Disruptive Technology – Always Underestimated

by FI Fighter on June 4, 2016

in Clean Energy, Graphite, Links

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Disruptive technology… Nobody can ever really comprehend or anticipate the type of profound impact it will have on society until it has already come and gone… It is only with the benefit of hindsight can we look back and say, “Well, damn… wasn’t that the most obvious and predictable thing… ever.

The Internet.

The Smartphone.

Clean Energy.

The first two have already happened (each gaining mass adoption in no more than a decade), and millions (billions) of dollars were made by investors who were savvy enough to invest into those sectors before they really took flight. The next revolution is now upon us and I am certain that it will again overwhelm us. The wheels are already in motion, led by electric vehicles (EV), solar energy/renewables, and grid storage.

The Rise of Infrastructure

Believe it or not, the following just happened

Renewable Energy Jobs Surpass Oil and Gas Sector for First Time in U.S.

Renewables

renewables_jobs_750

EV Improvements

What’s the biggest complaint when it comes to EVs? Lack of range and long charging times. Both are being refined and improved upon, continuously, each and everyday, so it will only be a matter of time before we have mass adoption. It wasn’t that long ago, when EVs (outside of an expensive Tesla Model S) could only provide about 100 miles of range or so. Think the original Nissan Leaf.

Now, in 2016, the auto companies are stepping up their game. The Chevy Bolt launches later this year (October), promising 200 miles of range at a $30,000 sticker (after full federal tax credits).

Chevy Bolt

All of which is made possible by the rapidly decreasing costs of battery cells.

GM-Battery-Electric-Vehicles-2

Most recently, Hyundai announced its own plans to release a 250 mile EV by 2020.

Hyundai

Of course, we’ve also got the Tesla Model 3, which all eyes will be fixated on in 2018, when its expected to launch.

Model 3

Yes, we’ve still got a ways to go, but improvements are steadily being made.

We’ve come a long ways since 2013, when I first got interested in the EV story…

EV Competition Growing

But it’s not just Tesla and your typical well-known auto manufacturers (General Motors, Hyundai, BMW, etc.) who alone will be leading the way and spearheading the EV movement. No, you’ve also got a fair share of newcomers to the mix, many of them flush with cash.

Apple, you might have heard of them?

Apple Spending

2-4

Morgan Stanley analysts actually believe the company is more interested in shared mobility than in selling a car, and they note that it is now spending 20 times more on research and development in the than leading automakers are spending. There’s also a report that the company is exploring building its own charging stations. Sound a lot like Tesla? Well, this wouldn’t be the first time Apple ripped off an idea from another company and made it even more popular than the original product in its category.

And don’t sleep on those rich Chinese companies, who no doubt have big aspirations as they look to make their mark in the EV space.

Faraday Future

The Chinese “Tesla killer”.

LeSEE Car

From Reuters.

“Tesla’s a great company and has taken the global car industry to the EV era,” Jia said in an interview at the Beijing headquarters of his Le Holdings Co, or LeEco. “But we’re not just building a car. We consider the car a smart mobile device on four wheels, essentially no different to a cellphone or tablet.

“We hope to surpass Tesla and lead the industry leapfrogging to a new age,” said Jia, wearing a black T-shirt and jeans.

And sooner or later, you just know that the second largest high-tech company (by market cap) in Silicon Valley will find a way of integrating their Intellectual Property (IP) into these EVs… If the “tipping point” for EVs happens as quickly as I think it will, it should only be a matter of time before we go full-autonomous.

From Extreme Tech.

You are looking at Google’s very own, built-from-scratch-in-Detroit self-driving car. The battery-powered electric vehicle has as a stop-go button, but no steering wheel or pedals.

Google

From Google.

We’ve self-driven more than 1.5 million miles and are currently out on the streets of Mountain View, CA, Austin, TX, Kirkland, WA and Metro Phoenix, AZ.

