What is an effective way to invest in electric car industry?
At this time I would say that the electric car industry as a whole is too new to be able to invest in it as a sector.  There are only a handful of companies that focus solely on electric cars to create a moderately diverse portfolio, let alone a mutual fund.  You can invest in mutual funds that include EV stocks as part of an auto sector or clean energy play, for example, but there's just not enough for an EV-only fund at this point. At this point, perhaps the best you can do if you want an exclusively EV portfolio is add some exposure to the companies that are the biggest players in the market and review the market periodically to see if any additional investments could be made to improve your diversification.  Look at EV-only car makers, battery makers, infrastructure providers, etc. to get a decent balance of stocks. I would not put any more than 10% of your entire investment portfolio into any one stock, and not more than 20% or so in this sector. You could have googled this question.  I did so and found a link to this article. YMMV taking investment advice from thestreet.com is very likely to lose you money.  However, there do not seem to be any sector funds that specifically focus on the electric vehicle market. Along similar, but not exactly the same lines, there are sector funds that focus on renewable energy.  This article reviews some of them.
Tesla has been pushing for mass market EV adoption since the beginning and they have clearly communicated their strategy as such.  Being a niche company in an ICE dominated automotive market is not a desirable position for Tesla. They want the market to move towards EVs as having even a small chunk of a market like that is worth a ton of revenue. I think the most concise way to understand EV is the value of the *operating assets* of the firm. It's most generally used when using income statement or cash flow ratios that are unlevered - before applying interest expense (which if the firm is optimally financed, in theory should only impact the equity). Examples include revenue, EBIT, EBITDA, unlevered FCF, etc.  In your hypothetical scenario, you would expect the equity value of the firm to increase linearly as cash builds up. In other words, in some implausible, ceteris paribus formulation of the firm, the enterprise value should remain constant. I work for an investment group in Central Asia in private equity/project investment. We use SPV and collateralized convertible loans to enter a project, we issue the loan at our own commercial bank. For each industry, the exact mechanisms vary. In most outcomes, we end up in control of some very important part of the business, and even if we have minority shares on paper, no decision is made w/o our approval.  For example, we enter cosntruction projects via aquisiton of land and pledging the land as equity for an SPV, then renting it to the project operator.   Basically, when you enter a business, be in control of the decisions there, or have significant leverage on the operations. Have your own operating professionals to run it. Profit. "This article feels like a project by an editor to see how well his new hire can write a ""finance"" article. Low hanging fruit: explain Tesla's junk rating compared to Ford's.  The conclusion I was hoping he reached, which is my belief, is that Musk flys to close to the sun trying to balance expansion and debt with cash flows and revenue. If they fail Ford's the best positioned car manufacturer in my opinion. Sure, the Volvo's of the world are going all electric, but that's not what makes Tesla appealing in my opinion. They're a tech company masked as a car company. Ford is a car company trying to pivot to a tech company. Electric isn't the future, the vehical cloud is. Someone has to make these cars. Google or apple won't. Ford will hopefully build and service their own." The largest hurdle I see is producing enough electric, affordable, fully autonomous vehicles to make it economically viable. Tesla, Ford, GM, Uber, Google, and Apple are all working hard to get there because whoever does it first/best will make boatloads of money. You're not seeing the forest for the trees.    Proper capital allocation takes diligent research from a community in choosing the best prospects.  That community then supports LONG-TERM investment in that company.  This is how proper companies are fostered; proper research is done; technologies advance, societies develop.  Long-term investment leads to proper capital allocation.  Please do tell me how short-term investment has any value in proper capital allocation. A few things. First, in order for Tesla to succeed there needs to be a market for electric cars, Tesla alone cannot create a market for electric cars. They could have the best battery design in the world and nobody will care if nobody wants electric vehicles. The next is Tesla got a head start, and is a darling company in the public eye. People love Elon, and Tesla is portrayed as a very cool company in the public eye. The last thing that I think is important is that I don't believe Tesla released anything about their manufacturing techniques. Knowing how a battery is made is cool, but if you can't build it efficiently and affordable t doesn't matter if you know how it's built. This is great news.  EVs are growing so fast.  Their reduced fuel and maintenance costs will be a great boon to the economy.  I wouldn't be surprising to see EVs take a significant share of the auto market in the coming years (they were ~1% in 2016).  Innovation drives economic growth.  It's also good for the environment (the electricity used is much cleaner than gasoline/diesel) and electrical grid (increased demand that's potentially responsive to system load helps finance smart grid improvements). "Okay. An ETF is an ""Exchange Traded Fund"". It trades like a stock, on the stock market.  Basically by buying one ETF, you can have ownership in the underlying companies that make up the ETF. So, if you buy QCLN, a green energy ETF, you own Tesla, First Solar Inc, SunPower Corporation, Vivint Solar, Advanced energy industries and a bunch of other companies that are involved in clean energy.   It allows you to gain exposure to a sector without having to buy individual companies.  