Tuesday, July 13, 2010

Gates is Greener Than Buffett

I am on Bill gates' side on this one. This news was on Yahoo today


Gates Bets Against Buffett's EV Prophecy


With all the electric vehicle talk these days, it's almost surprising to hear there are still start-ups banking on the future of the combustion engine. However, one such firm got a high-profile vote of confidence from Microsoft (NASDAQ: MSFT - News) founder Bill Gates, who, according to The Wall Street Journal, contributed to a $23.5 million round of funding. EcoMotors is a Troy, Michigan-based low-emissions engine firm whose motors are designed to run on ethanol, diesel, and good old-fashioned gasoline. According to its website, the company aims to make possible the first five-passenger car capable of 100 mpg highway fuel economy.

Investors pay close attention to the Bill & Melinda Gates Foundation's top disclosed equity holdings partly due to the foundation's multi-billion dollar scale, and also because of Gates' proximity to investment legend Warren Buffett. Lately though, Gates' personal venture investments have grabbed the most headlines.

Back in 2008, Buffett's Berkshire Hathaway (NYSE: BRK-A - News, BRK-B - News) bought a 10%, Hong Kong-listed stake in Chinese electric car and battery firm BYD Co (Pink Sheets: BYDDF - News). BYD is hardly the typical "Buffett stock," as indicated by Berkshire's latest disclosed U.S.-listed equity portfolio, which is chock full of blue-chips like Procter & Gamble (NYSE: PG - News), Johnson & Johnson (NYSE: JNJ - News), and Coca-Cola (NYSE: KO - News). But the Oracle of Omaha sees electric vehicles proliferating in the not too distant future, noting to a group of university students in 2009 that every car on the road will be electric in 20 years. Various components of the Energy Storage and Battery Technology Stocks Index are undoubtedly hoping that's the case.

Come mid-August investors will be privy to any notable Pro holdings in plug-in sports car firm Tesla Motors, Inc. (NASDAQ: TSLA - News), which debuted on the Nasdaq to much fanfare at the end of June. It didn't take long for the stock to forfeit its massive post-IPO spike, but investors will still be paying close attention to the firm's value, as it is the first domestic pure-play on electric vehicle production. Elsewhere in the automotive segment, Toyota Motor (NYSE: TM - News), Honda Motor (NYSE: HMC - News), Ford Motor (NYSE: F - News), and other major automakers have made significant investments in the development of electric or hybrid technology. It's interesting to see Gates bet against his billionaire buddy's prophecy, especially considering the likeness between their respective foundation's and firm's U.S.-listed holdings. However, with traders clamoring over plug-in investments, but relatively few hybrids, and even less full electric vehicles on the road, an efficiency play utilizing existing infrastructure doesn't sound like a bad idea. It will be interesting to see whether EcoMotors can prove worthy of the press it's received from the Gates investment.

Investors can view U.S.-listed firms the Bill & Melinda Gates Foundation has invested in and a chart of their combined performance at tickerspy.com.

6 comments:

  1. A graduate school advisor of mine liked to call BOVs (battery operated vehicles) like driving with a heavy, small gas tank that gets smaller as it ages.

    However, an EV is a wonderfully simple device; far fewer parts, far simpler repairs. And being car pollution free is really great: one breathed much easier in Chengdu, an average city of 11M in China, where taxis were natural gas powered in 2002, compared to Kunming, where they were not.

    I'm with Buffet, that batteries will keep getting better and better. Most people can live with having to plug in their smart phones whenever they can. Plugging in an EV whenever possible would be an extension of that habit that would make them viable for most American commutes. I'll happily use a hybrid outfitted with an EcoMotor ICE engine when I'm headed to the mountains.

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  2. I am sorry to say that Warren will not win this one. batteries will not comde down in price enough to ever make plug in cars or trucks very affordable. There will be some plug ins in small niches like the expensive Tesla Roadster or a golf cart sized urban vehicle. There will be tens of millions of plug in bicycles though. Compressed natural gas is one answer. The internal combustion engine will be the main source of car and truck propulsion for at least 40 more years

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