Our testing fleet includes both modified Lexus SUVs and new prototype vehicles that are designed from the ground up to be fully self-driving. There are safety drivers aboard all vehicles for now. We look forward to learning how the community perceives and interacts with us, and uncovering situations that are unique to a fully self-driving vehicle.

Say hello if you see us around!

Google Auto

There’s no going back after this… An EV is so much simpler, cleaner, more elegant, easier to maintain, and technologically superior to an internal combustion engine (ICE) vehicle. EVs will eventually make ICE go the way of Kodak film. Obsolete.

The major high-tech companies have all spoken — It’s 100% EV all the way.

If I was a betting man (I am), I would never in a million years put up my investing money battling against the likes of: Tesla, Apple, Google, etc…

I’m from Silicon Valley for crying out loud… I worked as both a hardware and software engineer for close to a decade… If anyone should know better, it’s me!

EV Future Demand

The clean energy revolution hasn’t even gotten off the ground yet, and you already have skeptics calling for a “bubble”. But according to Bloomberg, it won’t be until 2022 when the cost of an EV will be equivalent to an ICE vehicle, at which point we would have the catalyst needed for “liftoff sales”.

So, if the “tipping point” isn’t expected for another few years, how could we possibly be in a “bubble”, already, in 2016?

ev-sales

You can interpret the above projection numbers however you’d like (can you say uber conservative?)… What do I see?

Exponential growth.

Nuff said…

Drastic Change is Coming Soon

And coming sooner than we think, as countries around the globe ramp up their efforts to combat pollution and global warming.

Here’s what India has got planned.

Screen Shot 2016-06-04 at 8.30.05 PM

And fresh off the press from Norway.

Norway Press

From Autocar Professional.

Translated, the headline reads that four leading political parties are likely to agree to stop sales of diesel and petrol-engined vehicle by the year 2025

Norway, which offers handsome incentives to electric vehicle buyers, is already a major market for Tesla. The country, which sees annual sales of around 175,000 cars and has a population of five million, is eyeing a zero emission target from all cars by 2025.  

Norway is known to be among the greenest countries on the planet and sources most of its electricity from hydropower. It has more electric vehicles per capita than any country in the world – one out of four cars is an EV.

Which prompted this tweet from Elon Musk.

And let’s not forget to mention China…

From BBC.

_87368821_030684848-1

The damage has already been done. China has got some serious smog problems that need to be resolved sooner rather than later. The time to commit to going Green is NOW.

Many More Megafactories

Which has created unprecedented demand for batteries…

Enter the Megafactories. According to Benchmark Minerals, there are no fewer than 12 new Megafactories currently under development, due to come online sometime between now and 2020.

Now, it looks like Volkswagen might want to enter the fray.

Volkswagen

An insider familiar with the new plan spoke with Handelsblatt, saying, “We want to launch a major initiative, one that will put us at the top of the industry.” The German paper says the company’s board is likely to approve the plan to build the battery factory. This initiative also has the support of the works council and the state of Lower Saxony, a major shareholder.

Bottom line, companies such as Volkswagen, LG Chem, BYD, Foxconn, Panasonic, Samsung, etc. aren’t going to be shelling out billions of dollars if they don’t have serious plans of making this clean energy revolution a reality.

Just like I noted above, I’m not about to go betting against all this big money…

Solar/Renewable Energy Progress

The clean energy movement isn’t confined to just EVs. Actually, with the costs of solar coming down so much in recent years, it has become incredibly affordable…

Price_history_of_silicon_PV_cells_since_1977.svg

From ZME Science.

Solar energy has become dirt cheap, and the market is flourishing. GTM research says the solar market should grow by 119 percent in 2016 compared to the previous year. The low prices are making a lot of rooftop residents jubilant, but the same can’t be said about the largest solar contractors in the states whose stocks have plummeted by more than 50 percent.

As much as 85% of the global solar energy was installed within the past five years, so you can get an idea of the kind of momentum we’re talking about. This year, an astonishing 16 gigawatts of solar will be installed in the U.S. Most of this capacity is comprised of utility-scale installations, but residential capacity (rooftop solar) has also grown a lot.

