The market for electric transportation is broad and varied, though many investors don’t give much thought to opportunities beyond industry behemoths like Tesla Inc TSLA. In recent months, however, a growing number of investors and observers have seen past the recognizable names and are justifiably excited about the emerging opportunities they see in e-transportation and e-mobility.
For example, shares of BYD Co Ltd BYDDY, for which I was the first investor in 1995, have gained a hefty 300% in the past six months on heightened awareness. If you’re familiar with BYD – whose largest equity holder is now Berkshire Hathaway (NYSE: BRK-B) - you know the company as a maker of electric buses or industrial equipment such as forklifts and trucks.
What you may not know is that BYD began as a battery company, and that despite being the world’s largest maker of electric vehicles in 2016, it still primarily views itself as a battery maker. In fact, just two years ago, BYD was in the process of building the largest battery factory in the world. That breakneck growth has continued and shows little signs of slowing down. In fact, last month BYD Co Ltd raised $3.86 billion from an upsized sale of its Hong Kong-listed shares, capitalizing on growing demand for its new-energy vehicles.
Automakers that view their core operation as a battery company are common; people in the e-mobility market know they are in the battery business first and the car or shipping business second. In 2015, Elon Musk said exactly the same thing. Five years later, Social Capital CEO Chamath Palihapitiya echoed the same sentiment when he told CNBC Tesla’s growth is much more than about electric cars: its renewable energy components could be worth trillions.
Still, while many investors see spin-off opportunities in electric vehicles (EV), they likely miss that EVs themselves are spin-offs of battery technologies. In this market, just as with the cars and buses themselves, the batteries (no pun intended) are the drivers.
Take robotics as another example. Privately held UBTech, the world’s most valuable consumer robotics company (valued at about $10 billion), for which I am an investor and serve as board member, is also driven by advancements in battery technology. In robotics, a battery’s weight, energy density and ability to safely charge and discharge is everything.
That’s another reason why investors looking long term would be wise to source opportunities in batteries and battery-related technologies. By betting on batteries, you’re not only betting on Tesla, or Volkswagen, but also on robotics and satellite tech, shipping and grid-level energy storage, and mass transit. Even consumer electronics such as laptops, mobile phones and AR/VR headsets run on - you guessed it - batteries.
KULR takes space proven technology to make lithium battery systems cooler, lighter and safer for consumers. You can see why, in the battery world, that’s a big deal. They have been working on this technology for many years with NASA. Now they are deploying it to EV, energy storage and many other commercial applications. The market opportunity is huge for what they do.
Generally speaking, backing battery companies may feel like placing a wager on a very specific technology. But it’s really like investing in multiple, high-growth, high-return markets at once. If a single advancement in battery technology works, it doesn’t just work for a confined vertical - it works everywhere.
So, if you’re following car makers or e-mobility, or feel as though you may have missed early investment opportunities there, it may be a good time to see them differently -- to see them as battery companies. That’s what most of them really are.
Xia Zuoquan is a founding investor and director of BYD Co Ltd, a maker of electric buses and plug-in electric cars and batteries. Xia founded investment firm Zhengxuan Capital in 2004, with an estimated $1.5 billion in assets.
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