that easily, is the trend changes on the charts. Here is one that I think provides the biggest clue about how big this is about to get. Power is moved through copper. Copper closed at $3.29 today. This chart looks ballistic. The similarity to the 1990’s-2000 pattern is crazy good. The 2009 dip was large than the 1994 dip.

The chart of copper pricing is ready to break out to 7 year highs

In my opinion, the world is about to go ballistic in its need for Copper. If we are plugging in 1000 horsepower Hummers, hello to high prices! How can we invest in this area, without just buying Copper, looking for a double over time? There were doubles in the EV space this week! That is the whole reason we need charts and a broad strategy. This luxury of choice around the luxury within green investing is something we can exploit.

There is nothing wrong with trying to invest in a narrow swath of this market movement. However, the difference between the Ford chart and the Magna chart is only one example of looking deeper. There are going to be hundreds of linked opportunities.

If you would like to have a focused look delivered into your inbox every week reviewing the whole transformation, consider my EV newsletter for $2/week at $97/year. From my perspective, this is about to explode higher.

Good trading,

Greg Schnell, CMT, MFTA

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