Which translated to a banner year for solar and renewables.

Record Solar

From Inside Climate News.

One million solar power installations now dot America’s rooftops and landscape, an achievement being hailed as a milestone by advocates of solar energy. There were just 1,000 such projects at the turn of this century, and only six years ago, going solar cost twice as much.

The U.S. hit 1 million solar installations at the end of February, amounting to roughly 27.2 gigawatts of solar power capacity, according to the Solar Energy Industries Association (SEIA), a trade association based in Washington, D.C. That’s enough power to supply about 6 million homes.

Despite the tremendous progress being made in solar, it still currently only accounts for just 1% of electricity generated in the U.S.

But just like with everything, you’ve got to start somewhere…

Record Year

From CNBC.

An “extraordinary” year for renewable energy saw new investment in renewable power and fuels hit $286 billion in 2015 and an estimated 147 gigawatts added to renewable power generating capacity, according to a new study from the Renewable Energy Policy Network for the 21st Century (REN21).  

In addition the study, Renewables 2016 Global Status Report, found that the use of renewables expanded in the transport sector. China also appears to be emerging as a big player in renewables, accounting for a third of the $286 billion spend.

Grid Storage

Since solar energy is intermittent, naturally it begs the question of how to store it?

Enter grid storage, which could be the next booming market in the clean energy segment.

Powerwall

In fact, Tesla thinks that grid storage will outpace even EV sales…

From The Country Caller.

Regarding battery storage, Mr. Musk said, “No one is really doing it right.” He continued: “Powerpacks can scale on a global basis faster than the cars do. … I think the rate of growth will be several times that of the car side of Tesla.”

The automaker disclosed sales numbers for Tesla Energy for the first time during the first quarter, in which the company had 2,500 Powerwalls and about 100 Powerpacks. With overall sales of more than 25MWh of energy storage, The Country Caller estimated that the business generated at least $12 million during the period.

From Tesla.

Powerwall Tesla

Specs Powerwall

Just like with EVs, there’s more than just the Tesla story…

Mercedes-Benz has a competing model to challenge Tesla’s Powerwall.

Mercedes-at-home-battery-651x433

From Speed Lux.

But a Mercedes spokesperson informed Tech Insider that the system for a conventional family house expenses in between $9,000 and $10,000, consisting of the price of the inverter and installation.

Mercedes released its battery in last year in Germany and is seeking to roll it out in other European markets. The 66-pound, modular battery stores 2.5 kWh of energy, with the ability to stack eight devices for 20 kWh of storage.

The average individual in the United States utilizes 30 kWh each day.

Tesla’s 200-pound Powerwall posses 6.4 kWh of energy, but you can stack 9 Powerwalls together for nearly 58 kWh worth of energy capacity. A single Powerwall device costs $3,000, but that number can amount to more than $7,000 when consisting of the cost of setup and an inverter, as per a Bloomberg report.

And don’t forget about Nissan

nissan-xstorage-futures-energy-home-recycled-electric-car-battery_dezeen_936_2

From Renewable Energy World.

Available to pre-order in Europe in September 2016, the ‘xStorage’ unit will connect to the power grid or renewable generators, such as solar panels, and charge up when grid power is cheaper, for example during the night, or when energy is being generated from renewable resources.

Paul Willcox, Chairman, Nissan Europe, said in a statement: “It is high time consumers were given the flexibility and power to control how and when they use energy in their own homes. The new xStorage solution combines Nissan’s expertise in vehicle design and reliable battery technology with Eaton’s leadership in power quality and electronics, resulting in a formidable second life battery solution. We want to make energy storage exciting and affordable to everyone, not least because it delivers real consumer benefits whilst ensuring smarter and more sustainable energy management for the grid.”

