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Batteries are not just about cars. Portable computers have been around for more than two decades now, and they run on batteries. Gee, we even have battery backups for our computers. These things are ubiquitous and allow your computer to save data and shut down in an orderly fashion when there is a power outage. It’s cheap insurance. Most of us now have battery-operated keyboards, although I’m not always sure why a battery is better, since I never move far from my monitor. We also have battery-operated mice. (I also wonder why a battery is better with these, but I’ll agree that an uncorded mouse has more flexibility, more freedom.)

Batteries are also used for flashlights, portable radios and TVs (remember them?), iPads, iPhones, watches (though, aside from luxury ones, watches seem to be on a downhill slide; I rarely wear mine any longer) and on and on and on. (Note to me: It’s like gold mining, right? The people who made the most money in the gold-mining age manufactured dungarees or sold shovels and food to miners. Maybe, instead of focusing on investing in computer stocks, I should focus on battery stocks.)

GM

GM — or as people here in Oklahoma refer to the company, Government Motors — had the first modern electric car, the EV1 (presumably, Electric Vehicle 1), in the 1990s. According to Wikipedia, one of the few surviving models of the General Motors program (General Motors recalled and destroyed EV1s to avoid, it said, having to provide parts ad infinitum) later sold for $465,000 in 2008.

One could only buy the EV1 through Saturn dealers, and, then, only in California and Georgia, states where dealers were trained and the car could be serviced. (Saturn was a GM brand that generated crazy-mad loyalty. Owners from around the United States would drive for hundreds or thousands of miles yearly to attend a picnic at its Tennessee manufacturing plant. People loved their Saturns. The Saturn cult was almost a religion. On the other hand, the chief executives at Chevrolet, Pontiac, Buick and Cadillac hated Saturn, and over a period of years, they were able to slowly strangle the brand and reduce its product to the defective sameness that plagued other GM brands at the time. The sniping by division bosses even got the CEO to move the manufacturing of Saturns to — I think — a Chevy plant, maybe in the industrial part of New Jersey. No one was going to picnic there!)

The Chevy Volt was ahead of its time, no question. And how can anything with that much hype (and years of advertising before the final product appeared) that does not have the word Apple in front of its moniker survive? The Volt is probably lots better than we think, but the fear of problems (like Boeing’s Dreamliner, and new models of almost anything — except maybe Apple products, and even then once) seemed to have taken a toll on sales. Many people don’t “get” that the Volt can drive forever if one keeps filling it with fuel and that the plug-in battery is just to get around electrically for the first X miles.

Toyota

My wife has a 2007 Camry Hybrid, which has been an excellent and reliable car for five years, although it has never realized its gas mileage potential. Originally touted for in-town driving at around 40 mpg, the car has never gotten better than 32 mpg. It now mostly hovers around 28 or 29 mpg. In the first few years, its in-town average was around 24 to 25 mpg. On the highway, the Camry gets 34 mpg, whether one is driving 50, 75 or even more. I once wanted to check passing on a two-lane country road and floored it to get around a farm truck driving 50 mph. When I hit the gas full-on, the car seemed to engage its electric motor, battery pack and engine all at once, and, by the time I got ahead of the farm truck, I was doing 100 mph. Moral: Be careful in hybrids — they have multiple power sources.

New Camry models are lighter and reportedly have better gas mileage. We have had zero trouble with the battery pack or electric motor. (Note to self, re: investing possibilities: what company makes batteries for the Toyota and Prius?)

I test drove a Prius this year and generally liked it, although the feel of the steering seemed more like that of a heavy truck than a car. Priuses get about 50 to 55 mpg. They are hybrids — Sterling-cycle engines with batteries and electric motors, as is my wife’s Camry. (Note to self, re: investing: what company manufactures the electric motors, probably the same for Prius and Camry?)

Nissan

My brother-in-law has a Nissan Leaf. He can go about 75 miles on an electric charge, depending on whether he is using air conditioning or heating or neither and depending on how many passengers the car is carrying. He charges at night and seems to like his car. His wife has another automobile that they use for trips because once the 75-mile target is met, that Leaf won’t flutter any longer.

Ford

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Ford has been lying back in the weeds and has been slowly unveiling its array of hybrid cars, including the now multi-generational Escape Hybrid, which a customer of mine says gets excellent in-town gas mileage (30 mpg) and even better highway mileage for an SUV. In the meantime, Ford has unveiled a new car in the $29,000 range that gets mileage in the 40s. It will run up to 62 mpg on electric, although pick-up in that mode is slow. If you recharge it (and it apparently can do plug-in charging and/or charging on the fly through the engine charging system), your around-town trips are like to be at 108 mpg. And Ford’s 2013 Fusion, advertises mileage in the 40s. Ford may have one-upped Toyota in the Sterling-cycle sweepstakes.

Tesla

Martin Eberhard, the engineer who started Tesla, is now rumored to be with Volkswagen. He had some sort of legal settlement with Tesla after he left the CEO post. The firm is now run by Elon Musk, who is commercializing space travel and is the current Tesla CEO and a major infuser of capital. The company is an important piece of the electric car puzzle. Teslas use huge packs of batteries that seem like hundreds and hundreds of AA rechargeables, packed closely together, and is electric only. The sport model goes 244 miles between charges. Since Tesla’s sports car is over $100,000, the company is said to be building a family sedan that might be in the $50,000 range and appeal to a wider range of buyers. However, Ford’s 108-mpg in-town model starts at $29,000, so the competition will be keen.

Fisker

Don’t forget the Fisker Karma. It costs $100,000-plus and has over 400 horsepower. Yet, it’s supposed to get over 50 mpg, and the car looks like a million bucks. It has a backup 4-cylinder engine, but it also performs, hitting 60 in a little over six seconds on electric power alone.

Wikipedia lists a bewildering array of battery manufacturers. Other than the household names, the only one I know particularly is BYD, of which 10 percent was owned by Berkshire Hathaway in 2010. But Berkshire shows no stock position at the end of 2011. The absence of BYD tells me the Wikipedia list is incomplete. BYD is big in Asia, and I know it makes some batteries for Apple, aside from the ones for its own vehicles, including a spiffy electric bus used in Hong Kong. A BYD electric bus came to visit Berkshire stockholders at the May 2010 meeting.

I’ll leave finding the right battery company for your customers to invest in to you. It’s not just batteries, sometimes you have to look under the hood of the big investment idea (auto manufacturers) for other ideas. Let me know what you find, okay? I don’t think we are apt to stop using laptops, iPhones, tablets or hybrid cars any time soon. Think batteries. Think underneath the easy idea — the apparent idea — to find something worthwhile. (Example: If you really thought Fisker, which is privately held, would hum its way to great success, you might try to find the private equity firm that backed it and try to invest in its Fisker offering or in the PE firm itself. However, I worry about PE firms, and my calculations typically show rather low average returns in the 3 percent to 4 percent range).

This information is intended for financial professionals only, not the general public. This is not a solicitation to buy or sell any specific security. Mr. Hoe may have positions in the securities or other investments discussed. Investments in securities do not offer a fixed rate of return. Principal, yield and/or share price will fluctuate with changes in market conditions, and when sold or redeemed, one may receive more or less than originally invested.


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