There are ETFs for lots of different things. Technology ETFs, Healthcare ETFs, Consumer Staples ETFs, Utilities ETFs, etc.  REITS are essentially the same thing, except they own real estate." "To answer the investment aspect takes a bit of math. First, solar insolation numbers:  This represents the average sun-hours per day for a given area. You can see the range from 4 to 6, or 1460 hrs to about 2190 hrs of sun per year depending on location. I believe electricity also has a range of cost, but 15 cents per KWH is a good average.  So, a 1KW panel will produce as much as $328 per year of electricity in a high sun-hrs area, but only $219 in a lower sun-hrs area.  If we agree to ignore the government subsidies and look for the stable price unaffected by outside influence, an installed price of even $2500 would produce a return of 13% and a reasonable full payback over an 8 year period.  I call this installed price a tipping point, the price where this purchase provides a decent return. Some would accept a lower return, and therefore a higher price. As duff points out, this should be treated as the post rebate/tax credit price. Those help to push the price below this point. At the price point where the energy cost per panel is below, the government intervention may be unnecessary. The power companies may find consumer owned panels are the cheapest way to clip the peak consumption which tends to be the most expensive power demand.) One can take the insolation numbers and cost of local power to produce a grid showing the return for a 1KW panel in $$/year. (At this point the cost of money kick in. The present value of $100/yr is far higher today than if short term rates were say, 8%)  Once panels drop to where they are compelling for the higher return areas, I'd expect volume to drive continued improvements in cost and better economies of scale. Initially, the need for storage isn't there, as the infrastructure is in place to drive your meter backwards if you produce more than you use. The peek sun coincides with peek demand and the electric companies are happy to have your demand go negative during those times.  Update - the conversation with Duff led me to research 'demand charge' a bit more. You see, the utility company has to have equipment to generate the peak demand, usually occurring in the early afternoon, say 12N-2PM as the sun is brightest and AC use in particular, highest. I found that Austin energy has a PDF describing the fee for this. Simply put, the last kW of demand will cost you $14.03 in summer months and $12.65 in winter. This adds to $160/yr that a 1kW panel might save the owner. Even if one does capture the full power at peak every month, $100 is still non-trivial. This factor alone justifies $1000 worth of panel cost, and as Duff points out, the government may find it cheaper to use this method to clip peak demand than by funding bigger power generators.  To summarize, the question isn't so much ""are they worth it"" as ""what is a xKW panel worth?"" (A function of annual savings and time value of money.) The ever decreasing installed cost for a given system makes solar an inevitable part of the future power technology. I am not a green tree hugging guy, but I do like to breathe fresh air as much as anyone. I'm happy with whatever role solar plays in cutting down pollution." "This is the best tl;dr I could make, [original](https://www.bloomberg.com/news/articles/2017-07-11/electricity-overtook-fossil-fuels-in-push-for-investment-in-2016) reduced by 84%. (I'm a bot) ***** &gt; Electricity drew in more investment than fossil fuel supply for the first time last year as the energy industry prepared for electrification of everything from cars to buildings and industrial processes.  &gt; &amp;quot;With robust investment in renewable energy, increased investment into electricity networks, electricity is now the biggest area of capital investment.""  &gt; The shift of capital flows away from fossil fuels and towards electricity, particularly clean sources such as solar and wind, shows that the trend spurred by the Paris climate accord is seeping into the business of energy.   ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6mlp52/electricity_overtook_fossil_fuels_in_push_for/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ ""Version 1.65, ~164435 tl;drs so far."") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr ""PM's and comments are monitored, constructive feedback is welcome."") | *Top* *keywords*: **energy**^#1 **percent**^#2 **investment**^#3 **Electricity**^#4 **billion**^#5" I think your best strategy is to learn more about the behavior of what you're investing in.  Learn everything you can about it.  Specialize in it.  The more you study, the more the proper strategy will present itself. Answer the questions you ask in paragraph 3 through your own study. Industrial grade batteries, which is what you would need for this, are not cheap. Your typical household batteries are super cheap, but not electric car batteries.   Also I was speaking more from the substation point of view for the purchasing of the batteries, not the consumers. I could see having to maybe pay a membership fee to that type of station to get access though. Somehow have a way to sign some kind of forms for insurance of return of the batteries. i dont suppose elon's intention is to make money. which ironically is one of the reasons he will succeed. turning a quick buck business model wont work for an industry disrupter like telsa. right now they are getting the early adopters to fund the tech for more readily affordable cars. the money made is reinvested in r&amp;d. they need a few breakthroughs before things take off, its a long term strategy. investing in tesla isnt for everybody, but the few people with enough forsight to put some money into this concept could be looking at very large gains. its kinda like investing in apple when steve jobs was just a crazy smelly hippy. If you took a fixed loan, but paid it off at the accelerated rate, you would ultimately pay less total dollars in interest. So compare the actual amount paid in interest over the course of the loan rather than the interest rate itself.  That should be your answer. Also, plan on failing in your plan to pay it off and see how that will affect you.