Taking Notice

The changing landscape and shift to clean energy hasn’t gone unnoticed by some of the major oil companies out there. Some are quicker to react than others, like French major Total, who recently acquired battery maker Saft in a $1.1 billion deal.

Total

And Statoil plans to add a 1 MWh lithium-ion battery system to its Scottish floating wind project.

Statoil

It will be most interesting to observe what the fossil fuel majors will elect to do in the future as renewables continue to gain more and more momentum (and market share)…

Betting on the Revolution

As I mentioned earlier, I am a betting man… And I’m betting BIG (primarily through lithium stocks) on the coming clean energy revolution. It’s no secret to readers that I think the next major paradigm shift is fast approaching us.

Clean Energy.

Disruptive technology.

I’ve learned from the internet and smartphone booms to NEVER underestimate it; analysts ALWAYS do (like Bloomberg above), and I am sure that they will be off by a country mile (again).

Look at how swiftly the smartphone gained mass market penetration… In just one decade, we transitioned from a world where only top-level executives had the luxury of owning a “fancy” BlackBerry to one where now everyone and their mother owns a smartphone…

Screen-Shot-2014-04-07-at-7.55.13-AM

By the end of 2014, there were 1.63 billion smartphone users globally…

smartphone-users-worlwide-2014

The clean energy and EV revolution is fast approaching. You can either hop onboard, or get the hell out of the way. Irregardless, there’s no stopping it at this point.

The future has arrived.

Yet again…

{ 22 comments… read them below or add one }

1 Dividend BeginnerNo Gravatar June 5, 2016 at 3:21 am

Hey FIF,

Seriously, nice write-up. You’ve linked to so many articles and shown so many different sides of this Clean Energy revolution so I must commend you. I too believe that this will be a huge thing and have been wondering how I may capitalize on it through the stock market. I bought my first renewable energy stock last month and think I’ll double down on it this month.

Cheers,
DB

Reply

2 FI FighterNo Gravatar June 5, 2016 at 7:42 pm

DB,

Thanks! There are many ways to play the coming revolution, but since I’m a mining guy, it’s a really straightforward proposition for me — buy the companies (pure plays) who mine the resources in demand (lithium, graphite, cobalt, etc.) who control the best assets.

All the best!

Reply

3 Income SurferNo Gravatar June 5, 2016 at 4:55 am

Nice write up buddy. I missed two of those articles earlier this week. I think the key to mass adoption of EVs will stem from the duration between charging and the easy of charging. That being said, I think it’s coming much sooner than most people think!

Have a great weekend
-Bryan

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4 FI FighterNo Gravatar June 5, 2016 at 7:43 pm

Bryan,

Yeah, there are limitations for sure, such as charge times and range, but those are getting solved over time. Within 10 years, I would imagine the world to look like an entirely different place.

I’m convinced that’s there’s no turning back now. I’m all in.

Take care!

Reply

5 Roadmap2RetireNo Gravatar June 5, 2016 at 7:46 am

Nice (long) writeup, Jay 🙂
Thats a lot of links for folks to digest when reading and following up on all the articles linked. But it is a new disruptive space, and painting a picture like this requires a long article.

Thanks for putting this together. Hope you are having a great weekend (well, I guess everyday is a weekend when you’ve achieved FI 😉

cheers
R2R

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6 FI FighterNo Gravatar June 5, 2016 at 7:44 pm

Sabeel,

Haha, yeah this article like my lithium one was pretty long winded… I’m sure you’re used to these by now 😉

I’ve enjoyed our conversations talking about this stuff, especially as the news flow is coming in by the minute, literally everyday now.

Very exciting times.

Best wishes!

Reply

7 desidividendNo Gravatar June 5, 2016 at 10:01 am

Wow really long article , i need to find proper lithum stocks to invest in.Maybe electric car companies like tesla might be a good bet.

Reply

8 FI FighterNo Gravatar June 5, 2016 at 7:45 pm

desidividend,

Thanks! Yeah, there are many ways to play this disruption, and my own preference is mining stocks.

Take care!

Reply

9 JC @ Passive-Income-PursuitNo Gravatar June 5, 2016 at 6:36 pm

Thanks for linking to some other articles to read through. I’ve been thinking about disruptive technologies and trends that are sort of foregone conclusions to happen although the timing and pace of the changes are the difficult things to get right. Clean/renewable energy definitely falls in that category, in my opinion, but the most difficult thing for me is figuring out what companies to invest in along the entire chain. There’s the technology side, the manufacturing side, the parts/components suppliers, transmission and I’m sure a few others that I’m missing each with varying risk/reward levels.

Just to play devil’s advocate, truly disruptive technology that changes the way everything is done is also overused and thrown around much too often in the investment world. It seems like the DT that really changes everything gets shunned by many in the beginning until it finally just takes over whereas other times you hear of DT that really isn’t but there’s outspoken and excellent storytellers that back the technology so it gets a lot of hype.

Reply

10 FI FighterNo Gravatar June 5, 2016 at 7:48 pm

JC,

Yeah, it can be difficult at times trying to sift through all the different options out there to determine which ones work the best for our investment thesis. I’m really not going to bother with too much and I’m doing my best to keep things simple. In general, I’m not educated enough to invest in tech stocks, so I’ve kind of crossed that off my list altogether… Really, mining stocks are the only thing that I’m comfortable with investing in right now to play this disruption.

Outside of the internet and smartphone, this is the only no brainer disruption that I can think of in the last few decades.

When you’ve got global tech juggernauts like Tesla, Google, and Apple committing to pouring in billions in development/R&D, and 12 new Megafactories slated to come online by 2020, you can clearly see that the big boys are jumping in with both feet.

There’s no going back now.

All the best!

Reply

11 No Nonsense LandlordNo Gravatar June 5, 2016 at 7:15 pm

Electric cars will come soon, where that will be the main type of car. Then driver-less cars. Then a Uber call to get a driver-less pick up. Then, there will be one car for every 10 people, not one car per person.

For now, I will continue to drive my Ford F350 diesel… There’s nothing like the smell of diesel fumes and a think cloud of blue smoke to cheer you up in the morning.

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12 FI FighterNo Gravatar June 5, 2016 at 7:52 pm

Eric,

Yes, change is coming and it will be here before we know it. Do what makes you happy and enjoy your retirement and time off.

It’s funny though, many of the things we enjoy today will be seen as foreign to the next generation… Enjoying the roar of an engine, and the “smell of diesel fumes” is something I’m betting the kids of the future will have no concept or grasp of at all… They might even think the notion that human beings used to drive cars and used to get something called a “driver’s license” both peculiar and inefficient…

But we’ll see soon enough…

Take care!

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13 Evan @ Building Income InvestmentsNo Gravatar June 6, 2016 at 1:26 pm

Ever read The Snowball? It is Buffett’s authorized biography – in the very first chapter he discusses why he doesn’t invest in disruptive technology. If I were to bastardize the info, it went something like there hundreds of auto makers before the “big 3 or 4” were established, and same with aircraft…While I believe in Tesla as a long term investment who is to say faraday isn’t the next big thing? or some start up you have never heard of.

Just a lot of risk

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14 FI FighterNo Gravatar June 6, 2016 at 1:35 pm

Evan,

Nowhere in the article did I mention that one has to invest directly in TSLA or any car manufacturer to play the clean energy revolution. For myself, I am doing no such thing. And even if the final outcome is a “big 3 or 4”, that doesn’t mean that many smaller companies won’t be taken out for huge premiums in the process. In fact, when it comes to mining investments, the underlying goal for many investors is to invest in an early stage story that eventually does get swallowed up by a major producer.

There are many ways to play this turning tide, so investors must do their own due diligence and come up with ideas that are suitable for their goals and risk tolerance.

Take care!

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15 theFIREstarterNo Gravatar June 7, 2016 at 12:57 am

FI Fighter… Have been reading your lithium and other recent posts on this with great interest.

I totally agree with you about this being the next disruptive tech and the lithium miners seems to be a very rational way to try to capitalize on it. Not to mention actually getting involved and supporting the revolution directly, which I fully support from a moral point of view as well.

I think you may have finally persuaded me to jump in with a few individual stocks! Not going in big but a few small speculative plays.

The question is have I missed the boat in terms of the good prices? I think you mentioned that some of the ones you’ve bought have already shot up since you first posted about them… :s

I still have the guy on the other shoulder saying “don’t do it!” though… and that I can still capture part of the upside simply by sticking with my index trackers.

Thanks for all the info as always, really appreciate it!

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16 FI FighterNo Gravatar June 13, 2016 at 9:21 pm

theFIREstarter,

Thanks for stopping by buddy! In terms of missing the boat, I think the clean energy revolution is still very early stages, so there’s still a lot of room to run from here. It may be worthwhile to wait for some pullbacks first, but I’m still seeing a lot of good deals out there.

Yeah, it can be tough at times to try and predict the future. I remember back in 2009 when co-workers were telling me not to buy AAPL stock b/c there were too many competitors emerging on the smartphone scene 😉

All the best!

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17 JPNo Gravatar June 7, 2016 at 11:14 am

Dude, thank you for putting this much time and effort into your posts. I was already onboard before this, but now I am actually submitting the application for foreign trading and will start purchasing. I don’t feel like a few days/weeks/months will make that much of a difference because this will probably play out the best when these cars are actually being sold in large quantities. When that day comes I would hope to be sitting on thousands of shares of some of these mining stocks. You=da man

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18 FI FighterNo Gravatar June 13, 2016 at 9:23 pm

JP,

Glad you found the post informative! Yeah, I setup a global trading account late last year and it was one of the best things I ever did for my portfolio. It’s incredible the opportunities that open up to you when you start fishing in the ocean as opposed to staying confined to just the nearby lake 😉

Your’e definitely right that’s it’s still super early right now… In the short-term, the price action looks significant but I’m guessing it will look just like a blip on the radar in 3-5 years.

Take care!

Reply

19 BeSmartRichNo Gravatar June 8, 2016 at 8:57 am

Thanks so much for putting all of them together. That dedication to research is just amazing. Massive adaptation of renewable energy is the trend. I can feel it here and there… The question is where we should put our money in… I am sure you already are making your moves. 🙂

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20 FI FighterNo Gravatar June 13, 2016 at 9:24 pm

BSR,

Thanks for the kind words, I’m doing the best that I can! 🙂

Yeah, where to invest is the million dollar question. I’m all in to the mining stocks, but there are many ways to play this coming revolution.

Cheers!

Reply

21 ARBNo Gravatar June 9, 2016 at 8:18 am

Great article! Long one too.

I’ve never been a technophile, but I always welcome changes in technology that make our lives better. Self-parking and self-driving cars are an amazing advancement and I can never understand my friends who scoff at them, saying things like “I can park my own car!”. Sure you can, but why would you WANT to?

I’m definitely going to start paying more attention to renewable energy companies and lithium stocks. I’ve always loved energy stocks as regardless of what source we use or where oil is at on any given day, our society needs TONS of energy to survive on any given day. Renewable energy companies are just an extension of that. I really need to find some good dividend payers in that sector.

If nothing else, this article about disruptive technologies shows us that we can’t really on industries to continue paying and growing dividends or making us investors money however else simply by having existed since the early 1800’s or whenever. This should be a wake up call to many investors.

Thanks for this article!

Sincerely,
ARB–Angry Retail Banker

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22 FI FighterNo Gravatar June 13, 2016 at 9:27 pm

ARB,

Thanks! Yup, I do see autonomous vehicles in the future as well, it will only be a matter of time.

Definitely, technology changes on a dime… We can either embrace it or let it pass us by… I’m a huge fan of innovative tech, so I’m most excited about this next revolution.

Take care!

Reply

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